The Instability of Health Coverage in America: Hearing

THE INSTABILITY OF
HEALTH COVERAGE IN AMERICA
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON WAYS AND MEANS

U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
APRIL 15, 2008
Serial No. 11078

Printed for the use of the Committee on Ways and Means
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2009
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COMMITTEE ON WAYS AND MEANS

CHARLES B. RANGEL, New York, Chairman
FORTNEY PETE STARK, California
JIM MCCRERY, Louisiana
SANDER M. LEVIN, Michigan
WALLY HERGER, California
JIM MCDERMOTT, Washington
DAVE CAMP, Michigan
JOHN LEWIS, Georgia
JIM RAMSTAD, Minnesota
RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas
MICHAEL R. MCNULTY, New York
PHIL ENGLISH, Pennsylvania
JOHN S. TANNER, Tennessee
JERRY WELLER, Illinois
XAVIER BECERRA, California
KENNY HULSHOF, Missouri
LLOYD DOGGETT, Texas
RON LEWIS, Kentucky
EARL POMEROY, North Dakota
KEVIN BRADY, Texas
STEPHANIE TUBBS JONES, Ohio
THOMAS M. REYNOLDS, New York
MIKE THOMPSON, California
PAUL RYAN, Wisconsin
JOHN B. LARSON, Connecticut
ERIC CANTOR, Virginia
RAHM EMANUEL, Illinois
JOHN LINDER, Georgia
EARL BLUMENAUER, Oregon
DEVIN NUNES, California
RON KIND, Wisconsin
PAT TIBERI, Ohio
BILL PASCRELL, JR., New Jersey
JON PORTER, Nevada
SHELLEY BERKLEY, Nevada
JOSEPH CROWLEY, New York
CHRIS VAN HOLLEN, Maryland
KENDRICK MEEK, Florida
ALLYSON Y. SCHWARTZ, Pennsylvania
ARTUR DAVIS, Alabama
JANICE MAYS, Chief Counsel and Staff Director
BRETT LOPER, Minority Staff Director
SUBCOMMITTEE ON HEALTH
FORTNEY PETE STARK, California, Chairman
LLOYD DOGGETT, Texas
MIKE THOMPSON, California
RAHM EMANUEL, Illinois
XAVIER BECERRA, California
EARL POMEROY, North Dakota
STEPHANIE TUBBS JONES, Ohio
RON KIND, Wisconsin
DAVE CAMP, Michigan

SAM JOHNSON, Texas
JIM RAMSTAD, Minnesota
PHIL ENGLISH, Pennsylvania
KENNY HULSHOF, Missouri
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records
of the Committee on Ways and Means are also published in electronic form. The printed
hearing record remains the official version. Because electronic submissions are used to
prepare both printed and electronic versions of the hearing record, the process of converting
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CONTENTS
Page
Advisory of April 15, 2008, announcing the hearing ............................................
WITNESSES
Diane Rowland, Sc.D., Executive Vice President, Kaiser Family Foundation ...
John Z. Ayanian, MD, Professor of Medicine and Health Care Policy, Harvard
Medical School, Boston, Massachusetts .............................................................
Michael OGrady, Senior Fellow, National Opinion Research Center, University of Chicago, Chicago, Illinois .........................................................................
Stan Brock, Founder and Volunteer Director of Operations, Remote Area
Medical, Knoxville, Tennessee ............................................................................
Stephen Finan, Associate Director of Policy, American Cancer Society .............
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81
SUBMISSIONS FOR THE RECORD
American College of Physicians, Statement ..........................................................

Edward M. Burke, Statement .................................................................................
George Stone, Statement ........................................................................................
Jonathan B. Weisbuch, Statement .........................................................................
Karen Hawes, Statement ........................................................................................
March of Dimes Foundation, Statement ................................................................
National Congress of American Indians, Statement ............................................
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THE INSTABILITY OF
HEALTH COVERAGE IN AMERICA
TUESDAY, APRIL 15, 2008
U.S. HOUSE OF REPRESENTATIVES,

COMMITTEE ON WAYS AND MEANS,
SUBCOMMITTEE ON HEALTH,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:00 a.m. in room
1100, Longworth House Office Building, Hon. Fortney Pete Stark
(Chairman of the Subcommittee) presiding.
[The advisory announcing the hearing follows:]
(1)
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ADVISORY
FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON
HEALTH
CONTACT: (202) 225-3943
FOR IMMEDIATE RELEASE

April 08, 2008
HL23
The Instability of Health Coverage in America

House Ways and Means Health Subcommittee Chairman Pete Stark (DCA) announced today that the Subcommittee on Health will hold a hearing on the instability of health coverage in America. The hearing will take place at 10:00 a.m.
on Tuesday, April 15, 2008, in the main committee hearing room, 1100 Longworth House Office Building.
In view of the limited time available to hear witnesses, oral testimony at this
hearing will be from invited witnesses only. However, any individual or organization
not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing.
BACKGROUND:
There are nearly 47 million uninsured people in this country and their ranks have
been growing rapidly in recent years. Those without health insurance have worse
health outcomes than those with insurance, often pay more out-of-pocket for services
when they do seek care, and increase costs to the entire health care system. Additionally, there are millions of people who have private health insurance but have
trouble affording and accessing care.
The inadequacy of current coverage options forces many people to forgo needed
medical care because of the costs associated with seeking care. A 2005 study by The
Commonwealth Fund 1 estimated that nearly 16 million non-elderly individuals (12
percent of the insured population) were underinsured in 2003. Despite the fact
that they have insurance coverage, underinsured individuals can be exposed to significant out-of-pocket costs in the form of higher premiums, deductibles and co-pays
relative to more adequately insured individuals. They also can have trouble accessing doctors, obtaining prescription drugs and getting their insurance to pay for
needed care because the insurance that they can afford does not cover the treatment
that they need.
In announcing the hearing Chairman Stark said, Americas health system is
broken. Every year more and more people join the ranks of the uninsured.
Even those who have insurance are discovering the inadequacy of their
coverage, all the while their premiums and cost sharing continue to rise.
I am pleased to hold this hearing. It is important we understand the problems of todays system as we prepare to embark on health care reform.
FOCUS OF THE HEARING:
The hearing will focus on the instability of health coverage in America, examining
the problems facing those with and without health insurance.
1 http://www.commonwealthfund.org/publications/publications_show.htm?doc_id=280812.
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f
*Chairman STARK. The Subcommittee will begin its hearing,

and the Chairman will make outstanding introductory remarks, if
he can find them.
Thank you for attending today and I hope to be brief.
We are going to depart a little from our standard procedure.
Well show a short video that deals with the issues many Americans who are uninsured and are underinsured are facing. We know
that theres a lot of discussion in the campaign and in the press,
and everyplace else, about healthcare reform.
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Its been some years since the last large attempt at system-wide
reform and the failure to be able to come to a conclusion with it.
In this election year, candidates on all sides are talking about
healthcare with different approaches and philosophies, but I think
each candidate recognizes that there have to be some changes in
the system of delivery of medical care.
The number of uninsured is increasing. Middle class Americans
are having trouble paying their premiums, paying their cost-sharing. They just announced the other day theyre going to charge us
more for expensive drugs; and, we all know, I think, that the medical care delivery system is in need of change; and, before we rush
into solutions, I think we should develop an understanding of
where we are. What is the problem? Can we identify the problem
we are trying to fix?
Hopefully, Mr. Camp and I can come to some kind of agreement
on that. We may not agree on what the fix ought to be, but hopefully, we dont have to argue about what the problem is, and thats
the purpose of todays hearing.
Id like to defer on mentioning our first witness for a moment,
but after we do hear from our first witness, we will hear from a
panel of witnesses who will describe the instability of health coverage and the availability. After a second, I am going to recognize
Mr. Camp. We will then go off the record and view a ten- or twelveminute clip that comes out of a sixty-minute program in February;
and, it features the work of one of the witnesses that we will hear
from later today.
I want to thank the witnesses and my colleagues for being here
as we try to lay some groundwork for what may face us in the coming months and years ahead.
Mr. Camp?
Mr. CAMP. Thank you, Mr. Chairman. I want to thank our witnesses for being here today as well. The laws and regulations governing the U.S. health system can prevent from between 25 to 45
million Americans from having health insurance, and thats wrong.
Every American should have access to quality healthcare.
Before we can solve the problem, we need to ask why so many
Americans lack health insurance. One of the most immediate
causes has to be the skyrocketing cost of healthcare and health insurance. Since 2000, employer-based insurance premiums have increased by about 100 percent, and thats four times the rate of inflation. These spiraling costs are driving increasing numbers of employers to drop health insurance coverage for their employees. At
the same time, over-regulated state insurance markets are failing
to provide affordable health insurance for many American families.
We also need to identify who is uninsured. Approximately twothirds of the uninsured are in families with incomes below 200 percent of poverty, or about $40,000 a year. In the current, difficult,
economic times, it shouldnt come as a surprise that these individuals do not have the resources to purchase private health insurance. That does not mean, however, that they cannot have private
health insurance. Every uninsured person in this country shares
one common characteristic: they receive no assistance under the
Federal Tax Code to help them purchase health insurance.
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At the same time that costs for health insurance are soaring, our
Tax Code affirmatively discriminates against the uninsured. If we
were to simply equalize the tax subsidies that we provide, millions
more Americans would be able to get health insurance.
The generosity of the American taxpayer should not only go to
those with employer-purchased health insurance, it should apply to
individuals, small businesses, and large corporations alike. To do
that, we must make sure those Americans who already have insurance keep it, and we must help those who dont have coverage get
it.
I want to thank Mr. Stark for calling this hearing to give us all
the opportunity to examine this issue. I hope that in exploring this
issue, we can begin to identify solutions to reducing the number of
uninsured without further burdening existing entitlement programs that are already facing insolvency.
Thank you, Mr. Chairman, and I yield back.
[The prepared statement of Mr. Camp follows:]
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*Chairman STARK. Well, as the Committee knows, when it

comes to introducing witnesses we draw straws; and, this morning,
Mr. Ramstad, our colleague from Minneapolis drew the short
straw, and Id like to recognize him at this point.
Mr. RAMSTAD. Well, thank you very much, Mr. Chairman, and
Im very pleased today that our Subcommittee will hear from one
of our countrys most respected leaders in healthcare policy, former

Minnesota Senator, Dave Durenberger.
I would also like to recognize another distinguished Minnesotan
in the audience, Hennepin County Commissioner, Randy Johnson,
who at the county level has worked long and hard on extending access to healthcare for Hennepin County residents.
My good friend, Dave Durenberger, served as Minnesota Senior
Senator from 1978 to his retirement in 1995. In the Senate he was
highly respected for his mastery of healthcare policy and his ability
to work with people from both sides of the aisle to find solutions.
He brought some of Minnesotas most innovative and successful
ideas to Washington.
Dave Durenberger served on the two Senate Committees with jurisdiction over health policy, the Finance Committee and Labor
Committee, and also chaired the Finance Health Subcommittee.
Senator Durenberger left his mark on every major piece of
healthcare legislation through the 1980s and into the 90s. He also
authored Prescription for Change, a book on healthcare reform
through consumer choice.
Since his retirement, I know firsthand, Senator Durenberger has
not slowed down one iota. In addition to teaching graduate-level
courses in health policy, and I understand his graduate students
from St. Thomas University are here today with him, he formed
the National Institute on Health Policy, a joint effort between the
University of St. Thomas and the University of Minnesota.
Senator Durenberger also started the Medical Technology Leadership Forum, and also serves on the Medicare Payment Advisory
Commission. Of course, most significant to me personally, Senator
Dave Durenberger has been a close friend, mentor, confidant for 30
years.
We would be here all day if I listed all of Dave Durenbergers
credentials, but let me just say I deeply appreciated your expertise,
David, and your friendship over the years. This Subcommittee certainly looks forward to your testimony. We appreciate your collaboration on what I believe is one of Americas most pressing problems. Thank you again for being here, and thank you to all the witnesses.
I yield back, Mr. Chairman, thank you.
*Chairman STARK. Thank you, and Id like to join you.
It is my pleasure to welcome Dave here. He and I worked together since, I guess, 1985, on issues with Medicare and other
issues on healthcare and look forward to your testimony, following
which we will view the video.
Go ahead and enlighten us.
*Mr. DURENBERGER. Thank you, Mr. Chairman, Mr. Camp,
Members of the Committee, but especially Jim Ramstad, because
as Jim said he has been a very close friend for a long period of
time. I had mixed feelings when Jim announced that he was retiring, as many of you had too. On the one hand, I was happy for him.
On the other hand, I was unhappy for the rest of you, because of
the contribution that he has made to not just good health policy,
but a good policy in so, so many ways.
Each of us is reflective in a way of the people that we represented, the places we were raised, how we were educated, and so
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forth. Jim did this better than most people. As I see from some of
the people that I know here like Mr. Camp and his part of Michigan, and Mr. Kind and his part of Wisconsin, we much more alike
than we differ.
That certainly is true of health policy as well. It was an honor
for me to serve Minnesota for three terms in the Senate. It was always a challenge, I must say, to go to conference near the end of
each of those 16 years with the chair of this Subcommittee and the
chair of the energy and Commerce Committee, because they always
insisted on winning. Im really honored, Mr. Chairman, to have
been asked to testify here today.
I do so in the spirit that for most of those years characterized
our relationships and our effort to make national health policy;
and, particularly, to improve the health system of this country by
changing the financing incentives for providers in the Medicare
Program. One of the things you learn fairly early on in this process
is we dont have a national health system; and, Mr. Camp alluded
to that, I think, in his comment.
But, what we do have, because we know this from our personal
experiences in the communities we represent, we have a series of
systems and the work at Dartmouth explains that to us quite clearly. But my job is not to talk to you about the health system or the
specific challenge of the uninsured. I was asked to reflect on my experience in doing health policy. First, let me say that not since the
Presidential campaign 1992 have Americans been as concerned
about their financial well-being as they are this year.
Most Americans know they cant afford the rapid rise of health
insurance premiums, especially when it is currently accompanied
by the escalation and the cost of so many other of their basic needs;
so its a big challenge. But it isnt just health policy; and, you know
this better than I. Public opinion polls reflect this in strong support
for proposals to guarantee access for all, the health and medical
services for all Americans through some system of health insurance.
But, clearly, the same polls will tell you that theres no consensus on how to do it as both of you have pointed out. The debate,
as it always has been, is between universal coverage and cost containment; and, its also between social insurance systems and private insurance. For example, Senator Clinton advocates a universal
coverage path that can utilize a form of what we might call Medicare for persons under 65.
Senator Obama, same party, advocates using the model of the
Federal employee health benefits plan. Senator McCain advocates
cost containment through greater tax subsidies for private, major
medical insurance. Interestingly, each advocates similar cost containment measures through realigning financial incentives to
produce better quality, outcomes, effectiveness and efficiency from
the delivery system. Similar battles, as we know only too well, are
being waged at the state levelin part, coverage; in part, quality
and value.
So it has always been. Unfortunately, critics of the Democratic
proposals characterize them as socialized medicine; and, critics of
the Republican proposal criticize them as doing nothing to meet the
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issue of affordability which was driving up the numbers of uninsured and underinsured. That will probably get us nowhere.
As policymakers, we have always followed a two-path course to
universal coverage. It is most obvious in the Medicare Program,
where we have been making most national health insurance policy,
since I became active in health policy reform in the early 1970s.
We have used both social insurance and private insurance in our
financing policy changes, aiming ourselves at expanding access coverage and cost containment. The test for high value health insurance is how well it does for people when they are sick, seriously
injured, or chronically ill. Its the 8020 problem.
Twenty percent of the people present us with 80 plus percent of
the cost challenge. So the real test, choosing an insurance course
to universal coverage is how well does the plan do in that regard.
How many benefits a plan has or how little people use a deductible
is not the measure. The value test for both social insurance and
private insurance is how well each does to consistently pay for
quality, for outcomes, for effectiveness, and for efficiency.
That has been our challenge since I started doing this sort of
thing. How do you move both social and private insurance in that
direction? For example, the Federal F benefit plan has always been
a model for consumer choice of private health plans, and the impact of that choice was important in creating health insurance competition, community by community, using Federal employees and
retirees to accomplish that.
My first health legislation proposal was the Consumer Choice
Health Plan of 1979, when some of you were born, probably. The
purpose of it was to require choices similar to the HBP in the private employment in exchange for the employer tax subsidy.
So, Medicare always used private insurance: first in its benefit
design and its implementation through Blue Cross/Blue Shield carriers and intermediaries, and then, on my watch in cost have
HMOs, and in a major national test of HMO, in HMO risk contracting starting in 1985. These were hugely successful in areas of
the country where they were tried and where medical practice in
relations with community and state-based health insurance guaranteed their success.
For example, in our part of the country which always brags
about being the low cost area, we were one of the high cost areas.
We were in the upper quartile in the Hennepin County, St. Paul
area, and in North Dakota and places like that. Within two and a
half years of the start of this experiment with private HMOs, we
went to the bottom quartile; and, unfortunately, were still there;
principally because we didnt share there savings.
We in the Medicare Program did not share the savings with the
people that made them possible, who are the physicians, the hospitals, and the local health plans. The rest of the country chose to
follow the path of hospital DRGs which we instituted at the same
time, but on another vehicle. By 1989, of necessity we adopted the
prospect we payment system to physician position payment and
created lots of other problems, none of which I endorse that you repeat.
The mistake we made, of course, was not to leaving more of the
financial savings, for changing the overuse of medical services with
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the care professionals, and the hospitals, and the plans that were
responsible for doing it. The mistake the medical industry made
was to take these community-based examples of physician-hospital
cooperation national, and to take the local managed care organization national as well.
For example, United Health Group in our own community became the largest health insurer in the country through merger and
acquisition of lots of local HMOs all over America. Likewise,
Wellpoint became the largest insurer in the country through the
conversion of lots of local and state blues plans to for-profits, and
their subsequent merger and acquisition. This new national private
insurance phenomenon was very successful for a while in driving
down healthcare costs, and their premiums and profits made them
Wall Street darling.
But, by the end of the 1990s, the same plans were in national
industry playing by either state rules or no rules in the employer
self-insured market because of ERISA. Congress in 1997 authorized
private plans to do what markets are supposed to do, determine
through price competition for basic benefits, whats the real cost of
a basic set of medical services in a community-by-community across
the country.
The industry refused to play. The managed care industry, slowly
but surely, adopted itself to the realities of consumer demand for
freedom of choice, access, innovation and expectations. This is unfortunate. They did that particularly in areas in which physician
groups and hospitals had the power to make sure that sort of thing
happened. So, in effect, weve lost some of the benefit and the potential that exists in private insurance. Thats the point Id like to
make. Not that its wrongits very rightits been our course
from the beginning. The question is what are we trying to achieve?
At the Medicare Payment Advisory Commission, on which I
served until last week, we simply asked the public policy question
that Members of Congress like me have been asking since 1982
when Senator John Hines put the privatization amendment on the
tougher risk contract. If traditional Medicare is less effective in
achieving performance improvement than private insurance, then
how do we structure the value proposition in the relationship between Medicare and private health insurance?
Paying financial bonuses to Medicare Advantage Insurance plans
for simply adding service benefits to the Medicare Program is probably something you could do as a congress. But its not the right
thing to do without clear evidence that those services have value
added over existing insured services, this makes us to issues
around comparative effectiveness, which I wont dwell on, because
youve heard plenty of that.
So, let me conclude by saying there are many reasons why universal coverage is important. Many of them relate to the vastly improved economics of reducing or eliminating cross-subsidies from
paying to non-paying services in hospitals especially. I have now
lived long enough with the consequences of our National failures to
secure financial access to needed healthcare services for all Americans that I believe a commitment of the next president to this goal
is important to my vote. I do not believe it is possible in a Federal
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system for each of the 50 states to accomplish this goal on their

own. Their fiscal capacity, their populations are just too disparate.
This is a matter of income security policy for the nation of which
we are all citizens. We have no income security policy and we have
a bunch of aging entitlement programs, and Mr. Camp pointed this
out. We have a bunch of aging entitlement programs, which are
bending and sometimes breaking under the weight of population
health and aging and the cost of medical technology and providers.
It would be an appropriate challenge for this Committee, the full
Committee, to take the lead in going beyond reforming programs
that were enacted in the 1930s for the 30s and the 60s for the 60s
in developing an income security policy in this country. A good
place to start would be as we recommended in the Pepper Commission, get long-term care out of the welfare program and convert it
into a combination social and private insurance program. That
would make your challenges a lot more simple.
I have no reason to believe that as Republicans or Democrats we
have much disagreement about the need to agree quickly on how
to do the work of data gathering, measuring performance, motivating better outcomes, and rewarding the first-rate performers in
the business of an informed consumer in as many communities as
possible. I am also pleased to have been afforded this opportunity.
Much is expected of each of you in an area that is too complex
to be understood by any one of you, but challenging circumstances
always bring out the best. I hope that I may continue to serve
whatever interest you may take in health coverage and reform.
*Chairman STARK. Thank you, Senator. Dave, thank you very
much. As you know, you and I have a great difference in this problem of the underpayment of the Minnesota, North Dakota Wisconsin area, representing a district that is drastically in your opinion overpaid. Ive always said, swell, lets just cut the payments to
California down to the level that were paying in Minnesota and
think of all the money well save.
Im not so sure that thats the most popular approach to this solution in your part of the country, and it sure wouldnt be very popular in mine. But it occurs to me that thats one way to do it. I
just want to ask one question, and that is one of the issues that
we are going to be faced withand Im not sure any of us as yet
have an answer in the reimbursement program for physician servicesis what we do about volume. Im sure that in redesigning that
system as I think we all agree it must be redesigned.
We are going to have to deal with that issue, and my question
is will you come back and help us with it?
*Mr. DURENBERGER. Well, Id be glad to, and Im going to connect the two, just very, very briefly. The disparities exist in payment across the country, but it is largely because there are disparities in performance, and whether you look in Mr. Camps district,
or you look in my district, or you look at La Crosse, Wisconsin.
By the way, Congressman Kind is a doctor from Gunderson out
here in the MBA class as well. If you compare measurable, quality
outcomes performance for the dollars that are spent in your district, in his district, in my district, and so forth, it is a bargain for
the rest of the country. But its also a model for the rest of the
country to be followed. Unless you can design a payment system
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that begins to reward high performance in some way appropriately,

we are going to continue to have these problems. The key to that
is physician payment reform.
Weve talked about accountable care organizations. We talk
about bundling. We talk about a variety of approaches, and I would
be happy to come back and be helpful.
*Chairman STARK. Look forward to it.
Mr. Camp?
Mr. CAMP. Thank you, Mr. Chairman, and thank you, Senator
Durenberger.
*Mr. DURENBERGER. You are welcome.
Mr. CAMP. You made a number of good points.
I appreciate you outlining really sort of the background on Medicare that it always has had a private insurance component to it.
Tell me, what do you think of some of the proposals that have been
introduced either in the Senate or the House that are attempting
to use the Tax Code, either a tax credit or a tax deduction, or a
combination thereof to really create an individual insurance market.
Tell me, and also what you might think about the question of
mandates, if you have time.
*Mr. DURENBERGER. Ill again try to be brief. Number one, we
just had the benefit yesterday of having both Ron White and Bob
Bennett speak to our class. So, Im fresh from the ideas that are
out there.
First, with regard to the proposal for the tax subsidy, they have
this increase. Everybody pays, like $10,000, and then make them
pay with their insurance. That, like President Bushs proposal, has
been needed for the 35 years that Ive been involved with this. Its
the question of getting from here to there that is always the challenge. So, I think on the appropriateness of the tax subsidy for individuals, that is so much better than any other approach that has
been taken.
The challenge, I think, in this concept that we can blend the universal coverage of the Democrats with the market ideas of the Republicans is whether have real markets. I will start with something
simple, like insurance.
You will not have real markets in health insurance until you
have national rules by which all health plans have to pay. The idea
that we should just stay with 50-state regulation and you can go
shopping around the country for a good deal just will not work. It
wont protect consumers. But the idea of having a set of national
rules by which both national and state plans can truly compete is
really a great idea, and thats been presented as value-based benefits. Its been presented as a guaranteed issue and renewal, and
some of the other things that I know that this Committee is familiar with, but I think that is critical to getting the best out of private insurance.
After that, the issue becomes the same with regard to doctors
and hospitals and we talked about that in terms of whats quality,
whats good outcome, how do you measure it, how do you get consensus, and a lot of progress is being made on that. But, again, and
like the secretarys ideas on value exchanges and things like that,
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focusing on local communities and finding out who are the people
that are already ahead of the curve is critically important.
When you get the market working, youve got all the information
you need. People are informed and they are getting their information from reliable sources. Theyve curbed their own expectations
about having the sun and the moon and the stars and everything
else. Then the only way a national system works most effectively
is through everyone having an ownership of that insurance. Long
term care insurance, as weve analyzed many times, is basically
supportive services for elderly people. If we were able to sell disability insurance to everybody in this country when they were
young, you know, you wouldnt have to worry about meeting longterm care insurance, because people can use it at various times
through this system. Same thing applies to health insurance.
Mr. CAMP. Just quickly before my time, what do you think of
the individual mandate, some proposals think thats essential. Others dont.
*Mr. DURENBERGER. Yeah, again, you have to tie it together
with the insurance reform in my book before you even consider it.
You also have to tie it together with some other reforms. I think
in the end at some point you are going to need it. I would not start
with an individual mandate on whether its at the state level or the
Federal level.
There are other ways, I think, to explore the problem thats created by freeloaders or whatever the economists call it, the free
somebody or others on the system.
Mr. CAMP. All right. Thank you very much.
*Mr. DURENBERGER. You are welcome.
*Chairman STARK. Mr. Doggett, would you like to inquire?
Mr. DOGGETT. Thank you very much for your testimony.
Does any other country provide us a model of any aspect of what
we should be striving for here, or is our predicament so unique that
we have to strike out on our own?
*Mr. DURENBERGER. The policy models have been tried in one
form or another, although weve had some discussion about whats
the appropriate policy model to get from here to there.
One of the challenges that you face as a Subcommittee and the
larger Committee on Ways and Means is theres already by most
peoples assumptions a lot of money in the system, and a lot of it
is being spent on tax subsidies that are not doing. I mean, they are
benefiting wealthy people rather than lower income people. However, you might consider this. Long term care going into a welfare
system rather than being in its an insurable event and we ought
to be having insurance for it.
Theres all kinds of money out there, the inside buildup on tax
subsidized savings and things like that, so theres plenty of money
in the system, but theres no policy to guide you as a Committee.
Theres no policy to guide you to get from here to there, which is
why I made the argument about income security. Thinking about
it as income security policy, and I know along time ago, I think it
was the 25th anniversary of Medicare or something, I made the
statement that Medicare and Medicaid are not health programs.
They arent. They are income security programs.
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If you think about that long enough, you realize weve got this
whole series of programs built for various purposes at various
times that are not working today for the benefit of the people that
need them the most. That is an enormous challenge for you in
terms of cost reduction or cost containment. Lets take Medicare
Advantage, because I just heard this yesterday from Abbey Block
who runs the Medicare Advantage program at CMS.
She didnt know there was going to be somebody in the audience
from La Crosse, Wisconsin, so she says the difference in the value
to a Medicare beneficiary in Dade County, Florida, and the amount
of money that you are spending on her services in Miami, Florida,
versus La Cross, Wisconsin, and this is what I heard from her, is
248 percent. More money being spent on the same beneficiary in
Dade County for no reason, you know, other than part of the policy
design and the practice design.
Mr. DOGGETT. I certainly agree with you that these tax credits
by their very nature are very blunt instruments and they are very
costly for what they produced. They are not the most efficient way,
sometimes, of getting health coverage where we need it, and I certainly concur in your comments about how costly some of them are
for what the y produce.
Do you believe that its possible for some type of government insurance program to co-exist with private insurance to address this
problem?
*Mr. DURENBERGER. It does now to the potential advantage of
both. This is America. Were a pluralistic society and we ought to
build on that and thats why I made the point, that weve always
followed two paths. The question is have you set the goals correctly?
I mean, is the goal to be paying for the sick, the severely injured?
I mean is that the purpose of insurance?
Also, is part of the purpose of insurance to facilitate the rewards
for quality outcomes and efficiency and things like that?
So, if you set the policy goals right, there might be some circumstances, some populations, for which social insurance works
much better and others for which private insurance works better.
Mr. DOGGETT. Thank you so much.
*Mr. DURENBERGER. Thank you, Lloyd.
*Chairman STARK. Mr. Thompson? You pass?
I think Ms. Tubbs Jones. Would you like to inquire?
Ms. TUBBS JONES. Thank you Mr. Chairman.
Good morning, Senator. I dont think I have ever had the chance
to meet you, and it is my pleasure.
*Mr. DURENBERGER. It has been my pleasure.
Ms. TUBBS JONES. I would like to focus for a moment and ask
you about healthcare disparities.
Today, the Congressional Black Caucus is hosting their annual
healthcare disparity conference at a hotel here in Washington,
D.C., and I had to choose between which I could attend. So, I decided to be here with you. I wondered that in the work that you
have done around healthcare, have you had any focus in on health
disparities as it involves the delivery of healthcare to minorities
and majority. If so, what your experience has been and what your
recommendation would be to this Committee as we walk down the
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road of trying to repair the healthcare delivery system in this country.

*Mr. DURENBERGER. Thank you very much for the question,
and I will give you two brief reactions.
There are communities in this country where because of state efforts to provide universal coverage. Mine is one. You have heard
about Massachusetts. You can see a group of states in this country
that have gone the extra mile to finance access for as close to 100
percent of their population as you possibly can; and, so, in varying
ways we, have relied traditionally on the states to provide the initiative for financing access for people who are disadvantaged by income, by education, for whatever reason. Those states are on most
charts of health, access and so forth are going to be ahead of states
that have taken different courses, and have not chosen either
through the way they practice healthcare deliver or the way they
organize their systems or the way they finance them to accomplish
it.
One of the ways you can consider to broaden access to the financial insurance side of this, of course, is to think about it in terms
of income related subsidies for either private insurance or for some
other form of access. The transition to getting from here to there
would involve taking long-term care out of Medicaid particular
thing. But, the second, and maybe more important comment to
make, is about a hearing on cultural and other disparities, economic and other disparities today.
That same discussion is taking place in every community in this
country, and the link that organized medicine broke between public
health and medicine 80 years ago is now being reattached in many
of our communities. In Texas, for example, I can point to Parkland
Hospital in Dallas and some of the leadership there to involve the
communities. When the legislature is unwilling to provide the financing of access, the leadership at that very public, very challenged hospital, is out in the community, reaching out to the gang
leaders and other leaders to try to bring the community into the
delivery system.
One of the values of not-for-profit hospitals is the community
benefit tax exemption for contributing to bringing in the access, not
just through insurance, but access to services. It is happening in
many communities around this country and it is a wonderful thing
that its happening. We reconnect public health, personal responsibility and, you know, the insurance programs for medical care services and fostering that in some appropriate way.
Ms. TUBBS JONES. Thank you.
I would just put on the record another question about how do we
increase the availability of healthcare delivery personnel, nursing
being one of the huge things that one of the areas professions that
we were in such deep need for. One idea is that you dont have
time to give me the answer today, but I would be interested in
what you might think how we might address that issue.
*Mr. DURENBERGER. Well, in 28 seconds, I am going to tell
you to start financing the students, and stop financing the institutions that educate them. I mean, you look at where all the Medicare money is going, for example. It is going to large academic
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medical centers and they are overpaying for indirect medical education, benefits, and so forth.
My sort of conservative side says Id rather finance the consumer
of education than to continue to finance the establishment.
You are welcome.
Ms. TUBBS JONES. Thank you.
*Chairman STARK. Thank you.
Mr. Ramstad, would you like to inquire?
Mr. RAMSTAD. Thank you, Mr. Chairman.
Thank you for your excellent testimony, Senator. Thank you Mr.
Chairman for inviting this witness to lead off this important hearing. I dont think anybody frames the issues better than Senator
Durenberger.
Senator, you have often pointed out that Minnesota does a lot of
things right when it comes to healthcare delivery. We all know
that. We were recently ranked as the healthiest state in the nation.
We have the lowest rate of uninsured. We have a long history of
delivering high quality, efficient care at a low cost. Yet, as you
pointed out, as we all know on this Subcommittee, every Federal
program seems to punish Minnesota for doing the right thing.
We get low Medicare fee for service and Medicare Advantage reimbursement because of our history of low cost. I dont know how
many times I have copied your illustration comparing Dade County
vis-a-vis Hennepin County in my district. We cant use SCHIP
funds to cover children because we were already covering kids
through Minnesota Care before SCHIP was ever created. Our state
high risk pool for the uninsurable gets low Federal funding, because our state has done a good job of covering the uninsured.
How in your judgment can Federal incentives be realigned so we
are actually paying for quality and value instead of inefficiency and
utilization as you put it?
*Mr. DURENBERGER. Well, thank you for the question and
thank you for the self-serving comments about Minnesota. We
could say the same thing about Mr. McDermotts constituency, and
Ive said that about Mr. Kind and Mr. Camp. Theres probably others on this Committee that I am not aware of. The short answer
is we tried it already.
I mean we tried using what was then called the HMO and managed care to do our work for us, basically to identify all of the poor
quality areas that were just costing us a lot of money, and they
performed well. They continue to perform well.
The Virginia Mason Clinic, for example, in Seattle, is one of the
leaders in this country on efficiency and effectiveness, and issues
like that. Inter Mountain Healthcare is probably one of the best
places to go to get healthcare in this country. There are places in
the Chairmans district as we know, some of the Kaiser programs,
and so forth.
So, it isnt possible, Id say, for the Committee or the Subcommittee to start designating who do you like and who do you not
like. You almost need an intermediary to do that for you, and thats
why I make an argument for changing the rules and changing the
goals and the requirements for both public and private.
If you are going to pay extra money for private insurance to go
out there and find the most effective places to spend money, then
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you ought to do the same thing for traditional Medicare and enable
the doctors and the hospitals to be regarded for their outcomes and
their quality as well.
Mr. RAMSTAD. Well, first of all, I should thank you for being
less parochial than I am.
*Mr. DURENBERGER. Thats because Im here and you are
there.
Mr. RAMSTAD. Yeah, but I am not running for re-election, either.
[Laughter.]
*Mr. DURENBERGER. Somebody youll be just like me.
Mr. RAMSTAD. I mean dont we really have to get rid ofI
mean, theres not enough money in the system or the Federal
treasury for that matter to equalize things through the AAPCC formula. I mean, we really need a new system. Dont you agree?
*Mr. DURENBERGER. Yes. But the design of that system will
probably vary from one place to the other. I mean your tasks is to
reward quality. This is where Med-Pac was going, you know, with
bundling payments, with defining accountable care organizations.
Thats where some of the people in the professions are going with
the concept of medical home.
We had a regional medical home application under the 646 demonstration program. We had the entire region from Montana to
Wisconsin. The medical group at the University of Wisconsin was
part of it and a six-doctor group out in Western South Dakota was
part of it, just to demonstrate, if we had the authority to demonstrate it, from CMS, to demonstrate that paying for quality saves
money. Theres a variety of those ways that can be chosen, most
of which are going to relate to physicians.
Mr. RAMSTAD. Those criteria are much more important than
geographic criteria. Some have suggested moving to a regional system, but wouldnt we still have some of those same geographic in
equities?
*Mr. DURENBERGER. You have the same problems within
some of our systems that you have nationally. I mean, you can go
to one of the Fairview hospitals, or whatever it is in MinneapolisSt. Paul area, and you are going to find disparities there. Thats
why the physician becomes so important. Physician payment becomes important, and the Chairman has already pointed that out.
Mr. RAMSTAD. Thank you, Senator. Thank you, Mr. Chairman.
Mr. Becerra, would you like to inquire?
Mr. BECERRA. Mr. Chairman, other than to acknowledge the
Senator for all his work and to thank him for taking the time to
be here, I very much appreciate it and with that Mr. Chairman I
will yield back and say that I hope we are able to move forward
with some of the ideas that the senator has articulated and more
importantly just recognize it. More and more people are saying that
it is time to do something.
So, thank you for your testimony and thanks for being here.
*Mr. DURENBERGER. You are very welcome.
*Chairman STARK. Mr. Kind?
Mr. KIND. Thank you, Mr. Chairman.
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Just for the record, Senator Durenbergers testimony today is not

a paid advertisement on behalf of myself, Mr. Ramstad and Mr.
Camp. Although Im sure we are all nodding in strong agreement
with the statements and it is good to have you back, and it is good
to hear from you again.
I really appreciate the effort you have made too in reaching out
with so many of the providers in my own congressional district to
have this type of conversation ongoing. I couldnt agree with you
more that there is going to be tremendous savings had within the
Medicare system if we can get to out outcome or performance-based
type of reimbursement system. But that, of course, will follow the
huge investment in HIT which will be important in establishing
the standards and inoperability and everything that is taking place
right now.
I dont know if you have had an opportunity to pick up Shannon
Bromleys book, Overtreated, at all. If you have read that, many
people have. Her basic thesis is that there is huge disparity, obviously, in utilization, and that is backed up with the Dartmouth
Atlas study every year. If we look at how the utilization is taking
place from region to region, there could be tremendous cost savings.
One of the points that she made, I had a chance to talk to her
a little bit more about, is the crucial, six-months, end of life care,
and the tremendous spending that goes on there. Her point was if
we get back to listening to the patient a little more closely, because
again there is vast differences in utilization and what type of hospital stay is recommended or tests that are ordered in those final
months or weeks of life.
There could be tremendous cost savings there, not through a
major reform with healthcare treatment, but just by listening to
the patient. She says, invariably, patients dont want to be in the
ICU for weeks and weeks and weeks and having multiple tests ordered and multiple drugs administered, and that generally patients
are more conservative than a typical provider and they just like
pain management and have a chance to be at home in those final
days of life.
If we get back to that, listening to the patient, there could be not
only greater satisfaction with the patient and the family but also
a tremendous change in the healthcare system. One of the bills
that Ive been working on through a period of years, and you know
it modeled closely what you were advocating when you were still
serving in the Senate, is trying to set up that national purchasing
pool.
Of course, we have had the ongoing debate about associated
health plans and Federal preemption of State mandates; but, I also
agree with you that we do need a set of national rules, national
standards.
My question to you is how do we get there? What would the process look like? One of the things I have been toying with in the legislation would be a small business and family farm health act modeled after the Federal employee purchasing pool concept, because
when you look at the 47 million uninsured, most of them are working Americans, either in small business or on farms, who just cant
afford to provide any healthcare coverage.
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But part of the key to the success, obviously, is getting away

from the 50 different rules and mandates that are established from
state-to-state, which would make it easier for the plans to come in
that and be able to compete in the national pool. One of the ideas
I had forming this commission perhaps represented strongly by the
various state health insurance commissioners to see if they can
reach some type of agreement on what minimal standards should
look like and therefore have a national template.
I dont know if you have any thoughts, or Im sure you do.
*Mr. DURENBERGER. Right. Just two comments on what you
said: first with regard to the role of the patient in the last 6, 12,
and 24 months of life, which Dr. Wennberg has demonstrated for
us. Jack Wennberg has always been focused on the relationship between the doctor and the patient. He started with shared dialog.
He moved to all of this data that Dartmouth grinds out; and, today,
he sent a recommendation to you to consider changing the legal
standard for liability in healthcare to informed patient choice.
Informed patient choice means there is an obligation on the doctor to access all available information that relates to that patients
condition, to provide that to the patient, and then have the patient
make the choice and take the responsibility for that choice. On the
second point, Jeff Bingaman from New Mexico, and I think it was
91 or 92 introduced the health insurance purchasing cooperative
bill.
Unfortunately for us that got picked up in Mrs. Clintons health
plan, and like so many good things that were in Mrs. Clintons
health plan, it died an unfortunate death. Nobody brings it up anymore except folks who want to talk about association health plans,
which is a very different approach. So, I would recommend to you
to look at that, Health Insurance Purchasing Cooperative, because
it is basically a local way in which to do large group purchasing
and it serves the individual and the small group market as well.
Mr. KIND. Just to stop you there, real quick. In fact, weve got
some pilot programs taking place in Wisconsin right now targeting
family farmers throughout the state. It was the health insurance
cooperative, and allowing them to pool together, and it has been
tremendously popular and just a backlog of waiting lists developed
right now. May just decided to participate. There are like six or
seven plans right now participating in this program, and may just
decided to participate as well.
Thank you, Senator. It was good to hear from you.
*Mr. DURENBERGER. You are welcome. Thank you, very much.
Mr. KIND. Thank you, Mr. Chairman.
*Chairman STARK. I want to thank the gentleman from Wisconsin, but I do want to suggest a political implication.
When he starts talking about this end of life savings, youve got
to remember that Senator Durenberger and I are very concerned
about turned indicators, satellite radio, two-tone paint, little motorized scooters; and, if I thought you were going to take that away
from us.
Mr. KIND. Its a dangerous subject, Mr. Chairman.
*Chairman STARK. Id tread carefully there.
Mr. Johnson, would you like to weigh in on that issue?
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Mr. JOHNSON. Yeah, Id love to have one of those motorized

deals.
[Laughter.]
Mr. JOHNSON. Thank you for being here Senator.
Let me just ask one thing. It seems to me the companies that
provide insurance for their employees do it with pre-tax dollars,
and yet individuals or small companies that cant provide insurance have to buy it with after-tax dollars. This Committee has an
opportunity to fix that, and I wonder what your thoughts are on
that subject.
*Mr. DURENBERGER. I think you ought to fix it and there are
proposals around.
We talked earlier in the morning about the proposal that Senator
Wyden and Senator Bennett had put forward. We talked about
President Bushs proposal, which is an excellent one. Thirty years
Ive been asking the same question youve been asking and we
havent gotten to the point of changing it. I think in my opinion,
these are two good ways to change it.
One of the things I dont agree with in some of the proposals is
getting rid of the employer. I think the employer is a vital part of
the purchase and whole lot of other things. This whole effort to go
to health fitness and health management and helping people become more productive persons, and so forth, is really being driven
by employer involvement in the healthcare system.
You know, everybody walks around with no contribution from
their employer. Its too expensive to get any kind of coverage unless
you can keep those people involved.
Mr. JOHNSON. No, I think you are on target.
Thank you sir, I appreciate you being here.
Thank you, Mr. Chairman. I yield back.
Mr. Emanuel, would you like to inquire?
Mr. EMANUEL. Thank you, Senator.
*Chairman STARK. You are welcome.
Mr. EMANUEL. Thats all I got to say. Actually, I do want to
pick up with Ron and on the end of life.
I mean, if you look at healthcare, five Presidents have tried universal care: Truman, Johnson, Nixon, Carter, and Clinton. Were 0
for 5, but weve universalized care for segments of the population:
Medicare, Medicaid, Veterans. SCHIP was an attempt at that.
You are always torn between trying to just do the system and get
it right, because I want to associate it myself with what your comment is. Theres a lot of money in the system. We spent $2 Trillion
on 300 million people and have life expectancy of 73. The EU,
which is similar population, spends a trillion dollars yes and has
life expectancy of 75.
If you were doing this smartly, you would just say we aint
gettin our bang for the buck, if thats one measurement. Im always torn between just doing the whole thing, hopin for hope, that
the six times a magic number, we are then taking steps here that
you have outlined. One is the end of life. We do spend a preponderance of dollars on the last six months of life.
Two, something Dave and I are working on, which is getting people earlier in life, that is early retiree, 55, 65, participating in a
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chronic illness management before they get into Medicare, and they
get reduced co-pays for every illness or year they spend, whether
its smoking, diabetes, heart blood, etcetera.
So, you reward the right type of behavior, and thats one option
to look at. The other thing is to invest in the IT and get to the national standards you talked about and then allowing people to compete once that kind of floor and boundaries were set up.
Based on what youve seen in the history of reform where it has
succeeded and where it hasnt, what would guidance be given the
next congress and the next presidents. Go for the whole thing, or
try to make significant reforms, kind of early retiree buy-in to
Medicare and then alter that? I mean, take kind of the piece-meal
approach, or go for the Hail Mary pass and see if this time is different than the last 50 years.
*Mr. DURENBERGER. Back in 1988 long-term care financing
was the big political issue, and Claude Pepper wanted to create a
commission to deal with long-term care. Danny Rostenkowski said
right after we lost the Medicare Catastrophic Act, a step in the direction of making some sense out of the Medicare program, No.
Its got to be a commission for long-term care and everything else.
Out of that came the employer mandate. It did not come to the
answer to your question. We came with a solution. The Republicans
voted against it, but the AMA person and the Democrats including
Pete voted for it. Excuse me, Mr. Chairman. Out of it came the employer mandate, which was, you know, it was a solution or an answer, but it wasnt the answer to your question.
Weve always had this kind of debate between cost containment.
What belief about 2009 is the importance of the President. It
doesnt make any difference whether its Republican, Democrat, or
which Democrat. It is critical that the President begin by giving all
Americans a view of what is possible in a country as rich as ours,
as varied as ours, with the entrepreneurship that we see in
healthcare and medicine.
With a vision like that, people like you all can accomplish a lot.
Because with no vision, the status quo, you have, the old business
of what is one persons income is somebody elses cost, or the reverse of that. So, I think leadership right now is the biggest factor
in getting to all this other stuff.
Theres a lot of things we can talk about, but unless the people
are on board this thing, you know. You arent going to make it or
you are going to lose it at some point, so that leadership issue is
my answer.
Mr. EMANUEL. Id add one point and then Ill end, Mr. Chairman.
The difference between the 90s and now, vis-a-vis household income, where we saw a $6,000 rise in the nineties and an $1,100
drop in median household income, all related to healthcare. In fact,
Americans got a raise in the last six years. The problem is it all
went to the health insurance industry.
When you get healthcare costs for a family of four going from
6,000 to 12,000, median income is dropping by 11,000. They got a
raise; it just went to the healthcare system. It didnt go to their
bottom line to meet other needs. Unless we do something about
this, we just double it again.
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Thank you.
*Mr. DURENBERGER. Youre welcome.
*Chairman STARK. Again, Dave, thank you very much. We are
going to take you up on your generous offer to help us as we grind
through this next year.
I appreciate you sharing your thoughts with us today.
*Mr. DURENBERGER. Thanks to all of you, Mr. Chairman.
*Chairman STARK. We will now in just a moment, well go off
the record for about 10 or 12 minutes and observe a video. Perhaps
while we are doing that, if the second panel would like to come on
up, I think you will be able to see the video from the witness stand.
Why dont we just start the video.
[Video.]
*Chairman STARK. Without, we will go back on the record. We
have a print script of that, and without objection, I ask that we put
the script in the record.
[A transcript of the video follows:]
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*Chairman STARK. We will proceed with our second panel, and

they include Dr. Diane Rowland, who is familiar to all of us. Diane
has testified many times. She is vice president of the Kaiser Family Foundation, which I am told to remind people has nothing to
do with Kaiser Permanente in my district, which provides hundreds of thousands of people with medical care.
Dr. Ayanian, who is a professor of medicine and healthcare policy
at the Harvard Medical School.
29
Dr. Michael J. OGrady, who is a senior follow of the National
Opinion Research Center at the University of Chicago.
Stan Brock, who we saw displayed just a few minutes ago; and
Stephen Finan, the associate director of policy for the American
Cancer Society.
Each of you have submitted testimony which will without objection appear in the record in its entirety and we will ask you each
to summarize or expand upon your testimony in any manner that
you are comfortable.
We will start with Dr. Rowland.
STATEMENT OF DIANE ROWLAND, SC.D., EXECUTIVE VICE
PRESIDENT, KAISER FAMILY FOUNDATION
*Ms. ROWLAND. Thank you, Mr. Chairman, and Members of

the Subcommittee.
I am pleased to be here today and will try to put some numbers
to go with the very human experience you just saw in the video.
Health insurance coverage can provide a valuable lever to help
gain access to primary and preventive healthcare services, as well
as piece of mind and financial security for many facing serious
healthcare problems. Yet, our latest statistics show that nearly 47
million Americans were without health insurance coverage in 2006.
Whether or not one receives healthcare coverage in the U.S.
today depends on a variety of factors: age, income, workplace, and
state of residence. For those over age 65 and those with permanent
disabilities, Medicare provides health insurance protection. Slightly
more than half of all Americans receive employer-based coverage
and about five percent purchase coverage through the non-group or
individual market.
Together, Medicaid and SCHIP play a critical role for the low income population covering 29 million children and 24 million nonelderly adults and people with disabilities. This leaves, however,
one in six Americans, 16 percent of our population, uninsured.
The 47 million uninsured Americans include 9 million children
primarily coming from low-wage, working families. 80 percent of
the uninsured are from families with a full- or part-time worker
and two-thirds have incomes below 200 percent of poverty or
roughly $40,000 for a family of four.
Most work in places where health insurance is not offered
through their job, and the rising cost of health insurance premiums, now over $12,000 for a family, means that if coverage is
offered, the employees share of the premium is becoming more and
more unaffordable for working families.
Take for example one of the families participating in our study
on family budgets. Sam is uninsured and has just gotten a job in
a home improvement store. His wife, Carmen, is at home with their
three children. Once he becomes eligible for employer-sponsored
coverage, he will be required to pay $400 per month in his share
of the insurance premium, which is a quarter of his $1600 monthly
take-home pay. Today, nearly 90 percent of the family spending already goes to basic necessities, leaving little room in their budget,
roughly $150 a month, for additional spending that could be used
for healthcare or to pay deductibles and cost sharing for the health
plan.
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Yet, having health insurance matters. It affects how and when

people use the health system, and ultimately their health and financial well being. The uninsured are much more likely to postpone or forego care due to costs than those with coverage. When
they seek care, they are often billed full charge and left to pay
what they can, sometimes accumulating large medical debts that
can lead to bankruptcy.
Leaving 47 million Americans without health coverage affects not
only the uninsured, but also puts a growing burden on our
healthcare system and adds additional strain on the economy. In
2006 it is estimated that some 22,000 Americans died prematurely
as a consequence of being uninsured, and the lost productivity of
the uninsured had an annualized, economic cost of between 100
and 200 billion dollars.
As the availability, affordability, and scope of insurance decrease,
both insured and uninsured Americans are now dealing with budget-consuming medical bills and debt. In 2004 some 45 million
Americans were in families that had a high financial burden for
healthcare, i.e. spending more than 10 percent of disposable family
income on healthcare services and insurance premiums. This financial burden provides a measure of underinsurance.
Individuals at high risk for these levels of financial burden include those 55 to 64 who are not yet eligible for Medicare, those
in fair or poor health, and especially those with diabetes, stroke,
heart disease, and other chronic illnesses. It is clear that for many
health insurance alone is no longer a guarantee of financial protection from the cost of healthcare and financial stress when illness
strikes.
Health insurance is an important source of financial security for
families when illness strikes and helps to promote access to
healthcare services that can often stave off more serious illness.
As Congress moves forward to address the growing uninsured
population and the impact of rising healthcare costs for Americas
families, promoting improved access to affordable healthcare and
adequate health coverage for all Americans, will be an important
but challenging objective.
I appreciate the opportunity to testify before you today and will
welcome your questions at the conclusion of the panel.
Thank you.
[The prepared statement of Diane Rowland follows:]
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Prepared Statement of Diane Rowland, Sc.D., Executive Vice President,

Kaiser Family Foundation
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49
*Chairman STARK. Dr. Ayanian?
STATEMENT OF JOHN Z. AYANIAN, M.D., PROFESSOR OF MEDICINE AND HEALTH CARE POLICY, HARVARD MEDICAL
SCHOOL
*Dr. AYANIAN. Thank you, Chairman Stark, Representative

Camp, and the Members of the Subcommittee on health for inviting
me to testify on the health consequences for Americans who lack
insurance and on the persistent problem of racial and ethnic disparities in the U.S. healthcare system. These topics are of vital importance to our Nation.
My name is John Ayanian, and I am a professor of medicine and
health care policy at Harvard Medical School. Over the past 16
years, I have studied the adverse effects Americans experience
when they lack health insurance, as well as racial and ethnic disparities in healthcare.
From 2000 to 2004 I served on the Institute of Medicine Committee on the Consequences of Uninsurance. I am also a practicing
physician at Brigham and Young Womens Hospital in Boston,
where I have seen first-hand how patients lives are affected when
they lose their insurance.
Uninsured Americans are much more likely than insured Americans to avoid seeing a doctor because of the cost. Among those in
poor health, 50 to 70 percent of uninsured adults go without needed medical care, compared with only about 20 percent of insured
adults in poor health. Uninsured adults are less likely to receive
high quality primary care and important preventive services, such
as cholesterol testing and mammograms. As a result, they are often
unaware of their major health risks, such as high blood pressure,
high cholesterol, and those with curable cancers such as breast
cancer or colon cancer, are diagnosed at a more severe stage of disease.
Because of their unstable and sporadic medical care, uninsured
adults have a much greater risk of dying at younger ages than insured adults. The Institute of Medicine has estimated that 18,000
Americans died prematurely in 2000 because they lacked health insurance. Sadly, many of these premature deaths occur among people with conditions that are readily treatable, including high blood
pressure, HIV infection, and breast cancer.
The instability of insurance coverage in the United States has especially harsh effects for adults who are uninsured or erratically
insured between ages 55 and 64. About four million adults in this
age group were uninsured in 2006. For those who have lost their
coverage, finding insurance in the individual market is often prohibitively expensive, if not impossible, when they have pre-existing
medical conditions.
As a physician, I see that people who receive good medical care
in their 50s and early 60s live longer and healthier lives; however,
recent research by our group and others has shown that the health
of uninsured adults declines more rapidly in middle age than the
health of insured adults. These declines in health are associated
with a 40 percent greater risk of death for uninsured adults. This
risk is concentrated among uninsured adults with high blood pres-
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sure, diabetes or heart disease, precisely the conditions for which

we know good medical care makes a difference.
But the evidence on this topic is not all grim. If uninsured adults
survive to age 65, Medicare improves their access to physicians,
medical tests and effective treatments. In our most recent research,
we have found that differences in health between uninsured and
insured adults with cardiovascular disease or diabetes at age 65
are reduced by half after five years of Medicare coverage. Our research also shows that after these uninsured adults gain Medicare
coverage, they experience fewer heart attacks, less heart failure,
and less severe chest pain.
The status quo masks hidden cost to the Medicare Program when
millions of uninsured adults enroll in Medicare. Uninsured adults,
particularly those with chronic medical conditions, have fewer visits to physicians and fewer hospitalizations than insured adults in
similar health before age 65. After becoming eligible for Medicare,
uninsured adults have a rapid increase in physician visits and hospitalizations that persists for at least seven years after age 65.
Their care in the Medicare Program is thus more costly, because
they reach age 65 in worse health and have more immediate and
expensive medical needs than if they had been insured and welltreated in their fifties and sixties. If all adults in this age group
had insurance coverage, the cost of covering them could be off-set
by better health and potential savings for the Medicare program.
The instability of insurance coverage in the U.S. is also an important factor contributing to racial and ethnic disparities in
healthcare and health outcomes. Rates of coverage very widely
across racial and ethnic groups in the United States with the highest rates of uninsurance among African Americans, American Indians, and Hispanic Americans. Without consistent insurance coverage, many minority Americans receive fewer preventive services
and less effective treatment for many medical conditions.
In the latest national healthcare disparities report, three key
themes have emerged since 2001. First, overall disparities in
healthcare quality and access are not getting smaller. Second, some
progress is being made, but many of the biggest gaps in quality
and access have not been reduced. Third, the problem of persistent
uninsurance is a major barrier to reducing disparities.
In conclusion, as you consider the instability of health coverage
in the United States, the financial challenge of achieving universal
coverage may appear daunting, but the human and economic consequences of the status quo are substantial. To put it bluntly, uninsured Americans live sicker and die quicker because they receive
too little medical care that often comes too late to prevent avoidable complications and death.
Thank you for inviting me to speak with you today about this important problem for our Nation.
[The prepared statement of John Ayanian, M.D. follows:]
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Prepared Statement of John Z. Ayanian, MD, Professor of Medicine and

Health Care Policy, Harvard Medical School, Boston, Massachusetts
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Dr. OGrady?
61
STATEMENT OF MICHAEL J. OGRADY, PH.D., SENIOR FELLOW,
NATIONAL OPINION RESEARCH CENTER, UNIVERSITY OF
CHICAGO
*Mr. OGRADY. Mr. Chairman, Members of the Subcommittee,

my name is Michael OGrady, and I am a senior fellow at the National Opinion Research Center at the University of Chicago.
Previously, I was the assistant secretary for planning and evaluation at the Department of Health and Human Services. I have
also served on the professional staff of the Senate Finance Committee, the Joint Economic Committee, and the Congressional Research Service. In all of those roles I have studied the problem of
the uninsured.
First slide, please?
[Slide.]
*Mr. OGRADY. An important point I urge you to keep in mind
is the uninsured are not one single population. Consider the following: more than half of the uninsured who are of working age are
full-time workers. It is not only the unemployed who lack insurance.
Second, those who work in small firms are far less likely to have
coverage than those in the larger firms.
Third, the uninsured are found at all income levels, but most notably the poor and the near poor.
Four, the uninsured are found at all ages, except for seniors, because of Medicare. Youth, 18 to 24, are the least likely to be insured, and sometimes by their own choice.
Hispanics are the last likely to have insurance, followed by
blacks, Asians, and then whites. About 20 percent or 10 million
people of the uninsured living in the United States are not U.S.
citizens.
Other than being uninsured, these individuals often have very
little else in common. Designing and evaluating proposals to expand health insurance coverage is remarkably complex. It is made
even more difficult in the event that budget constraints require
tough choices about who will be assisted in what way.
I offer two suggestions. First, consider coverage options along
several key policy dimensions. Second, consider the mix of coverage
tools for providing coverage to this very diverse population.
Next slide please.
[Slide.]
*Mr. OGRADY. The first dimension I recommend is the desire
for coverage. It can be broken down into at least three groups.
First, people who are desperate for coverage, such as the chronically ill and are willing to pay almost any price if it was only
available. Second, those who seek coverage, but are priced out of
the market. They just cant afford it. Third, people who do not seek
coverage, even if it is available and affordable.
Traditional definitions of universal coverage: provide coverage to
everyone, regardless of an individuals desire to be covered. For example, the single, healthy, young adult who isnt interested in
health coverage at this point in life. On the other hand, those following a phased approach might rank some groups of the uninsured as a higher priority than others. For example, they may be
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more concerned about an uninsured, 55-year-old diabetic with complications than a young, healthy, recent college graduate.
The second dimension Id suggest is time without coverage. The
data on coverage indicates that the longer a person is uninsured,
the longer the potential gap in needed services. In this example,
higher priority might be given to those uninsured for the longest
period of time. For example, more than two years.
The third dimension is citizenship status. There may be neither
the political consensus nor the budget to extend coverage to all the
people living in the United States. A likely scenario might have
coverage first off to citizens before coverage would be considered for
non-citizens, either legally or illegally in the country. This chart
provides a visual way to think about the interactions among the
three policy dimensions Ive just outlined.
People falling into the highest priority on all three dimensions
are assigned the highest overall priority of one. While policymakers
may differ on the assignment of priorities or on the dimensions
they wish to consider, this provides a common framework on which
to base decisions. In addition to those policy dimensions, different
policy tools may be needed to meet the needs of these very different
subpopulations.
For small business with moderate income employees, the successful solution might include access to both purchasing pools, so they
have the same options as larger firms, and an improved tax advantage to help them offset the cost of coverage. For the uninsured
without employment-based coverage, it could be made more affordable if they had access to the same tax advantages as employerbased coverage.
For immigrants, legal or illegal, that same combination of incentives would probably not be as nearly as effective. Also, especially
for the illegal immigrants, it would seem unlikely that expanded
government programs would prove effective, asking illegal immigrants to interact with government intake and eligibility officials is
unlikely to generate much trust or compliance.
This subpopulation may be better served through a clinic approach, which insures care, if not coverage, and is closer to the
model of care found in many of their home countries. Policymakers
will need to carefully consider the circumstances of the subpopulation involved to judge which type of design will be the most successful. The systematic examination of the composition of the uninsured, a prioritization of those who receive insurance assistance,
and a review of the mix of tools available to help the uninsured
gain access to health care will prove useful in shaping a scientifically sound and viable policy for the future. Thank you.
[The prepared statement of Michael J. OGrady follows:]
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Prepared Statement of Michael OGrady, Senior Fellow, National Opinion

Research Center, University of Chicago, Chicago, Illinois
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*Chairman STARK. Thank you very much, doctor.

Mr. Brock, what can you add to the wonderful program, which
we just viewed? Please.
79
STATEMENT OF STAN BROCK, FOUNDER AND VOLUNTEER DIRECTOR OF OPERATIONS, REMOTE AREA MEDICAL, KNOXVILLE, TENNESSEE
*Mr. BROCK. Ill try. Thank you, sir.

Remote Area of Medical, often referred to the acronym, RAM,
was formed in 1985 as a tax-exempt 501(c)(3) publicly supported
organization headquartered in Knoxville, Tennessee. Its intent was
to provide airborne medical and veterinary relief for the Wapishana
indians, with whom I had lived for many years in a remote area
over the upper Amazon. However, observations at our U.S. base in
the heart of Appalachia revealed a substantial need for RAM free
services here at home. The need is massive and it touches all regions of America, both rural and urban. Its not limited to the
homeless, unemployed, and uninsured. It affects the working class
and those who have insurance. Health care in America has become
a privilege of the wealthy and well-insured.
More than 15 percent of Americas population are uninsured, and
there are millions more who have insurance inadequate to meet the
needs of a catastrophic medical event or visits to the dentist or eye
doctor.
The RAM experience in hundreds of thousands of cases proves
huge numbers of Americans cannot afford routine dental care and
simply neglect their teeth. RAM data showed that our volunteer
dentists extract an overwhelming number of teeth that are beyond
repair. People tell us they face thousands of dollars of dental work,
and when we look in their mouths, we see cases as bad as any discovered among the Amazonian tribal groups.
The state of vision care among those who visit RAM clinics is no
better. They cant afford an eye exam and if they had one, cant afford the prescription glasses. No wonder hundreds, sometimes a
thousand people line up throughout the night before a RAM-free
clinic in an effort to get their teeth fixed and obtain a free pair of
glasses from us.
Services for children under the age of 18 usually are covered by
state programs, but access can be difficult. Toping the list of reasons is government reimbursements are too low, and paperwork too
cumbersome to make it worthwhile.
Once people transition into adulthood, they are on their own for
dental and vision care, unless theyre able to pay large insurance
premiums. I received a call last Sunday from a 38-year-old working
mother of four in Kentucky. All five of the family have serious dental problems. She has insurance through her employer, but it has
a $50 deductible, and when the plan pays, she has to cover an
unaffordable 20 percent co-payment. Her 17-year-old needs his wisdom teeth extracted, but the plan does not cover the $700 for the
anesthesia. The mother needs her own teeth extracted so she can
get dentures. Oh, and the family cat needs to be spayed. I told her
to come to the RAM clinic at Lincoln Memorial University at the
end of May and would fix everybodys teeth, and a RAM volunteer
vet would spay the cat, all free.
Why does the United States, the richest country on our planet,
have a health care system ranked No. 37 out 190 countries by the
World Health Organization? We have the most advanced technology accessible only to those who can afford it.
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Americas poor and the not-so-poor, who have some type of insurance are suffering debilitating pain and health risk from diseased
teeth and are handicapped with vision problems that are correctable, but not affordable.
When Britain was at war in 1941 the government realized that
they needed a national health care system, and in 1944 gave the
minister of health and Aneurin Bevan a mandate to develop it. Im
not advocating that the United States follow Britain, France, Canada, Germany, or any other developed country which has some
form of national health care system; however, I am convinced that
the RAM experience with the hundreds of thousands of patients we
have seen that America does need to provide free care for the millions who cannot afford it, and free dental and vision care for the
adults must be included.
In closing, I would like to stress that a great impediment to providing free care in this country is that willing volunteer health care
providers holding licenses in one state are not allowed to provide
free care in another.
Tennessee changed this in 1995 with the enactment of the Volunteer Health Care Services Act. Under that law, any charitable organization can bring volunteer medical workers and vets licensed
anywhere in the U.S. into Tennessee to provide free care. House
concurrent resolution No. 69 was introduced to Congress in 1997
to encourage national adoption of the Tennessee model. To our
knowledge, it never got out of Committee. If practitioners were allowed to cross state lines to provide free care for those in need and
had protection from frivolous malpractice suits, the system of free
care that RAM has developed and proven throughout all these
years, could be replicated throughout America.
Id like to thank the Committee for inviting me today, and thank
you, CBS, 60 Minutes, for dramatically focusing on this national
problem.
[The prepared statement of Stan Brock follows:]
Prepared Statement of Stan Brock, Founder and Volunteer Director of
Operations, Remote Area Medical, Knoxville, Tennessee
Remote Area Medical, often referred to by the acronym, RAM, was formed in
1985 as a tax exempt 501c3 publicly supported organization headquartered in Knoxville, TN. Its intent was to provide airborne medical and veterinary relief for
Wapishana Indians with whom I had lived for many years in a remote area of the
upper Amazon.
However, observations at our U.S. base in the heart of Appalachia revealed a substantial need for RAM free services here at home. The need is massive and it touches all regions of America both rural and urban. It is not limited to the homeless,
unemployed and uninsured. It affects the working class and those who have insurance. Health care in America has become a privilege of the wealthy and well-insured.
More than 15 percent of Americas population are uninsured and there are millions more who have insurance inadequate to meet the needs of a catastrophic medical event or visits to the dentist or eye doctor.
The RAM experience in hundreds of thousands of cases proves huge numbers of
Americans cannot afford routine dental care and simply neglect their teeth. RAM
data show that our volunteer dentists extract an overwhelming number of teeth that
are beyond repair. People tell us they face thousands of dollars of dental work and,
when we look in their mouths, we see cases as bad as any discovered among the
Amazonian tribal groups.
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The state of vision care among those who visit RAM clinics is no better. They cannot afford an eye exam and, if they had one, cannot afford the prescription eyeglasses.
No wonder hundredssometimes a thousandpeople line up throughout the
night before a RAM free clinic in an effort to get their teeth fixed and obtain a free
pair of eyeglasses from us.
Services for children under the age of 18 usually are covered by state programs,
but access can be difficult. Topping the list of reasons is government reimbursements are too low and paperwork too cumbersome to make it worthwhile. Once people transition into adulthood, they are on their own for dental and vision care unless
they are able to pay large insurance premiums.
I received a call last Sunday from a 38-year-old working mother of four in Kentucky. All five of them have serious dental problems. She has insurance through her
employer but it has a $50 deductible and, when the plan pays, she has to cover an
unaffordable 20 percent co-payment. Her 17-year-old needs his wisdom teeth extracted but the plan does not cover the $700 cost for the anesthesia. The mother
needs her own teeth extracted so she can get dentures. Oh, and the family cat needs
to be spayed. I told her to come to the RAM clinic at Lincoln Memorial University
at the end of May and we would fix everybodys teeth and a RAM volunteer veterinarian would spay the catall free.
Why does the United States, the richest country on our planet, have a health care
system ranked number 37 out of 190 countries by the World Health Organization?
We have the most advanced technology accessible only to those who can afford it.
Americas poor, and the not-so-poor who have some type of insurance, are suffering debilitating pain and health risk from diseased teeth and are handicapped
with vision problems which are correctable but not affordable.
When Britain was at war in 1941, the Government realized they needed a national health care system and in 1944, gave the Minister of Health, Aneurin Bevan,
a mandate to develop it. I am not advocating that the United States follow Great
Britain, France, Canada, Germany or any other developed country which has some
form of national health care system. However, I am convinced by the RAM experience with the hundreds of thousands of patients we have seen that America does
need to provide free care for the millions who cannot afford it and free dental and
vision care for adults must be included.
In closing, I would like to stress that a great impediment to providing free care
in this country is that willing volunteer health care providers holding licenses in
one state are not allowed to provide free care in another state. Tennessee changed
this in 1995 with the enactment of the Volunteer Health Care Services Act. Under
that law, any charitable organization can bring volunteer medical workers and veterinarians licensed anywhere in the United States into Tennessee to provide free
care. House Concurrent Resolution No. 69 was introduced to Congress in 1997 to
encourage national adoption of the Tennessee model. To our knowledge, it never got
out of committee.
If practitioners were allowed to cross state lines to provide free care for those in
need, and had protection from frivolous malpractice suits, the system of free care
that RAM has developed and proven throughout all these years could be replicated
throughout America.
f
*Chairman STARK. Thank you, Mr. Brock.

Mr. Finan, would you?
STATEMENT OF STEPHEN FINAN, ASSOCIATE DIRECTOR OF
POLICY, AMERICAN CANCER SOCIETY
*Mr. FINAN. Good morning, Mr. Chairman, Mr. Camp, and distinguished Members of the Committee. Thank you for inviting the
American Cancer Society year to testify today. The American Cancer Society is a nation-wide, community-based voluntary health organization dedicated to eliminating cancer. The Society and its sister advocacy organization, the American Cancer Society Cancer Action Network, are working together to elevate the issue of access
to care and its impact on cancer patients and their families.
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I would like to begin my discussion of inadequate health insurance by sharing Doreens story with you. Doreen, a 57-year-old
former medical office receptionist, was diagnosed with stage IV
breast cancer in the fall of 2005. The cancer spread to her spinal
column, liver, lungs, and left femur.
Doreens husband is a retired New York policeman, and she has
health insurance through his retirement plan. Her plan limited her
to thirty outpatient visits a year, a number Doreen quickly exceeded. Her plan had other restrictions as well, including a limit that
initially prevented her from getting a stent for her chemotherapy.
She was ultimately allowed to have the procedure for the stent, but
only after a delay. She also learned of some of these restrictions
from her plan, only after she had exceeded them. As a result, in
less than a year Doreen and her husband owed more than $100,000
to the hospital for various treatments. These significant restrictions
resulted in delays in treatment and great emotional stress that further jeopardized her health.
As defined by the Society, adequate health insurance insures
timely access to the full range of evidence-based health care services necessary to maintain health, avoid disease, overcome acute
illness, and live with a chronic condition. These services include the
complete continuum of evidence-based cancer care for preventing
treatment and support needs, including clinical trials.
Doreen is one of 16,000 people who have called the American
Cancer Society because she had problems with her private health
insurance. The primary problems we have identified among those
with inadequate health insurance include annular life-time dollar
limits or restrictions on necessary services, like Doreen experienced; no or limited coverage within the plan for out-of-network
specialists, limiting the patients ability to access care; no or limited coverage within the plan for prescription drugs.
But the biggest single issue we see is related to cost sharing.
Nearly two-thirds have trouble meeting deductibles, paying their
co-insurance for prescription drugs and treatment, and covering
costs for necessary services not covered by their plan.
Let me illustrate the cost-sharing problem with Marthas story.
Martha, a 63-year old retired woman, was diagnosed with stage I
breast cancer in November of 2007. Marthas cancer treatment included surgery followed by radiation. Martha has health insurance
but the policy is inadequate. For example, the insurance paid
$100,000 of a $10,000 hospital bill for her surgery. Her accumulated deductibles and co-pays for various medical services have left
her with $28,000 in medical debt and the hospital is threatening
her with a collection agency.
Co-pays and deductibles may be reasonable or routine care, but
when a person has a serious medical condition like cancer, the accumulated expenses can become very significant. Today Martha is
struggling with keeping her head above water financially.
Some of the most disheartening kinds of stories we hear are from
people who have had to interrupt their treatment because of inadequate coverage. We logged nearly 900 such cases last year. Please
think about this for a minute. These are people who have stopped
treatment for a deadly disease because they cannot afford to pay
for additional necessary care.
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For them a decision to delay treatment is often a life-or-death decision, but if they proceed, they risk breaking themselves and their
families financially.
More formal studies support our experience. For example, nearly
1 in 3 cancer patients who are insured have out-of-pocket costs that
exceed 10 percent of their family income. More than 1 in 9 cancer
patients with insurance have out-of-pocket health costs that exceed
20 percent of their family income. Twenty percent of cancer patients with insurance use all or most of their savings when dealing
with their financial costs of cancer. And 10 percent of medical
bankruptcies are from people who have had a cancer diagnosis.
The problem of under-insurance is very difficult to measure, but
we know the problem is very real for many cancer patients. This
should be a concern to everyone, because cancer can touch us all.
Slightly less than 1 in 2 men will have cancer in their lifetime, and
slightly more than 1 in 3 women will.
Although Ive focused on the issue of adequacy of insurance, the
American Cancer Society is also greatly concerned about the problems of the uninsured which the other witnesses this morning have
addressed. We believe that the science and the knowledge exist to
provide quality care for all Americans, but we must work together
to restructure our coverage and delivery systems to achieve that
goal. Your hearing today is a valuable contribution to that discussion.
Thank you, Mr. Chairman.
[The prepared statement of Stephen Finan follows:]
Prepared Statement of Stephen Finan, Associate Director of Policy,
American Cancer Society
Good morning, Mr. Chairman and distinguished Members of the Committee. My

name is Stephen Finan, Associate Director of Policy for the American Cancer Society. The American Cancer Society is a nationwide, community-based, voluntary
health organization, dedicated to eliminating cancer as a major health problem by
preventing cancer, saving lives, and diminishing suffering from cancer through research, education, advocacy, and services.
Thank you for inviting the American Cancer Society to testify. As you may know,
ACS, and its sister advocacy organization the American Cancer Society Cancer Action Network (ACS CAN) are working together to elevate the issue of access to care
and its impact on cancer patients and their families by educating the public and
policymakers about problems in the health care system and the need for change. We
look forward to working with this Subcommittee as you work toward solutions to
improve and expand access to quality care.
This morning you are listening to other speakers on the panel describe the problem of availability of health insurance. Although we fully share that concern, I
would like to take this time to shed light on the under-appreciated, and at times
overlooked, problem of adequacy of insurance. I would like to paint a pictureall
too common in Americaof how cancer patients and survivors with inadequate insurance face barriers and financial burdens in getting the quality health care they
need to fight their dreadful disease.
Doreens Struggle With Inadequate Insurance Coverage
Let me begin our discussion of inadequate insured by sharing Doreens story with
you. Doreen, a 57-year-old former medical office receptionist, was diagnosed with
Stage IV breast cancer in the fall of 2005. The cancer metastasized to her spinal
column, liver, lungs, and left femur. Doreen and her husband, a retired New York
City police officer, have health insurance through his retirement plan. The insurance covers 30 outpatient visits a year, a number Doreen quickly exceeded after beginning treatment for her cancer. After she reached this annual limit, she was billed
$5,000 a week for chemotherapy treatments. In less than a year, Doreen and her
husband owed more than $100,000 to the hospital for her treatment. By the time
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Doreens insurance company informed her that she had exceeded her maximum
number of outpatient visits, she had already made additional visits the plan would
not cover. Fortunately for Doreen, she spoke at an American Cancer Society event
about her inadequate insurance and the story ran in the Long Island Newsday.
Upon reading the article, the insurer reversed the decision and paid Doreens medical bills in full. While Doreens story turned out well, countless others are not as
fortunate to have a platform to share their story.
It was stories like Doreens and the countless stories of uninsured Americans
struggle with this dreadful disease that brought the American Cancer Society to the
conclusion that we had to enter the broader national debate about access to care.
Defining Adequate Health Insurance
As defined by the Society, adequate health insurance ensures timely access to the
full range of evidence-based health care services (i.e., rational, science-based, patient-centered)including prevention and primary carenecessary to maintain
health, avoid disease, overcome acute illness, and live with chronic illness. These
services include the complete continuum of evidence-based cancer care for treatment
and support needs including clinical trials. Coverage should be comprehensive and
protect the individual from incurring catastrophic expenditures.
Little Help Available for Those With Inadequate Insurance
The stories we are giving you come from our Health Insurance Assistance Service
(HIAS), which is a service offered through the American Cancer Societys National
Cancer Information Center (NCIC). HIAS is a free resource that connects callers
with health insurance specialists who work to address their needs. The specialists
at NCIC handle inquiries about health insurance, coverage dynamics, and state programsall specific to the callers needs. To date HIAS has captured almost 16,000
cases from 32 states, with plans to expand the program to other states.
The volume and type of calls received are captured as part of an internal database
that allows for analysis of trends and emerging issues. While the database is not
systematic or representative of all Americans, the volume and type of calls we receive identify serious problems that exist in our insurance system today. A recent
analysis of the cases in the database revealed interesting information about cancer
patients who have inadequate health insurance. In general, the Society is able to
assist 1 in 6 cancer patients who contact HIAS about their health insurance problems. In the cases where we were unable to help the cancer patient, we can identify
barriers in the current health insurance system facing cancer patients.
HIAS receives calls from individuals who are uninsured, those who are
transitioning between plans, and cancer patients who are currently insured. Many
of these callers are people who have been recently diagnosed or who are in treatment for cancer.
The problems we have specifically identified among those with inadequate insurance include:
Annual or lifetime benefit limits within the plan that results in the patient not
being able to access further cancer care without incurring medical debt.
No or limited coverage within the plan for out-of-network specialists, limiting
the patients ability to access quality cancer care.
No or limited coverage within the plan for prescription drugs or treatments.
Mounting, affordable co-pays or co-insurance.
For these callers, there is seldom help available to solve their problems. Unfortunately, there are few safety net options for the under-insured.
The biggest single issue is related to cost-sharing being too high. Nearly twothirds (63 percent) stated cost-sharing as their primary reason to call HIAS. These
callers had trouble meeting deductibles, paying their co-insurance for prescription
drugs and treatment, and covering costs for physician visits and non-network specialty care.
Marthas Financial Struggle With High Cost-Sharing
I would like to share a story from HIAS of a cancer patient who was insured and
struggled financially because of the high cost-sharing for covered benefits. Martha,
a 63-year-old retired woman, was diagnosed with Stage I breast cancer in November
2007. For her cancer treatment, Martha had surgery followed by radiation. Martha
is now post-treatment, but still needs periodic follow-up visits to her oncologist to
monitor for recurrence. Martha has a health insurance policy, but the policy is inadequate for her needs. For example, the insurance paid $1,000 of a $10,000 hospital
bill for her surgery. Martha said she is $28,000 in medical debt due to her cancer
diagnosis, and the hospital is threatening her with a collection agency. Martha lives
in a state that has a medically underwritten individual insurance market, so it is
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unlikely she would be offered another policy. Martha beat her cancer, but now she
is struggling with keeping her head above water financially.
Patients Interrupting Treatment Because of Inadequate Coverage
Some of the most disheartening kind of stories we hear come from people who
have had to interrupt their treatment because of inadequate coverage. Nearly 900
of the cases logged in the last year have involved cancer patients interrupting their
treatment, meaning they elect to stop their treatment before it has been completed.
Please think about this for a momentthese are people who stop treatment for a
deadly disease because they cannot afford to pay. The consequences of this decision
could be detrimental to their health and may very well be a life or death situation.
Another common problem we see involves pre-existing condition restrictions on
coverage. Although this is an access problem, it can also be viewed as an adequacy
issue. If the caller has a current cancer diagnosis or a history of cancer, insurers
may limit their coverage by imposing a pre-existing exclusion period. These exclusions eliminate all coverage for cancer-related health care for the duration of the
exclusion periodusually 612 months, but sometimes permanently, depending on
the coverage type. Pre-existing condition exclusion periods are a leading reason why
HIAS callers do not enroll in coverage options available to them. They cannot afford
to pay for premiums without receiving coverage for their cancer.
Let me share a story illustrating the adequacy problems related to the exclusion
of pre-existing conditions. Thomas, a 35-year-old married father of three, was diagnosed with testicular cancer in March 2004. At the time, he was insured and able
to get the appropriate care to successfully treat his cancer with surgery and radiation. Thomas wife called HIAS because Thomas was without insurance and needed
follow-up care to ensure his cancer remained in remission. Thomas could not receive
the follow-up tests, which cost more than $2,500, without insurance or a means to
pay. Since his remission, Thomas started his own business and lost his previous coverage. He attempted to get coverage in the individual market, but due to medically
underwriting he was denied several insurance policies. Thomas was eligible for the
state high risk pool; however, Thomas said the 12-month pre-existing exclusion period renders this option not viable. Thomas remains uninsured and unable to access
the follow-up care to monitor his health.
Cancer and the Under-Insured
The problem of paying costly medical bills affects middle-class families, particularly those with chronic diseases such as cancer. Often insurance policy deductibles,
co-payments and limits on health services may leave cancer patients without access
to the timely, lifesaving treatment they need. Cancer patients may have to deal with
major financial burdens because of out-of-pocket costs in addition to their cancer diagnosis. We receive calls everyday from cancer patients with these problems and
published research is available that supports these problems of inadequate and
unaffordable insurance as illustrated through the HIAS stories.
A recent study analyzing data from the Medical Expenditures Panel Survey
(MEPS) shows the breadth of this kind of financial problem.1 The MEPS household
survey, sponsored by the Agency for Health Care Research and Quality (AHRQ), collects information from the non-elderly, non-institutionalized U.S. population. The
survey asks American families questions about health insurance coverage, health
care utilization, and health care expenditures. In this study, the researchers defined
under-insured as people with insurance spending 10 percent or more of their taxadjusted family income on health care services, including insurance premiums.
Nearly 1 in 3 (28.8 percent) cancer patients who are insured have an out-of-pocket
health care burden that exceeds 10 percent of their family income. More than 1 in
9 cancer patients with insurance have out-of-pocket health care burdens exceeding
20 percent of their family income in health care expenditures.
Cancer patients who have inadequate coverage have higher medical costs and
must deal with the additional stress of financial instability. A survey of cancer patients and their families found that one in five cancer patients with insurance uses
all or most of their savings when dealing with the financial costs of cancer.2 Another
study found that more than one in five people with chronic conditions have problems
paying medical bills. Furthermore, the incidence of burdensome out-of-pocket spend-
1 Banthin JS, Bernard DM. Changes in financial burdens for health care: National estimates
for the population younger than 65 years, 1996 to 2003. JAMA 2006; 296: 271219.
2 USA Today, the Kaiser Family Foundation, the Harvard School of Public Health. National
survey of households affected by cancer, August 1September 14, 2006.
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ing among low-income, privately insured people with chronic conditions is rising
dramatically.3
Medical debt has been an important cause of bankruptcy filing in the U.S. An
analysis of national survey data found nearly six of ten adults who had current-year
difficulty paying medical bills and 70 percent of those reporting medical debt said
they were insured at the time their problems began.4 Another study examined the
causes of bankruptcy and found that 1.92.2 million Americans experienced bankruptcy related to medical problems in 2001.5 Among those with illnesses that led
to bankruptcy, their out-of-pocket costs average $11,854 and three-quarters had insurance at the time of their diagnosis.
Despite having insurance, many cancer patients and survivors experience major
financial burdens. The situation of the under-insured is difficult to measure because wide variation exists among health insurance plans and people do not realize
they are under-insured until they have a health crisis such as cancer. Furthermore, studies like the one I previously mentioned use a narrow definition to measure the number of under-insuredthat is, they do not include those who stop or
delay treatment because they will not be able to afford it. While we use these studies to talk about the under-insured, they do not fully capture the nature and extent of the problem.
American Cancer Societys Commitment to Access to Care
Our testimony this morning focused on the issue of adequacy, but the American
Cancer Society is also greatly concerned about the problems of the uninsured, which
the other witnesses this morning are addressing.
We have made significant progress in recent years in addressing the cancer problem. Cancer death rates have decreased by 18.4 percent among men and 10.5 percent among women since the early 1990s. Despite this significant progress, the
American Cancer Society realizes that its long-term goals of reducing the incidence
and mortality of cancer cannot be achieved unless the gaps that exist within the
current health care system are addressed. The challenge lies in the fact that our
health care system is not up to the task.
A recent American Cancer Society study of 12 types of cancer among more than
3.5 million cancer patients dramatically demonstrates the problem of access today
for uninsured cancer patients.6 The study found uninsured patients were significantly more likely to present with advanced stage cancer compared to patients with
private insurance. The study found consistent associations between insurance status
and stage at diagnosis across multiple cancer sites. Compared to patients with private insurance, uninsured patients had significantly increased likelihoods of being
diagnosed with cancer at more advanced stages. The greatest risk for diagnosis with
moderately advanced cancer (stage II) instead of the earliest stage (stage I) was in
colorectal cancer, while the highest risk for diagnosis at the most advanced stage
of cancer (stage III/IV) was in breast cancer. The study shows that too many cancer
patients are being diagnosed too late, when treatment is more difficult, more expensive, and has less chance of saving lives.
We know that individuals and families who are uninsured or have inadequate insurance often go without preventive care despite research showing that early detection and timely treatment are effective in improving outcomes.
We know that cancer patients who are uninsured or have inadequate insurance
often do not receive necessary and appropriate treatment in a timely manner, and
that they have worse health because of these problems.
And we know we cannot meet the American Cancer Societys goals of reducing
cancer mortality by 25 percent and cancer incidence by 50 percent by 2015 if we
dont achieve greater improvements in our nations coverage and health care delivery systems.
The recognition of these problems for cancer patients led the American Cancer Society to decide to enter the broader national debate on health care reform. Last year,
the Society developed evidence-based principles defining meaningful health insurance to be adequate, available, affordable, and administratively simple without re-
3 Tu HT. Rising health costs, medical debt, and chronic conditions. Center for Studying Health
System Change Issue Brief No. 88, September 2004.
4 Doty MM, Edwards JN, Holgren AL. Seeing red: Americans driven into debt by medical bills.
The Commonwealth Fund, August 2005.
5 Himmelstein DB, Warren E, Thorne D, Woolhandler S. Illness and injury as contributors to
bankruptcy. Health Aff 2005; Web exclusive: 6373.
6 Halpern MT, Ward EM, Pavluck AL, Schrag NM, Bian J, et al. Association of Insurance Status and Ethnicity with Cancer Stage at Diagnosis for 12 Cancer Sites: A Retrospective Analysis.
Lancet Oncology 2008; 9:22231.
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gard to health status or risk. These guiding principles, known as the 4As, are essential to any health care reform. (The principles are attached as Appendix A.)
Conclusion
Cancer death rates are decreasing and we know what we must do as a nation to
defeat cancer. Much of the public debate today is about the need to cover the 47
million uninsured, and the American Cancer Society fully shares that concern. However, we need to recognize more fully the very significant problem of underinsurance. Health plans vary enormously in their deductibles, co-pays, benefits covered,
and exceptions. Insurance plans are written in very detailed legalistic language that
very few lay people can begin to comprehend, and the summary plan documents
that are provided to enrollees almost never begin to convey the adequacy of coverage. Put another way, if you were to look at an array of plans that might be available to you as a consumer, and you were to ask, what would be the adequacy of
your coverage if you were to be diagnosed with cancer or some other serious disease,
you would probably conclude that you have no idea whether the plan would be adequate. As we see all too often in our HIAS cases, people often discover after their
diagnosis what their plan really meansand that is a point where for most patients
it is virtually impossible to change coverage. As an appendix to my testimony, I am
including additional stories that highlight the problems of the inadequately insured.
(The stories are attached as Appendix B.)
In adopting our principles for meaningful health insuranceour 4Aswe said
that adequacy should cover the full array of necessary services, from early detection
through treatment and survivorship, but we did not attempt to define the specifics
of an adequate plan. Rather, our goal is to stimulate a public discussion that will
lead to a broad consensus. We want to raise the issues through the campaigns this
year and carry the discussion forward at the Federal and State level as legislative
reform efforts are developed. We believe the science and the knowledge exist to provide quality health care for all Americans, but we must work together to restructure
our coverage and delivery systems to achieve that goal. Your hearing today is a valuable contribution to that discussion.
Thank you.
Appendix A:
American Cancer Society Statement of Principles on What Constitutes
Meaningful Health Insurance
The American Cancer Society is the nationwide community-based voluntary
health organization dedicated to eliminating cancer as a major health problem by
preventing cancer, saving lives and diminishing suffering from cancer, through research, education, advocacy, and service. The American Cancer Society has set ambitious goals for significantly reducing the rates of cancer incidence and mortality
along with measurably improving the quality of life for all people with cancer.
The ultimate conquest of cancer in America is as much a public policy aspiration
as it is a scientific and medical challenge. There are many stakeholders in the cancer fight actively doing their part to defeat this disease, but it cannot be done without the sustained leadership and strong commitment of government. We are poised
to make gains so substantial that we now can talk about a time when cancer is no
longer a killer and is instead just a chronic condition, or even better, a disease for
which a cure is a realistic, frequently achieved goal. Our nations current health
care system is not up to this challenge. If we are to ultimately conquer cancer our
system must ensure that all Americans have access to high quality care. 7
Improving the nations health care system requires a new partnership for the nation that will facilitate the coverage and delivery of quality evidence-based cancer
care and work to eliminate disparities and inequities in the current system. This
will require a commitment from the private, public, and not-for-profit sectors and
individuals. Stakeholders in the health care system, from doctors, hospitals, and insurers, to employers, and not-for-profit organizations, all have critical roles to play.
All Americans have an obligation, as well, to take responsibility for their own health
to the extent possible, by pursuing healthy lifestyles, and educating themselves
about their health needs, including ways to prevent and detect cancer.
A critical aspect of improving the health care system is to define and ensure access to meaningful public or private insurance. This includes adequate financing.
Our nation has had much conversation on the insured and uninsured and less on
what it means to be meaningfully insured. Below is the statement of the American
Cancer Society on what constitutes meaningful health insurance.
7 Dr. John Seffrin, American Cancer Society CEO, Statement to ACS Board of Directors during January 2006 meeting.
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Statement of Principles
It is a fundamental principle of the American Cancer Society that everyone
should have meaningful public or private health insurance.
Meaningful health insurance is adequate, affordable, available and administratively simple.
Adequate health insurance means:

timely access and coverage of the complete continuum of quality, evidence-based healthcare services (i.e., rational, science-based, patientcentered), including prevention and early detection, diagnosis, and
treatment
supportive services should be available as appropriate, including access
to clinical trials, chronic disease management, and palliative care
coverage with sufficient annual and lifetime benefits to cover catastrophic expenditures
Available health insurance means:
coverage will be available regardless of health status, or claims history
policies are renewable
coverage is continuous
Affordable health insurance means:
costs, including premiums, deductibles, co-pays, and total out-of-pocket
expenditure limits, are not excessive and are based on the familys or individuals ability to pay
premium pricing is not based on health status or claims experience
Administratively simple health insurance means:
clear, up-front explanations of covered benefits, financial liability, billing procedures, and processes for filing claims, grievances, and appeals
are easily understood and timely, and required forms are readily comprehensible by consumers, providers and regulators
consumers can reasonably compare and contrast the different health insurance plans available and can navigate health insurance transactions and transitions
Appendix B: Stories from Cancer Patients on the Adequacy of Health Insurance
Since 2005, the Society has documented real stories from cancer patients who
have had trouble accessing adequate coverage. These case studies reflect actual
cases of cancer patients who called the American Cancer Society National Cancer
Information Center for advice navigating the health care system and solving coverage problems.
Randy, 63 years old, Pennsylvania
Following his diagnosis with Stage IV esophageal cancer, Randy had surgery to
remove his esophagus and stomach. Radiation and intense chemotherapy followed.
Randy quickly reached the $100,000 lifetime cap on his major medical coverage and
now receives no further benefits. He has paid out of pocket for follow-up scans and
labs to monitor his condition. Because he had 18 months of continuous, creditable
coverage, Randy wouldve been eligible by Federal law for a policy with no pre-exclusionary period. However, he wasnt aware of the option until after it had expired.
Meanwhile, Randy and his wife are ineligible for AdultBasic or Medicaid, and he
is unlikely to get private insurance due to medical underwriting. Randys only option, a guaranteed issue policy, includes a pre-existing condition exclusionary period
of up to three years. The policy allows for riders that could modify the benefits and
conditions of his coverage. Ultimately, Randy will have to wait two years to become
Medicare eligible. He has no other choice.
Valerie, 34 years old, Georgia
Valerie, a mother and wife, is a contract worker for a small staffing agency. Her
husband, Jeff, is a car salesman. The familys income fluctuates based on her workload and his commission. Valerie was recently diagnosed with Stage IV breast cancer and is currently undergoing treatment. She has employee-sponsored insurance
through the staffing agency, but she quickly met the plans $10,000 yearly maximum benefit. She now owes $6,000 in bills to her oncologists office and is responsible for the cost of her treatments moving forward. Those treatments include three
more rounds of chemotherapy and potentially radiation or surgery. Valerie doesnt
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want to change insurance, largely because the other members of her family are covered under her plan. Jeff doesnt have access to employee-sponsored insurance at
his job. Valerie will likely be denied insurance in the individual market because of
medical underwriting. Therefore, she cant buy a supplemental policy to cover her
chemotherapy. She will continue paying her considerable treatment costs out of
pocket.
Kay, 61 years old, Florida
Kay works part time at a large department store earning $13,000 per year. She
has insurance through her employer but quickly exceeded the plans $25,000 annual
maximum following her diagnosis with Stage II breast cancer. She has received
eight cycles of pre-operative chemotherapy, had a lumpectomy with auxiliary lymph
node dissection, and now needs radiation. Kay already has $40,000 in outstanding
medical bills from various diagnostic tests that were not covered. Now shes been
told that she cannot begin radiation unless she plans to bring $115,000 with her
to the first appointment. Kays Medicaid application is pending; it will take months
before she learns if help is available. Meanwhile, she will likely be denied private
insurance because of medical underwriting. Kay has no adequate insurance options.
Bettie, 57 years old, Florida
Bettie works at a toll both in Florida. She exceeded the $50,000 annual maximum
on her employer-sponsored insurance within six weeks of her breast cancer diagnosis. Bettie had a lumpectomy followed by auxiliary dissection of her underarm
lymph nodes. She has been unable to start radiation treatments and is now uninsured; her plan was terminated when her employer changed parent companies.
Bettie has been told that she cannot enroll in the new employee-sponsored plan
until she returns from short-term disability. She is currently caring for her husband, a double amputee, and spending many hours searching for a way to afford
her radiation treatments.
Andrew, 19 years old, Rhode Island
Andrew was recently diagnosed with Hodgkin lymphoma. He is on leave from his
landscaping job and receives $641 per month in unemployment compensation. Andrews outstanding medical bills currently total between $15,000 and $20,000. He
has private insurance but his treatments sometimes exceed the policys limit of
$1,000 per day for chemotherapy. The insurance also does not cover many of his
hospital costs. Andrews boss has offered him a different insurance policy once he
returns to work. Andrew will elect the new coverage option when the time comes.
However, his medical debt will remain.
Donna, 45 years old, Ohio
Donna has two children. She works full time, and her annual income is $27,000.
She was recently diagnosed with breast cancer. Donna does have health insurance,
a major medical individual policy that she purchased after her company ended its
group plan. However, she quickly met the $10,000 limit on outpatient services under
her new plan. Donnas treatment, including 15 chemotherapy sessions, has left her
with more than $100,000 in outstanding medical bills. Donna is uncertain how she
is going to pay the debt and handle future out-of-pocket costs. She had been
supplementing her income through a second, part-time job but had to give that up
once her chemotherapy began. Donnas hoping she can get one of Ohios guaranteed
issue policies, which are limited by enrollment caps. The plans are only available
during an annual 30-day open enrollment period, so Donna will wait to see what
happens. She has no insurance options otherwise.
f
*Chairman STARK. Thank you. I had agreed that I would yield

my first chance to inquire to Mr. Thompson. Would you like to inquire, Mr. Thompson?
Mr. THOMPSON. Thank you very much, Mr. Chairman. I appreciate your generosity, and thank you to all of the witnesses who are
here today. Mr. Finan, Id like to pick up where you left off. Im
a huge proponent of preventive care, an area where I see there is
a huge problem is the barriers that seniors face in regard to getting
preventive care in the form of cancer screenings and such. It seems
to me that someones a senior in many instances their disposable
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income numbers are going down, and right now sadly at the same
time that the costs for food and gasoline and energy and everything
else is going up, Im concerned that copayments and co-insurance
payments are having an impact, a negative impact, in providing a
barrier to these preventive services. Thats had an impact on things
like cancer screening, which costs us more money in the long run.
Anything you want to add to that? Push your button, please.
*Chairman STARK. Your mike please, Mr. Finan?
*Mr. FINAN. Yes, I would. First of all I want to thank you very
much for your continued support on this issue. We totally agree
with you that it is a significant problem, and we are totally supportive of your legislative efforts in this area.
Id like to point out that there was an article recently in the New
England Journal of Medicine that looked at the issue of co-pays
and preventive services among the Medicare population; and they
found that even a co-pay as little as $10 resulted in about an 8 percent decline in the number of women who sought mammograms.
So, it does suggest that theres enormous price sensitivity among
the elderly to these kinds of services.
Mr. THOMPSON. Then we pay for it at the other end, when it
becomes an acute problem.
*Mr. FINAN. Exactly. Here for $10 we see a decline in women
getting the mammograms, and yet, as you just point out, the cost
if theyre not getting them could be extraordinarily high.
Mr. THOMPSON. Thank you. Dr. Ayanian? Thanks. On the
other end of the spectrum, on the other end of the age spectrum,
the issue of preventive care for children. When I was in the state
legislature, I had success with legislation that required all providers to provide health care for kids, preventive health care for
kids from birth to 18 years of age. One loophole in that legislation
was the ERISA loophole. Its my feeling that that is, in fact, a true
loophole, and I know we can save a lot of money and a lot of lives
and a lot of anguish if we can catch problems early in kids. Its everything from keeping kids out of the hospital and hospitalization
for kids is more expensive than adults, and its longer than adults.
Then also if we can deal with these things when theyre preventable, rather than when theyre acute, were building a more healthy
Medicare population in the future, should we close that ERISA
loophole.
*Dr. AYANIAN. Its clear that investing in the health of children
is a very worthwhile endeavor, and anything we can do in a costeffective manner to achieve that goal is very important. We this at
the issue Institute of Medicine regarding the consequences of
uninsurance and the importance of consistent coverage for children
as well as their parents. It was clear that the evidence is that children are more likely to get the care they need when they have coverage and its consistent across different plans; and particularly
also when their parents are covered the parents use the health system more effectively for their children. We get long-term benefits
from that. So, yes.
Mr. THOMPSON. Then, lastly, Mr. Brock, thank you for being
here and thank you for all of the work that youre doing. Thats
pretty fascinating.
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Ten percent of the doctors practice in rural areas, and Im told

about 25 percent of the patients are in rural areas, so theres a real
disparity. Representing one of those rural areas, I hear all the time
about the trouble that we get to attract physicians to our areas and
keep physicians in our areas, and we share the same health care
problems as under-served areas, be they rural, urban, or otherwise.
How much of the lack of access to health care in rural areas can
be attributed to the lack of providers?
*Mr. BROCK. Well, thank you for asking that question. A lot of
the problems do stem from the fact that there are programs to help
some of these people, but the paperwork requirements and the reimbursement rates unfortunately are not attractive enough for
many of the providers to be willing to accept the patients.
The other problem that we are continually faced with and actually it doesnt matter whether were in a very, very rural area of
Appalachia or whether were in a downtown urban area, the number of patients that are going to show up for our services are about
the same. As a small turnout, there are going to be 5 or 6 hundred
patients turn out. At a large RAM event, there are going to be several thousand that turn up. It doesnt matter whether theyre living
in an urban area or a rural area.
The biggest problem really in providing this kind of care for
these people is that we have found over many, many years now
that the local physicians, dentists, and eye doctors really dont
want to deliver the care to these people in their hometown. Those
same doctors are very, very willing to travel hundreds of miles with
us, perhaps to Eagle Butte, South Dakota, to provide the care, but
theyre really not interested in providing the care in their own
home districts. For that reason, we are strongly hoping that rules
will change, so that doctors can cross state lines from all over the
country and alleviate this very, very serious problem.
Mr. THOMPSON. Thank you. Mr. Chairman, Mr. Doggett, thank
you both for yielding me the time.
*Chairman STARK. Mr. Camp?
Mr. CAMP. Thank you, Mr. Chairman. Dr. OGrady, you testified
that of the uninsured population that 22 percent are non-citizens.
What percentage of the total uninsured population are eligible for
Medicaid and other programs, but are not enrolled?
*Mr. OGRADY. I dont have that figure right off the top of my
head, but I can certainly get it for. Although it is one that is under
some considerable kind of discussion of figuring out what the right
figure isand part of it has to do with the interactions between
these eligibility questionsso if some of these kids, given immigration laws, would not be eligible as is true for the legal immigrants,
that youre not eligible in the first five years for either Medicaid
or SCHIP, exactly whos eligible or not is certainly somewhat of
a bone of contention. Although one of the nations best experts in
this is right across the street at the Congressional Research Service. So, candidly, Im going to go and pull that, and get back to you
on it.
Mr. CAMP. All right. If you could get back to the Committee
with your
Mr. Rowland. Mr. Camp, if I could
Mr. CAMP. I just have a short time. Im not done with him yet.
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Mr. Rowland. I was going to just answer

Mr. CAMP. All right. If you could submit that in writing, that
answer, Id appreciate that.
What percentage of the uninsured lack coverage for just a short
period of time, say less than three months or less than six months?
*Mr. OGRADY. Well, we tend the see this pattern. Again, Ill get
back to you with the exact figure. But what we see is we see theres
points in your life where you are more vulnerable. Some of these
vulnerabilities we worry about more than others. So, you doI
gave the example in the oral testimony about the kid who leaves
college, and before they start that first real job and get coverage,
that is, certainly theyre uninsured, we would certainly prefer to
have them insured, but we dont really worry about them quite as
much as we do about the chronically ill and these people who have
been uninsured for years.
So, it is this idea of where Ive tried to introduce this idea of
thinking about how you might triage this problem, because the
likelihood of having enough money and political consensus to do everything for everybody might just not be there, in reality.
Mr. CAMP. Do you know, and can you tell us what percentage
of the uninsured elect not to purchase health insurance, even if its
offered to them?
*Mr. OGRADY. There are certain ways we sort of back into that
question. There is not good data. What we do know and youll see
in the written testimony is we know that the offering rates, especially among once youre over about 500 or a thousand employees
in a firm, that almost all those firms offer. But you still see perhaps 10 percent in both those categories as being uninsured.
Now we know theyre offered. We dont know exactly whether
they are, like I said, what we tend to jokingly call the young immortals, who sort of as long as they dont fall off their motorcycle,
they really dont see much need for insurance. Is it that category?,
or is it someone who is in a position where, you know, coverage is
being offered, but whatever their share of the premium, their share
of the cost-sharing going on makes it unaffordable for then. Splitting those two kinds of groups isI dont know anyone whos done
it well yet.
Mr. CAMP. Difficult to do?
*Mr. OGRADY. Yeah.
Mr. CAMP. Theres been a lot of debate around the question of
an individual mandate to buying health insurance. Do you have
any opinion on whether there should be a mandate, and what
would be the pros and cons of imposing a requirement that an individual is to buy insurance, even if they feel they dont need it.
*Mr. OGRADY. Yeah. An individual mandate is a tough issue in
terms of you have these situations in the last generation of these
sort of proposals we heard an awful lot about employer mandates,
and in some today we hear about matching of employer and individual. The individual mandate does get to the point of where we
talked about before, my young immortals. The idea of should you
be in a position where you in effect force them to have coverage?
Now thats much of the discussion thats gone on, on the campaign
trail between Mrs. Clinton and Mr. Obama. Mr. Obama sort of
wondering once youre out of children, once youre at a certain age,
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you want to make it as affordable as possible; do you actually want

to take that extra step to mandate?
Mr. CAMP. Okay.
*Mr. OGRADY. It is true, the term that the Senator was searching for before is free rider. So, when these folks do fall off their
motorcycle and all of a sudden need the health care system, they
are going as bad debt on the rest of us; theres no doubt about that.
Mr. CAMP. All right. I noticed in the tape we saw thatwell, let
me just say there are 23 federally qualified health centers in Tennessee, and from what I understand, they have a list of services
that are required, including emergency medical and dental services, among a list of other services. Can you tell me why individuals would not be able to be also attending the federally-qualified
health centers that have a mandate to see anyone who comes in?
*Mr. OGRADY. Right. They do have a mandate, they certainly
serve the uninsured. They serve the underinsured, Medicaid population, and even a few, just because of locale, regular insurance
people. All the evaluations Ive seen is they scored very high on
what they do; they havethis was brought up before about health
information technologythey have one of the best systems in the
country right nowwhether its poor outreach or just a nod of allowing them to know, but I know of no structural barrier of why
folks cant seek out those clinics.
As you may have remembered, the President a few state of the
unions ago, made the push to have a clinic in every poor county,
and from what I saw when I was at the Department of Health and
Human Services, they took that seriously. Especially in those areas
like in the, you know where Katrina hit, especially poor.
Mr. CAMP. All right. Thank you very much. Thank you, Mr.
Chairman.
*Chairman STARK. Mr. Doggett, would you like to inquire?
Mr. DOGGETT. Thank you, Mr. Chairman and thanks to each
of you for your insightful remarks. Of course, Mr. Brock, what
weve seen that youve accomplished is incredibly impressive, and
yet it is an indictment of the failings of our public health system
in this country that those serious needs are there, demanding the
extraordinary effort youve undertaken.
One of the issues that I noted from the 60 Minutes clip is the
difference between providing a one-stop or a periodic kind of service like eyeglasses or dental care versus the need for continuing
treatment, continuing care, like the young woman who had had
cervical cancer. Is there any way through your program that you
can provide someone a primary health care home for that type of
continuing care?, or what happens to the person who requires the
periodic checkup, whether its for cervical cancer or for maintaining
their blood pressure or their cholesterol, or whatever, on a repeat
visit basis?
*Mr. BROCK. Well, I think that that question is admirably demonstrated at our clinic that we do every year in Wise County, Virginia. In Wise County, Virginia, for 212 days, people come at the
rate of twelve hundred people a day, and they wait eight, ten, fifteen hours for the service.
Now we provide all of the services that youve just mentioned.
Not only do we have about a hundred dentists there and dozens
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and dozens of eye doctors, but we also have cardiologists and we

have cancer experts, we do mammograms and we do Pap smears.
The whole gamut. The interesting thing isand again this goes
back to the fact that so few of these state and Federal programs
address the dentistry and the vision careso here you have twelve
hundred people who arrive at one of our clinics, and wait many,
many hours. When they get in the door, they want to see the dentist so bad because their teeth are just in agony and they want a
pair of eyeglasses because they cant see to read the paper or they
cant qualify to get a job. We are constantly, with the hundreds of
other practitioners that weve got there, saying, Save your place
in line. You need to come down here and you need to have a diabetic check-up. You need to have a check-up for high blood pressure, and so on and so forth.
It is extremely difficult to get those people motivated to do that.
So, if some of these programs were addressing and enabling people
to get their teeth fixed, those immediate problems, then we would
find it easier to get them to see the other specialties that they
need.
When you look at the cross-section of the thousands of people
that we see, its largely self-induced problems. Theyre all smoking
and theyre all eating the wrong things; theyre largely overweight,
and of course theres an educational factor in there too.
But the services are there, but theyre so hung up on the teeth
and the eyes, thats its very difficult to get them to take advantage
of the rest of it.
Mr. DOGGETT. Thank you. Dr. Rowland, and Dr. Ayanian,
youve touched on this issue, but really the lack of insurance is a
matter of life and death, and I have seen one recent study in the
state of Texas, which is notable for having more uninsured children
proportionally than any other state in the nation, tragically, that
about seven working-aged Texans die each day because of a lack
of health insurance. I suppose if the death certificate were amended to show the true cause of death along with the physical cause
as being a societal disability, that we would see lack of health insurance on that death certificate on a pretty regular basis. It would
be up perhaps as high as deaths from diabetes.
Could you just comment again on what you see as the life and
death cost of the failings of this Congress and this administration
to see that there is access to health insurance for more of our citizens?
*Ms. ROWLAND. Well, clearly we see from all of the research
that when you dont have health insurance, you make decisions
that are contrary to your health. So, as we saw in the film so
graphically, people delay care, and as a result of delaying care they
come at a later stage of diagnosis, where treatment options are
fewer and where the outcomes are worse therefore mean this
means that on their death certificate they may die from a cancer,
but the cancer could have been treated if caught in an earlier
stage.
Dr. Ayanians work has really helped to really the impact of lack
of insurance by looking at specific conditions, so Ill let him comment in addition.
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*Dr. AYANIAN. I would just add that we all know that effective
insurance coverage is the gateway to the health care system for
most people in our country, and when people lack that, they dont
have the good primary and specialty care that we know makes a
difference. In many ways we just defer the costs. Effective primary
care can be very cost-effective. Preventive care screening tests, and
care of chronic diseases like high blood pressure and diabetes. If we
dont take measures to provide coverage and provide access to care
for people at those early stages of disease, then we end up with
more costly complications of heart attacks, kidney failure, advanced
cancer.
*Chairman STARK. Mr. Johnson, would you like to inquire?
Mr. JOHNSON. Thank you, Mr. Chairman. For any of you first
three over there, you know, I believe one way to increase access to
health care for more Americans in this country is to decrease the
cost, and if theres one thing America has proven, that its competition is the best way to drive down the cost. Health care is no different.
Theres two initiatives I think are critical in achieving this goal:
Health savings accounts, and association health plans. You know,
over 4.5 million Americans have chosen HSA type insurance, and
some studies show that as many as one-third of them were previously uninsured, and almost half have incomes below $50,000.
Concerning HPs, estimates indicate that at least 60 percent of
the working uninsured work for small businesses. I think we cant
have a conversation about the uninsured in this country without
talking about a way to allow small businesses to pool their resources in order to provide health insurance for their employees.
Would you all discuss that for me?
*Ms. ROWLAND. When you look at the problems facing our
health care system, rising costs from the increases that weve seen
in premiums over the last few years have taken a real toll on both
employers ability to offer coverage as well as on employees ability
to pay their share of those premiums.
However, I think one of the things thats important when you
look at the low-income, uninsured population, is that two-thirds of
the uninsured come from families with incomes below $40,000 a
year. How much they can they afford for the premium, how much
would you subsidize that premium, and also how much they are
able to pay out of pocket. One of the concerns we have stems from
some of the research weve done is looking at the liquid assets of
individuals at these lower income levels. We see that they have relatively few savings. As a result, if they have a health care policy
that requires a fairly high deductible, they may not have the resources to be able to pay those co-payments and deductibles, which
in the end could end up having them behave more in their interaction with the health system, like an uninsured person rather
than like someone with health insurance coverage.
So, I think one really needs to look at the availability of income
and the availability of assets to be able to meet obligations as one
assesses the adequacy of health insurance coverage. Work that the
Department of Health and Human Services has done, looking at financial burden, finds many families, especially those with higher
deductible plans, as end up spending much more of a share of their
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income on health insurance coverage than people with more comprehensive plans, especially those offered now through the employer sector.
*Mr. OGRADY. Yes. There are a couple of things you brought up
which were very good. One thing to keep in mind is that making
this more affordable is essential. At the same time it is that value
proposition that was being discussed earlier about we have the
baby boomer retiring, we have these other pressures that are coming, so its more spending smarter, not more, notand how were
going to control that, and how were going to determine whether
were really gettingmost of us dont mind spending more if we
think were getting that breakthrough drug or that breakthrough
device thats going to really make a difference. But we mind spending more for something that seems wasteful and is just nicer cars
for physicians. That sort of thing.
So, when the chief actuary came in, I assume a week or two ago,
and showed those trends in Medicare, those same trends exist for
employers trying to offer coverage, Medicaid. They just dont have
a trustees report that you get every year.
So, all that money being absorbed there is more money being
taken off the table for the uninsured. So the notion of how you ease
up on that cost pressure to give yourself enough leeway to start to
think about expansion and doing it in a fiscally responsible way is
vital.
There was a piece done a few years ago by a researcher at the
University of San Diego, that looked at those small firms, and in
years when premiums were going up very fast, they either had to
drop their coverage, or for the firms that were looking to add coverage, not in a 10 percent premium increase here. In the slower
years, thats when people either held their own in terms of offering
coverage, or were able to expand. So, its very important. HSAs fill
a niche, a very important niche in terms of affordability. Because
by changing the structure of the health benefit, moving it to the
more serious, more catastrophic things, they definitely lower the
premium.
Now I have one personally. Ive had it for about three years now.
I like it very much. I have a chronic illness. It works because it
means also that account I can go to whatever provider I want to,
whether theyre in the network or not, or participating with my
plan or not.
So, it works very well on the affordability, but certainly it is putting financial pressures on folks for that up-front cost. Theres no
denying that. Again, none of these particular solutions that people
put forth, me or anyone else youll hear from, are going to be totally pain-free. Also, youll help on affordability but youll hurt on
cost-sharings on the beneficiary.
But back to your first notion about bringing down this overall
growth in spending, you know, thats where you can have it cost
less for both the employer and the worker, for the government and
the beneficiary is by slowing that growth in overall spending.
Mr. JOHNSON. Yeah. They get to pick their hospital. Thats important.
Thank you, Mr. Chairman.
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*Mr. BROCK. Is it possible that I can just in the half-minute

light on unemployment insurance thing from a statistic that we
came up with last Saturday?
*Chairman STARK. Certainly, Mr. Brock.
*Mr. BROCK. Two hundred and fifty people showed up at a rural
area in Tennessee and 124 of them were prepared to answer the
following questions. It turned out that 73 percent of them were unemployed; 18 percent were employed part time; and 10 percent
were employed full time. Of the full-time employed, only 18 percent
had any kind of insurance. Of those employed part time, 58 percent
of them had insurance; and of the unemployed of which there were
73 percent of them were unemployed, 46 percent of them had insurance. So, from this non-scientific but carefully done study last
Saturday, if you were unemployed you were more likely to have
some kind of insurance.
*Chairman STARK. Mr. Becerra, would you like to inquire?
Mr. BECERRA. I dont know if I should be more depressed now
after hearing that.
[Laughter.]
Mr. BECERRA. Thank you all for your testimony. I think you
are reiterating much of what weve heard or experienced. I wish we
knew how to crack this nut that keeps us from having universal
coverage; but perhaps I can try to whittle my thoughts here down
to a couple of questions.
I was wondering, Mr. Brock, if youd give me just a quick sense
of what your understanding or what your sense is of an individual
mandate, the proposals to require that individuals purchase insurance in order to obtain access to health care that rather than require an employer, or rather than do it through a system like
Medicare, which is government-financed, that we put the burden of
obtaining the insurance on the individual and by requiring everyone in the country to have insurance, then we will end up having
that universal coverage that we need.
*Mr. BROCK. I think
Mr. BECERRA. Your microphone. You need to turn your microphone on.
*Mr. BROCK. I think that in light of the fact that 73 percent of
the people that show up are unemployed, this would demonstrate
that those people could not afford to buy insurance. So, that presents us with a very difficult problem.
Mr. BECERRA. Another question. Give us again a very quick
sense, because I know my time is limitedwhat are some of the
comments you hear from some of the caregivers, the doctors, the
dentists, the other providers, that volunteer to be part of these clinics that you set up? Whats their sense? They obviously go back to
their paying job later on, where theyre providing health care, but
whats their sense of where we have to go, where a solution lies?
*Mr. BROCK. Well, they want coverage for malpractice. The first
question that doctors ask us when they volunteer is, Am I covered
for malpractice? The answer unfortunately is not, they are not. So,
thats something that needs to be fixed. Again, going back towe
really need to allow these doctors and dentists who are willing to
provide the service to cross state lines and provide free care anywhere in the country as long as they can prove that they are a doc-
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tor in good standing. The Tennessee Volunteer Health Care Services Act, its as simple as this: The doctor shows up, even without
any notice. Hey, I heard youre holding a clinic. Im from Iowa,
heres my license, Im not under any judicial review. Sign that
statement, roll your sleeves up, and go to work.
Mr. BECERRA. Let me askmy question is moreI imagine the
doctor from Iowa who goes to Tennessee can only do that once in
a while. My question goes more to the point of: What do they see
as a longer-term solution to this crisis that causes hundreds if not
thousands of people to show up on a weekend to try to receive the
care you offer?
*Mr. BROCK. Well, I think that they would like to see some type
of national coverage for people who are in a certain economic strata, whether its twice the poverty line or three times the poverty
line, that people in that group need some kind of national health
care coverage, and people who are above that economic group lets
not mess with the system that weve already got, which is fabulous
as long as you can afford it.
Mr. BECERRA. Dr. Rowland, let me see I can ask you something. I find what Mr. Brock does inspiring and demoralizing at the
same time: inspiring because you have people who are willing to
volunteer, the good Samaritans who go out there, professionals who
provide this care; demoralizing because hundreds and thousands of
people have to rely on a weekend opportunity to get a tooth taken
care of.
In all these studies that have been done, in all the work that
weve had come before us for presentation, I still dont see that the
American public is any more angry and prepared to take us to a
place where we, then, as policy-makers feel that we could go and
provide that type of coverage that gets the universality that I think
most of us would like to see for the American public.
So I guess my question to you is: Do you see any further movement in the eyes of the American publicnot so much the policymakers, but the American public, in having the outrage to having
their policy-makers move in a universal direction?
*Ms. ROWLAND. As we do our work in public opinion, we ask
the public about the uninsured and about their access to care, and
one of the startling things from our research is that people say,
Well, the uninsured get the care they need; they just may get it
a little later. I think we still have a real burden of educating the
public on the facts. I think things like the 60 Minute documentary
is very important about to show that if youre uninsured, you make
different choices and you may not get the care you need. As John
and others work shows, the consequences on your health and on
our societys health are really monumental.
But I think it really is a lack of understandingwe think that
we have the best medical care system in the world, and that if anyone really gets sick, they can show up at an emergency room and
they can get the care they need. Yet we know they dont even show
up often at the emergency room, and the consequences of not getting preventive and primary care are overwhelming.
Mr. BECERRA. Thank you. I appreciate your testimony, all of
you, and look forward to having you back again. Thank you very
much. Mr. Chairman, thank you.
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*Chairman STARK. Ms. Tubbs Jones, would you like to inquire?

Ms. TUBBS JONES. Mr. Chairman, thank you very much, and
to all the witnesses, thank you for appearing here today.
I think the public is actually saying to policy makers like us and
legislators that they do want and need health care. I think the dilemma is that the United States has been so reluctant to focus on
preventive care that we tend to be a country that focuses on acute
and chronic care versus preventive care. Thats my little piece of
it.
But I want to focus for a moment, if I can, with you, Dr.
Ayanian, if Im saying your name appropriately. As I said earlier
before this panel came, the Congressional Black Caucus Foundation is doing a health disparities session at a hotel here yesterday
and today, and Im hoping to get over there this afternoon. But I
see that in your reportand I dont recall that you had enough
time in your 5 minutes to really delve into what we need to focus
in around disparities. There were seven things that I just had in
front of me, and I lost them. So, why dont you go back through
that again for me, and if you had to prioritize the 1 through 7 factors around health care disparities, would you give them to me in
that order?
*Dr. AYANIAN. Sure. Youre referring to a set of what have been
described as voltage drops in the health care system from the basic
essential of having insurance coverage to ending up with high-quality care and the seven steps in which we can lose voltage, and people not get the care and the quality of health outcomes that were
looking for.
Clearly insurance coverage is an important part of the health
care disparities we see for different racial and ethnic groups and
economic groups in this country, and so thats one of the most important factors. We have a safety net. In many areas safety net
providers are doing very important and effective work. But it
leaves too many people outside the boundaries of our health care
system, who are not coming in until their illnesses are too far advanced.
We also know that health care providers that serve predominantly minority communities, low-income communities tend to be
less well-supported, and less access to appropriate specialty care.
If primary care is available, its not consistently available to all in
the community.
So, I think we also need to focus on the providers, the health
care organizations, hospitals, community health centers, and medical groups, that care for disproportionate shares of minority patients, and make sure that theyre well supported, that their staff
are highly qualified, that they have the services that are needed,
and relationships within their communities.
I think one of the points that was touched on in the first panel
discussion was the need for communities and states to understand
the presence of health care disparities in their midst and develop
their own local and state plans. Were seeing some promising evidence about this work in Chicago, trying to address racial disparities between African American women and white women, and
breast cancer mortality, where community health centers, breast
cancer survivors, community leaders, leaders of the major medical
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centers, are coming together and really working on access to mammography, access to effective treatment, and then the quality of
care that people get.
So, I think those are some of the highest priority areas, and I
think its very important at a national level through tools like the
National Health Care Disparities Report, to pay close attention to
what progress or lack of progress we have on this front; and then
also to use data and resources to support local communities in addressing the health care needs, where theyre well understood.
Ms. TUBBS JONES. I remember that as a kid in the public
school systems, there were at least a school nurse and a dentist
that fell through at least every once in a while. I cant understand
why we cant get back to some of that service. Theres less schools,
there are less students in many of the schools. Because to me it
would be the broker for other services for folks at every level, and
hopefully begin a process of working with young people with the vision of what prevention really means, because that is whats ultimately going to be the concept.
I dont have time to allow the rest of you to respond to that particular issue, but I think its something we need to think about,
how do we marry an education and then an education about preventive care within the system?
Mr. Brock, I want to applaud you for the work youre doing, and
I think Im going to be in Knoxville on Friday, and depending on
my schedule, I may try to catch up with you, if I can get a number
or an address.
*Mr. BROCK. Id be delighted to see you, madame.
Ms. TUBBS JONES. Thank you. Mr. Chairman?
*Chairman STARK. Thank you. Dr. Rowland, you were going to
add an answer or a comment to Mr. Camps question relative to the
make-up of the uninsured. Would you like to?
*Ms. ROWLAND. Its roughly 20 percent of our uninsured population are children. When we look at uninsured children, we think
that about two-thirds of those children are actually eligible today
for either the Medicaid or the SCHIP program, but have not been
enrolled, partially because they may be unaware of their eligibility
or their family may not have taken them in. About half a million
children who are uninsured have an immigration status that prohibits them from being eligible for either Medicaid or SCHIP, although their incomes are below the 300 percent of poverty.
*Chairman STARK. Thank you. Further, can you comment on
whats happening to the projections of the growth in uninsured
Americans, and this question of citizenship or documentation unhappily will come up and for those who are more xenophobic than
others, its a great political stance to suggest thatI dont know of
other countries that deny coverage to people who happen not to be
citizensbut how big a part of our problem is that?
*Ms. ROWLAND. Well currently, about 22 percent of our 47 million uninsured are non-citizens; however, the majority of them are
legal and not illegal, and we estimate that about 10 million people
therefore out of the 47 million are non-citizens, many of them waiting for eligibility for citizenship. About 4 million are from the illegal immigration population and therefore currently ineligible for
anything except for emergency care in the U.S.
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*Chairman STARK. So, can I infer from that, that if we think

there are 12 million undocumented workers here and there are
only 4 million of the 12, at least with about 8 million who have
some form of insurance, even though they are not documented, is
that fair?
*Ms. ROWLAND. Correct.
*Chairman STARK. Okay.
*Ms. ROWLAND. In fact most of the growth we see in our uninsured population comes growth among citizens, who makes up
about 80 percent of the growth each year, since the number of
illegals is still small in comparison to the total population.
*Chairman STARK. Okay.
I want to ask both you and Dr. Ayanian, in your testimony, doctor, and I think Diane as well, youve talked about hidden costs.
Dr. Ayanian points out that ifI think if I remember correctly
if Im uninsured before I mature into Medicare for the next 7 years,
6572, Im apt to be more expensive than those who have a continuum of medicalwhich one presumes means they were insured.
Then theres the issue of the local emergency room. Id like to
think, although Im not positive, that we dont let people bleed to
death on the streets, so if they end up in an emergency room,
theyre at least stabilized if theyre treated, somebody pays for that,
either those of us who are paying for insurance pay through higher
premiums, or the local community pays through taxes to subsidize
care.
Then there is the issue of benefit caps, in other words, whether
its the people who sell these association plans that generally dont
meet decent standards in terms of providing care that is covered
by most insurance commissioners or other reasonscan we get
I think Commonwealth did a study that deals with the social costs.
Productivity is kind of an elusive issue. You know, is General Motors going to make less money because of productivity, or is the dry
cleaner in the shopping going to make less money because their
workers may be absent more than othersare there many studies,
and any of you Id appreciate the answer, seriouslyits kind of
hard for us to quantify that. I mean how much more do we spend
on Medicare?, can we find out?, because of the uninsured who mature into Medicare? Is there a number out there that would available to us without extensive research?
*Dr. AYANIAN. Id have to say at this point there is not a definitive number, but its something that were actively working on, and
working with Medicare data to try to understand that better. From
some of the work that I discussed earlier, we found that people in
their late fifties and early sixties who are uninsured use 15 percent
lower levels of services in the presence of heart disease and diabetes, so this is a group clearly that should be in care and where we
know health care makes a difference.
Then almost immediately after they turn 65, we see a sort of flipping of that, and the people who are previously uninsured use
about 15 percent more services after they enter the Medicare Program. So, were now moving forward to try and understand exactly
what services. Some of them may be fairly expensive, like people
needing coronary bypass surgery. Other aspects may be fairly
basic, like seeing primary care physician for diabetes care. Another
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issue that were pursing is to what extent might those savings be

available to the Medicare Program if we did a better job of covering
people in their 50s and 60s before their conditions became more severe.
*Chairman STARK. Okay. It would be helpful, Im sure to all of
us if we could, at least as we have to wind our way through this,
we could in fact quantify those areas, because there are a lot of
people who on both sides of the aisle that unless we can assure
them that were not wasting a lot of money, were going to have
trouble. Its one thing to talk in generalities; its another thing to
say, Hey, this costs X bucks to Medicare. That makes our job a
bit easier.
Mr. Brock, I just want to commend you as well for the efforts of
your organization, and I hope youll keep it up. Im concerned that
many of the services that you suggest are not insurable, insofar as
I know, the American Dental Society is not very anxious to see
dental insurance made available by any kind of mandate, and so
without their help, Im not sure it will ever happen.
Speaking of mandates, which is an issue that was brought up,
Id be remiss if I didnt suggest that Governor Romney and Governor Schwarzenegger, whom I have not ever seen at any of our
progressive caucuses, or any other liberal groups, both suggested
mandates as part of their state plans, and I dont think to their political disadvantage. I think they both felt, as I feel, that there was
no way they were going to get universal coverage without somehow
mandating it. I just dont think that whether its the youngsters
who think theyre invincible, who wont buy it if theyre not told to,
but at some point I think mandateif we would like to see universal coverage, I dont know how were going to avoid that.
My commentary on that. I appreciate, Mr. Finan, the work that
American Cancer Society does to try and save us from ourselves,
and what happens the somebody diagnosed with cancer with no insurance, no money? Youre a male and when you get prostate cancer, if youre uninsured you go to the emergency room. Prostate
cancer generally doesnt present itself except for maybe an urgency
to go to the bathroom that you cant satisfy, but other than that.
What happens to that person? What happens to the woman who
says, Oh, oh, Ive got a lump, but I dont know whether thats
breast cancer or not.and they virtually dont have access to a
systematic medical protocolwhat do they do?
*Mr. FINAN. Well, youre correct, Mr. Chairman. These people in
those situations typically show up at the emergency room. At that
point they probably have an advanced stage of a cancer. It obviously becomes much more expensive to treat at that point. That
cost is being borne more widely by society because theyre uninsured.
*Chairman STARK. Do they get treated, though? I mean if they
show up, do they get surgery or radiology or chemo, which could
be a long and expensive procedure. Is that
*Mr. FINAN. It depends on the state of the condition, actually.
Where they happen to go into the emergency room. I think it varies
considerably by the facility and where they are, and what kind of
charity is available. But the fact is we know that some recent research was done by some of my colleagues in the Society shows
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that for those who are uninsured, they tend to be diagnosed much
later and are much less likely to survive, or they have less chances
of survivorship for the uninsured.
So, insurance makes a huge difference.
*Chairman STARK. Okay. Well, I cant conclude this hearing
without commenting that the one thingand Dr. OGrady, I hate
to tell you, but you failed meI know coming from the Let them
eat cake school of social consciousness that youd like to find ways
to provide care like public clinics, but with all your perspicuity and
intellectual curiosity, you blew it. The Stark solution for these people who are truly uninsured, be they citizens with document or people without documentationhow you could have missed the chance
that I have suggested for every uninsured American, who under
the Constitution, all they have to do is walk out of this room, step
out there on the corner, and kick a cop. Youll end up in jail, where
the Constitution will require us with the medical care you deserve.
So Ive always suggested, if you dont have medical care any place
else, go hit a cop, youll get all the medical careyoull probably
need a little extra when youre donebut please add that to your
testimony because you really havent done the job that I think your
position requires.
[Laughter.]
*Mr. OGRADY. I stand corrected.
*Chairman STARK. Having said that, I want to thank the witnesses and the Members for starting at least on this road to seeing
whether we can identify the problem that faces us.
Thank you all very much for being with us today.
*Mr. BROCK. Can I just add a 10-second thingthat comment
that you made a moment ago?
*Chairman STARK. Certainly, Mr. Brock, you may.
*Mr. BROCK. About the state of Massachusetts. I have here as
a result of the 60 Minutes piece a request from the Campaign for
a Better Tomorrow in Massachusetts, saying to us, We are proposing a convoy of 300 southeastern Massachusetts residents via
school bus for treatment by Remote Area of Medical in Tennessee.
Does this mean, then, that one of the richest states in the Union
is going to be sending patients to us, at one of the poorest states
in the Union? But I found it rather interesting. If they show up,
well treat them.
*Chairman STARK. Youre very kind. Thank you very much, and
the hearing is adjourned.
[Whereupon, at 12:37 p.m., the hearing was adjourned.]
[Submissions for the Record follow:]
Statement of American College of Physicians
The American College of Physicians (ACP) is the largest medical specialty society
in the United States, representing 125,000 doctors of internal medicine, residents
and medical students. ACP commends Chairman Pete Stark for holding this hearing
to better understand the problems of todays health care system so that we may
achieve effective health care reform. The College advocates that all Americans
should have affordable health insurance coverage.
To determine how to achieve a high performance health care system with universal health insurance coverage, the College examined the U.S. health care system
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and compared it to health care systems in other countries.i The analysis revealed
lessons that could be learned from high performance health care systems in other
industrialized countries. Based on these lessons, ACP proposes recommendations to
achieve a more efficient, better functioning health care system in the USA with
health insurance coverage for all.
The U.S. health care system spends far more on health care than any other country. Costs continue to rise at a faster pace than spending in the rest of the U.S.
economy. Yet, an estimated 47 million Americans (15.8 percent) lack health insurance protection.ii These Americans are much less likely than those with insurance
to receive recommended preventive services and medications, are less likely to have
access to regular care by a personal physician and are less able to obtain needed
health care services. People without health insurance live sicker and die younger.iii
Even among those with health insurance coverage, wide variations exist in terms
of cost, utilization, quality and access to health care services. Rising costs are creating financial burdens for individuals, government and employers, resulting in reduced access to care, and adding to the number of uninsured.iv
Additional problems in the U.S. include disparities in health care based on race,
ethnicity and geography; an insufficient supply of primary care physicians for an
aging society; a dysfunctional system for paying physicians; and excessive administrative and regulatory costs.
Our analysis of health care systems in twelve other industrialized countries included an overview of each countrys healthcare system, its advantages and disadvantages, and possible lessons to be learned for the USA. Criteria developed by
the Commonwealth Fund were used for measuring the performance of health care
systems.
Although many individuals in the United States receive exemplary health care,
international comparisons on most key indicators of the publics health have shown
that the United States has poorer health outcomes in the aggregate than many
other industrialized countries. Major improvements are needed in the health care
system in the United States to achieve performance levels attained by health systems in other countries.
The following lessons and recommendations were identified for improving health
care in the United States:
Lesson: Well-functioning health systems guarantee that all residents have access
to affordable health care. Some countries achieve universal coverage with a system
funded solely by the government. Most, however, have opted for models that include
a mix of public and private sources of funding.
Lesson: Global budgets can help restrain health care costs but do not provide incentives for improved efficiency unless they are set reasonably and targeted to small
enough groups.
Lesson: The use of government power to negotiate prices can achieve cost savings
but may result in shortages of services subject to price controls, delays in obtaining
elective procedures, cost-shifting, and creation of parallel private sector markets.
Recommendation: Provide universal health insurance coverage to ensure that all
people within the United States have equitable access to appropriate health care
without unreasonable financial barriers. Health insurance coverage and benefits
should be continuous and not dependent on place of residence or employment status.
ACP calls on policymakers to consider adopting one of the following two pathways
to achieve universal coverage:
A single-payer system in which one government entity is the sole third-party
payer of health care costs. The advantages of single-payer systems are that they
generally are more equitable, have lower administrative costs, have lower per capita
health care expenditures, have high levels of patient satisfaction, and have high performance on measures of quality and access than systems using private health insurance. The disadvantages of this system include potential shortages of services
subject to price controls and delays in obtaining elective procedures.
i American College of Physicians. Achieving a High-Performance Health Care System with

Universal Access: What the United States Can Learn from Other Countries. Annals of Internal
Medicine. 2008;148:5575 (accessible at http://www.annals.org/cgi/content/full/0000605
20080101000196v1)
ii Organization for Economic Co-operation and Development. Total Expenditures Per Capita,
June 2006.
iii U.S. Bureau of the Census. Income, poverty, and health insurance coverage in the United
States: 2006. U.S. Deptartment of Commerce (P60233). August 2007.
iv American College of PhysiciansAmerican Society of Internal Medicine. No health insurance? Its enough to make you sick. Philadelphia: American College of PhysiciansAmerican Society of Internal Medicine; November 1999.
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A pluralistic system in which government entities as well as for-profit and notfor-profit organizations ensure universal access while allowing individuals the freedom to purchase private supplemental coverage. The disadvantages of this system
are that it is more likely to result in inequalities in coverage and higher administrative costs. Pluralistic financing models must provide a legal guarantee that all individuals have access to coverage and sufficient government subsidies and funded coverage for those who cannot afford to purchase coverage through the private sector.
Lesson: Cost-sharing designed so that low-income individuals pay no or nominal
amounts can help restrain costs while assuring that poorer individuals are still able
to access services.
Recommendation: Create incentives to encourage patients to be prudent purchasers and to participate in their health care. Patients should have ready access
to health information necessary for informed decision-making. Cost-sharing should
be designed to encourage patient cost-consciousness without deterring patients from
receiving needed and appropriate services or participating in their care.
Lesson: Societal investment in professional medical education can help achieve a
health care workforce that is balanced, well-trained, and in sufficient supply. Investment in primary and preventive care can result in better health outcomes, reduce
costs, and may better assure an adequate supply of primary care physicians.
Recommendation: Develop a national health workforce policy that includes sufficient support to educate and train a supply of health professionals that meets the
nations health care needs. To meet this goal, the nations workforce policy must
focus on ensuring an adequate supply of primary and principal care physicians
trained to manage care for the whole patient. The Federal Government must intervene to avert the impending shortage of primary care physicians. A key element of
workforce policy is setting specific targets for producing generalists and specialists
and enacting policy to achieve these targets.
Lesson: Effective physician payment systems include support for the role of primary care physicians, incentives for quality improvement and reporting, and incentives for care coordination. Establishment of performance measures, financial incentives, and active monitoring of performance can encourage higher quality of care.
Countries that organize care around the relationship between a primary care physician and the patient through a patient-centered medical home have better outcomes
at lower cost.
Recommendation: Provide financial incentives for physicians to achieve evidencebased performance standards. The United States should revise existing volumebased payment systems to create care coordination payments for physicians working
with health care teams to provide patient care management and maintain a fee-forservice component for separately identifiable visits. Redirect Federal health care
policy toward supporting patient-centered care and the patient-centered medical
home.
Lesson: Uniform billing systems and electronic processing of claims improve efficiency and reduce administrative expenses.
Recommendation: Support with Federal funds an inter-operable health information technology infrastructure, create a uniform billing system for all services, and
reduce regulatory burdens.
Lesson: Insufficient investments in research and medical technology result in reliance on outdated technologies and medical equipment, and delay patients access to
advances in medical science.
Recommendation: Encourage public and private investment in medical research
and assessments of the comparative effectiveness of different medical treatments.
Conclusion
The American College of Physicians appreciates the opportunity to provide the
Health Subcommittee with this summary of our views on health system reform. We
recognized that although we can learn much from other health care systems, any
solution for the United States must be unique to our political and social culture, demographics, and form of government. Many factors make it unlikely that we can
simply adopt systems used by other nations, particularly those that involve a substantial expansion of the power of the Federal Government to regulate health care.
Nevertheless, we believe our examination of the evidence identified several approaches that are more likely than others to be effective in achieving a well-functioning health system that could be adapted to the unique circumstances in the U.S.
Additional information on ACPs analysis and proposals for improving access to
health care can be found on our website at: http://www.acponline.org/advocacy/
where_we_stand/access/#access.
The American College of Physicians would welcome an opportunity to provide further details of our findings and recommendations or to answer any questions.
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Statement of Edward M. Burke
Hello, my name is Edward M. Burke and I am a 49-year-old individual with hemophilia. I want to share my concern with you about the increasingly unobtainable
and unaffordable health insurance coverage for Americans, especially the unemployed, the disabled and vulnerable youth. Therefore I am submitting for the record
the following statistics:
Health insurance costs continue to climb and will probably rise again next year
according to the survey released by the Kaiser Family Foundation, a health care research organization that annually tracks the cost of health insurance.(1) Traditionally health care premiums rises between 914 percent per year, challenging the
standard of income increase. Although health insurance is a priority issue in American lives and amongst political candidates no new significant advance or major
change has been applied in years.
The largest uninsured population of the U.S. are the young people between 19
30. The reason they do not have health insurance is because most have jobs that
do not offer it or because they only make average annual incomes of less than
$26,000. If they were to pay premiums they would require approximately $3,600
which would be 13 percent of their income before taxes and other expenses.
Here is an example at $26,000 ($2,166 monthly):
Monthly Income:
$2,166 per month
Monthly Expenses:
$375 per month
4,500 Taxes 15% of income
$300 per month
3,600 Health Premiums

13% of income
$900 per month
Rent 38% of income
$400 per month
Transportation18% of
income
$250 per month
Food11% of income
$150 per month
Utilities7% of income
$100 per month
Debt4.5% of income
$2,475 per month

($309) Monthly Debt with health insurance(2)
It is clearly evident from an economic standpoint that the younger uninsured population cannot afford health insurance. There is nothing to scale down unless you
expect this population to live in section 8 housing, ride bicycles to work, live off of
soup and crackers, and heat their homes with dangerous space heaters. Many in
this population would rather roll the dice of chances than live in debt, given the
fact that they are already living from hand to mouth. The strategy for this population is, if I need medical attention, I will just go to an emergency room and either
the state or government will pay for it. . . . not me.
Now that we have looked at the livelihood of a relatively health young adult population, lets assume there is a small population within this population who have expensive chronic illnesses. Suddenly the $309 monthly debt would significantly increase to an additional $500 to $1,000 per month in co-payments. Me, having hemophilia and being one of these young people would have to not only incur a debt of
$300 per month so I can stay insured, but I would have to incur an additional
monthly debt of $2500 per month until my out-of-pocket was met or it would be a
recurrent monthly debt for all 12 months if I were on Medicare totaling $30,000.
And you wonder why people who are uninsured flock to the emergency rooms?!
Our health care system does not provide affordable coverage, plummets working
tax-paying citizens into public assistance programs (which incurs cost to the govern-
(1) Health Insurance Costs Climb; Workers Pay 14 of Premiums Emily Fredrix, The Associated
Press, Page 9
(2) UCLA Center for Health Policy Research, California Budget Project, August 2007, What
Does It Take For a Family to Afford to Pay for Health Care, David Carroll, Dylan H. Roby,
Jean Ross, Michael Snavely, E. Richard Brown, and Gerald F. Kominski
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ment), and removes any incentive to better oneself or even maintain a work environment. Why not just live off the State and Federal Governments?
In all due respect, many legislators are not understanding the economics livelihoods and capabilities of their constituents. There seems to be a loss of reality between those making the laws and those trying to live the laws.
The Factor Foundation would like to propose two solutions to provide an incentive
for helping young people afford health insurance and helping people maintain
health insurance. The first is simply to negotiate with health plans to offer more
affordable premiums that would provide at least catastrophic coverage for injuries,
hospitalizations, and necessary tests and surgeries. The second would be the elimination of lifetime health insurance caps.
Sixty (60) percent of all individuals affected by hemophilia have private health
insurance and approximately 3,000 people in the U.S. exceed their lifetime cap each
year, (3)
The average cap for hemophilia A is around $1.4 million. (4) Since this chronic
disease state can incur from $100,000 to $2,000,000 per patient per year health insurance coverage is a constant concern for families with hemophilia. In 1970, the
cap of 1 million dollars was set by the insurance industry. The same coverage today
would equal $18 million. (5)
Eliminating or raising lifetime caps would be of the utmost benefit to chronic disease states such as hemophilia. Other disease states like Cancer, Cystic Fibrosis,
Fabry Disease, Parkinsons and Multiple Sclerosis as well as so many others would
also benefit.
In 1995 Price Waterhouse found that eliminating the lifetime cap would save the
Medicaid program alone more than $7 billion over seven years. These savings are
likely more in todays dollars. A study from the American Academy of Actuaries,
also in 1995, found that eliminating the lifetime cap would increase premiums as
little as $8 a year. Eliminating lifetime caps would allow individuals with manageable, but high costs such as those with bleeding disorders to maintain their private
insurance. (6)
Further, as per the research of Mr. Jack Rodgers, then Director of Health Policy
Economics at Price Waterhouse in 1995, Mr. Rodgers stated, based on our preliminary calculations, we estimate that removing lifetime insurance caps on medical
care would result in an annual savings of $440 million to the entire Medicaid program for 1995 and increasing to roughly $1.3 billion in year 2002. The cumulative
estimated Medicaid savings for Federal and State/local governments for years 1995
to 2002 is approximately $7 billion. Of the $440 million Medicaid savings in 1995,
we estimate that approximately $250 million would go towards Federal Medicaid
savings and $190 million would go towards State/local Medicaid savings. (7)
In 2001 Price Waterhouse estimated about 2,500 patients per year reached their
insurance cap. The Price Waterhouse report prepared in 1995 as Congress was considering legislation to require higher lifetime caps, estimated that State and Federal
health programs could save $1.3 billion in 2002 if lifetime caps were completely removed.
Eliminating lifetime caps would allow the Federal Government and State governments to experience cost savings to ever increasing challenged budgets, and avoid
costly utilization of emergency rooms and hospitalizations due to the chronically ill
being uninsured and limited by lifetime caps. Making health insurance minimal and
more affordable to fit a young persons budget illustrated above would also provide
cost savings to the Federal Government.
I thank you for the opportunity to present this information to you and would be
willing to provide you with the documented resources that support this statement.
Thank you for your interest and concern.
Additional information provided by Dana Kuhn, PhD, President and
Founder of Patient Services Incorporated.
f
(3) www.HemophiliaGalaxy.
About Lifetime Caps, Page 1

About Lifetime Caps, Page 1
(5) www.hemophilia.org, Lifetime Insurance Caps, Page 1
(6) www.hemophilia.org, Lifetime Insurance Caps, Page 2
(7) Jack Rodgers, November 8, 1995, Research Letter, Page 7
(4) www.HemophiliaGalaxy.
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Statement of George Stone
Thank you for looking into the rising cost of health insurance in this country. I
retired about 6 years ago and since that time the cost of my health insurance has
gone up dramatically while my income has not.
Without help controlling those health care costs I will be joining the ranks of the
uninsured.
Retired Firefighter/Paramedic
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Statement of Jonathan B. Weisbuch
Thank you for the opportunity to submit a statement to your informational hearing, Health Subcommittee Advisory No. HL23. Since my graduation from NYU
Medical School in 1963, this country has struggled to provide health care to all its
residents. Medicare and Medicaid were initial steps, but continue to leave huge gaps
that have not been closed. Now is the time to make the major changes that will
set the system right.
Plans currently promoted by Senators Clinton and Obama are insufficient. Their
plans rely on an insurance industry which profits by denying care, and a Medicaid
program for medically indigent that promotes the myth that a health system for
the poor can be separate, but equal.
Preserving a profit system continues the benighted notion that medicine operates
under the rules of Adam Smith, Milton Friedman and the economics of the market
place. This cultural error produces waste, inefficiency, and unnecessary human morbidity and mortality. It encourages the outright greed we now find in hospitals, physician practices, the medical equipment and pharmaceutical sectors, and the insurance industry. The business model is driven by profits and competition; a medical
system should focus on preventing disease, using science to diagnosis and treat patients, and providing humane care when cure is no longer possible. Profit does not
enter the equation. Quality care and profits frequently conflict; nothing in the business vocabulary speaks to serving human needs where no economic benefit accrue
to the corporation. The cultural misconception that medicine is a business, not a
profession, must be eliminated from any reform.
Similarly, Medicaid, focused on serving the medically indigent, has produced 50
state systems, all of which are different. Eligibility is variable, coverage is not transportable; individuals are subject to means tests, and may lose coverage for themselves or their children when income exceeds a minimal level. States invariably
have difficulty covering their medical costs, reducing eligibility, services, and the fee
schedule. A special system for the poor must be eliminated. Congress must adopt
a universal program that assures that everyone has coverage that is equitable and
accessible in every region of the country; is based on common standards of care,
practice and quality; and is reimbursed by fees agreed upon by all parties. Administration costs should be a low percentage of total expenditures.
The one program in the United States that could meet these objectives, if expanded and modified, is Medicare. It is true that the VA system provides the highest quality care at the lowest cost of any large system in this country; but proposing
a program, fully owned by government, is inconsistent with the independent nature
of medical practice. The VA should be preserved until the new health reform
achieves the level of quality, cost and patient satisfaction that exists in the VA.
Until that time, however, the Medicare model will suffice for non-veterans. The New
Medicare should eliminate Parts C and D, and modify Part B in lieu of a service
model that expands primary care and prevention, supports quality improvement,
and spreads all costs across the entire system. The New Medicare should pay hospital costs on a per diem rather than a DRG basis; and should encourage the use
of high technology only when clear outcome improvements to health are demonstrable. The differences in care and cost that exist between regions are unconscionable. The New Medicare should also include mental health and dental services, rehabilitation, and community care.
Expanding Medicare to include everyone can be accomplished in three years. The
age for eligibility for adults could be lowered annually by 15 year increments; for
children, providing coverage for those 01 in year one, then up to 10 in year two,
and to 20 in year three would achieve universal coverage with minimal strain to
the current system. Patients now covered by insurance would maintain their current
patterns of care; those without coverage or a medical home, would be given the opportunity to choose one. Adding 16 percent to every primary care practice in the
country might be a short term burden to the system; but if primary providers were
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given a large increase in their fee schedule, they could be willing to add one hour
to their day to meet the demand. Over three to five years, the increased primary
care fees might draw physicians into primary care specialty training, helping to
equilibrate what is now a disproportionate number of specialists in the American
system.
A significant outcome of this change, apart from the fact that everyone will be
covered, is that all providers will know the fee schedule for a particular service.
Today, insurance carriers all have different fees, Medicare and Medicaid differ, and
fees paid to some providers of care differ from those paid to others for the same
service. This promotes inefficiency and efforts to beat the system; it encourages dishonesty. Adjustment in the fee schedules will take time, hard work; and must include representatives from all segments of the system to be equitable and acceptable.
Payment for the new program will require transferring premium dollars now paid
by employers for private insurance into the Medicare Trust Fund, as each eligible
age group moves from private insurance into the New Medicare program. The coverage for pregnant women and children would be paid in part by transferring the
family coverage premiums into the Trust Fund, and the rest from the Federal monies now used by Medicaid for deliveries and other pediatric programs like SCHIP.
The New Medicare should allow states to retain their portion of Medicaid dollars,
a benefit of nearly $200 billion, funds sorely needed by the states.
Under this scenario, the insurance industry will remain active for three years, diminishing in size each year. Corporate costs for health benefits will remain approximately the same, since the monies now purchasing private insurance for each age
group will be transferred to the Trust Fund as that age group becomes eligible.
Family coverage will be transferred to the Trust Fund. As premiums shift to the
Trust Fund, corporate staff now used to choose insurance programs, examine utilization, determine benefits, and respond to personnel complaints, can be reassigned.
Other insurance costs that cover worker health benefits will decline over time:
Workers Compensation, vehicle insurance, pension health benefits, etc.
Corporate premiums will not cover all health costs, however, since current costs
also include patients out-of-pocket costs. These point-of-service fees will be eliminated for patients, but will have to be covered by a small increase in personal income taxes.
No new finances will be required to pay for the New Medicare, sufficient funds
already exist in the system to meet the $2.3 trillion cost. Corporate premiums generate about $900 billion. Out-of-pocket costs today approximate $1,500 per individual, or $450 billion. The payroll tax going into the Medicare Trust Fund to cover
the elderly, approximately $500 billion, will continue; and may decline in time as
the system becomes more efficient in preventing the morbidity of those entering the
65 year old window. The Federal portion of the $350 billion now spent by State and
Federal general revenues for Medicaid will be added to the Trust Fund, and the
state portion retained by each state. Most of the categorical funding now coming
from HHS, such as Ryan White, Maternal and Child Health funds, special disability
monies, etc. will all be rolled into the Trust Fund. These monies will allow the New
Medicare to operate without a means test, without exclusions for pre-conditions,
without the need for annual state legislative action, without the need for any definition of eligibility based on the Federal Poverty Line, and without the 30 percent
overhead and profits now drained from the system. The only new tax is the income
tax on individuals to offset the out-of-pocket costs now paid at the point of service.
The New Medicare program will function as did the old, with minimal administrative overhead, saving clinicians and hospitals hundreds of billions of dollars in billing costs now required to keep up with the current paperwork.
In three years everyone in the U.S. will be covered. Preventable deaths in the uninsured, failure to use preventive services, individual bankruptcies for catastrophic
illness, and the failure to provide adequate health care to prisoners, will all be
eliminated. Initially, everyone will be covered under the same rules now governing
Medicare; but these rules will have to change, so that by year 5, the entire system
will have common service guidelines. Some service exclusions will exist, including
cosmetic surgery, experimental treatments and those without scientific justification;
but, the approved set of services will include all the care needed to promote health,
to cure and care for disease. Profits will no longer drive the process, rather the care
giving concept outlined by Hippocrates 2500 years ago will prevail. The pharmaceutical industry, the medical equipment industry, private transport services, etc.,
will provide services to the program under competitive bids. Fees and reimbursements will be based upon the cost to provide care and a relative value scale. Incentives may be used to encourage providers to work in underserved areas. And the
system should cover public health costs up to 3 percent of the gross health expendi-
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tures; allowing PH to meet its legislative mandates and be prepared for mass
events.
HB 676 submitted by Congressman Conyers, and over 100 cosigners, would
achieve these objectives. Everyone would be included, the states would be relieved
of their Medicaid burden, companies providing health benefits would experience a
decline in their costs.
Medicare Trust Fund problems would be resolved as large additional revenues
from individuals and corporations are added, increasing the risk pool with large
numbers who use limited medical services. With an entire nation covered by one
common payer, the actual cost of care per individual will decline as many exploit
prevention services, utilize early diagnosis and treatment, and reduce inappropriate
use of hospital emergency services.
f
Statement of Karen Hawes
Speaking ones mind is what we should all be doing, in healthy debates and not
heated arguments. When 47 million Americans is quoted as the number of people
adversely affected by our present-day, health-scare system, the numbers game can
be flipped and dissected to support any argument, even using the same numbers.
However, knowing/seeing much of the impact firsthand, alongside comparisons with
what is provided in other countries, the U.S. is not the leader when it comes to caring for its own. We may have many technological advances, but they are limited to
the select fewthis does not translate to being great as a nation; other nations,
with perhaps fewer or less-fantastic advances, but who provide necessary care to
their people, provides a greater national advancement than any bleeding-edge technology. The rhetoric does not reflect the reality, when it comes to our health care
system.
Some mention that there are millions in America who choose to go without health
care coverage. For those who are choosing to go without healthcare coverage, its
most likely because of cost, not because of choice. We all want quality care, not all
of us can afford it; especially when you have families who have to choose between
paying the rent or paying for ever-inflating insurancefor coverage that may not
pay for your medical needs (due to multiple loopholes and contractual fine print).
So, people gamble with their lives, in order to keep afloat and provide what they
know is needed: food, shelter, etc. I think that every American should volunteer at
one of these health clinics, at least once a year, to see it first-hand and at the frontline who these people are and how it is that things got this way for them. Its
a lot different than whats covered in the sound-bytes of our news sources. There
are more people than were being shown, who are frightened to death, no pun intended, about getting sick. This also reflects the factoid that well over half of Americans who file for bankruptcy have done so as a result of a major medical illness.
When in America, it often is your money or our life.
f
Statement of March of Dimes Foundation
The March of Dimes is pleased to submit testimony on the importance of health

insurance coverage for women of childbearing age, infants and children on behalf
of its over 3 million volunteers and 1500 staff. As you may know, the March of
Dimes is a national voluntary health agency founded in 1938 by President Franklin
D. Roosevelt to conquer polio. Today, the Foundation works to improve the health
of mothers, infants and children by preventing birth defects, prematurity and infant
mortality through research, community services, education, and advocacy. The
Foundation is a unique collaboration of scientists, clinicians, parents, members of
the business community, and other volunteers affiliated with 51 chapters in every
state, the District of Columbia and Puerto Rico.
The March of Dimes thanks Chairman Stark and Members of the Subcommittee
for holding a hearing on the topic of the instability of health coverage in America.
According to the Institute of Medicine, health coverage is the single most important
factor in determining whether a child receives medically-needed care. The IOM has
also found that health coverage plays an important role in access to maternity care,
and pregnant women without health insurance receive fewer health services and report greater difficulty in obtaining needed care than women with insurance.
Given the Foundations history with the polio epidemics and our current focus on
preterm birth, the March of Dimes is equally committed to ensuring that all women
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of childbearing age, infants and children have coverage for preventive services as
recommended by the American College of Obstetricians and Gynecologists (ACOG)
and the American Academy of Pediatrics (AAP) and that high risk pregnant women
and medically compromised children, such as those born preterm or with birth defects, have comprehensive coverage for special health care they require.
The March of Dimes has worked with Members of Congress, other Federal officials, and numerous states on efforts to improve, expand and protect both private
and public coverage. Specifically in regard to private coverage, in 2006, the March
of Dimes commissioned a report from the Georgetown University Health Policy Institute entitled, Health Insurance Regulation by States and the Federal Government: A Review of Current Approaches and Proposals for Change. This report
found that numerous states have enacted laws to ensure that individuals covered
by state regulated insurance plans received access to certain important benefits. For
example, 19 states have requirements regarding maternity coverage, 27 states have
requirements regarding the screening for and treatment of phenylketonuria (PKU),
and 13 states have requirements that address coverage for the treatment of cleft
lip/palate malformations. These measures provide access to critical care. As the Subcommittee considers healthcare reform proposals, the March of Dimes urges Members to recognize the importance of these mandates to pregnant women, children
with birth defects, and their families.
The need for continued efforts to expand access to health coverage is clear. According to Census Bureau data prepared for the March of Dimes, in 2006, 9.4 million12 percentof the nations 78 million children under age 19 lacked health insurance coverage. Some 61 percent of these children lived in families with incomes
below 200 percent of poverty and may have been eligible for Medicaid or the State
Childrens Health Insurance Program (SCHIP). In fact, public programs like Medicaid, SCHIP and Medicare are a critical source of access to care for many low income women of childbearing age, infants and children. Medicare finances approximately 10,000 births annually, and Medicaid financed 41 percent of hospital births
in 2002. Medicaid also covered nearly 30 million children in 2004, and SCHIP covered approximately 6 million. The March of Dimes is dedicated to continuing to
work with Members of the Subcommittee to ensure a swift reauthorization of
SCHIP that will provide states with the tools and resources necessary to make significant gains in enrolling eligible pregnant women, infants and children. The Foundation is also eager to work with Members to ensure that the specific healthcare
needs of women of childbearing age, infants and children are addressed in any
healthcare reform efforts.
The March of Dimes supports access to comprehensive insurance coverage for all
women of childbearing age, especially those who are pregnant, that covers the full
scope of maternity care benefits recommended by the American College of Obstetricians and Gynecologists (ACOG) and the AAP. Women who receive maternity care
are more likely to have access to screening and diagnostic tests that can help identify problems early; services to manage developing and existing problems; and education, counseling and referral to reduce risky behaviors like substance use and poor
nutrition. Such care may thus help improve the health of both mothers and infants.
In addition, postpartum care helps women appropriately space pregnancies, thus reducing the risk of preterm birth.
While maternity care is crucial, research increasingly shows that women who
have regular access to health care before becoming pregnant have healthier pregnancies and better birth outcomes than women who begin care after they become
pregnant. In fact, ACOG now recommends that women receive preconception care,
defined as, the identification of those conditions that could affect a future pregnancy or fetus and that may be amenable to intervention. Such care includes tobacco cessation counseling and pharmaceuticals, nutrition and folic acid counseling,
and controlling pre-existing medical conditions that could impact a pregnancy (such
as diabetes or hypertension). For these reasons, the March of Dimes believes that
all women of childbearing age should have access to comprehensive health coverage
to improve their chances of receiving these services.
Once again, the March of Dimes thanks Chairman Stark and Members of the
Subcommittee for holding this important hearing and for providing us with this opportunity to submit testimony. The Foundation looks forward to working closely
with Subcommittee Members to improve access to comprehensive health coverage
for women of childbearing age, infants and children.
Submitted by Marina L. Weiss, Senior Vice President, Public Policy and Government Affairs
Contact: Amanda Jezek, Deputy Director, Federal Affairs
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Statement of National Congress of American Indians
On behalf of the National Congress of American Indians (NCAI), we are pleased
to present testimony to the House Committee on Ways and Means, Subcommittee
on Health for the hearing on the Instability of Health Coverage in America.
NCAI is the oldest and largest American Indian organization in the United
States. NCAI was founded in 1944 in response to termination and assimilation policies that the United States forced upon the tribal governments in contradiction of
their treaty rights and status as sovereign governments. Today NCAI remains dedicated to protecting the rights of tribal governments to achieve self-determination
and self-sufficiency.
American Indian and Alaska Natives Face Massive Disparities1
Throughout America, health care is a top priority. It is widely accepted that highquality health care is a necessity, not a luxury. In Indian Country, even the most
basic health care is a luxury and high-quality health care is usually not even an
option. Most tribal communities cannot easily access health care services and, even
when services are available, they are often subject to decades-old, outdated practices
and services.
Across every indicator, American Indian and Alaska Natives face massive disparities in health:
Life Expectancy
Life expectancy of American Indian and Alaska Natives is nearly six years less
than any other race or ethnic group in America72.4 versus 77.8 for the general population.2
The life expectancy for males on the Pine Ridge Reservation is 56 years old. The
life expectancy for males from Iraq, Haiti, and Ghana is higher at 58, 59, and
60, respectively.3
Diabetes
American Indians and Alaska Natives have the highest prevalence of Type 2
diabetes in the world and the incidence of type 2 diabetes is rising at 2.6 times
the national average among American Indian and Alaska Native children and
young adults.4
The American Indian and Alaska Native diabetes death rate of 36.35 per
100,000 6 places Indian Country 17th out of 191 World Health Organization
Member States.
Heart Disease
The leading cause of death among American Indian and Alaska Natives are
heart diseasesat 133.5 7 per 100,000 8a higher rate than found in the general population.
Suicide
Native people ages 1534 make up 40 percent of all suicides within AI/AN populations.
As a recent example, in the past 12 months there have been 213 suicide attempts on the Rosebud Sioux reservation. At least one suicide attempt every
other day.
1 Results
from the 2006 National Survey on Drug Use and Health: National Findings
Vital Statistics Reports, U.S. States Life Tables, 2003. Available from http://
www.cdc.gov/nchs/data/nvsr/nvsr54/nvsr54_14.pdf. (accessed April 2008).
3 United Nations, Department of Economic and Social Affairs, Population Division (2007),
World Population Prospects: The 2006 Revision. CDROM EditionComprehensive Dataset
(United Nations publications, forthcoming); supplemented by official national statistics published in United Nations Demographic Yearbook 2003 and Demographic Yearbook 2004, available from the United Nations Statistics Division website, http://unstats.un.org/unsd/demographic/products/dyb/default.htm (accessed Dec 2007); and data compiled by the Secretariat of
the Pacific Community (SPC) Demography Programme, available from the SPC website, http://
www.spc.int/prism/social/health.html (accessed Dec 2007). http://unstats.un.org/unsd/demographic/products/indwm/tab3a.htm
4 National Center for Health Statistics, Health, United States, 2007, With Chartbook on
Trends in the Health of Americans.
5 Adjusted to compensate for miscoding of Indian race on death certificates.
6 Trends in Indian Health 19981999. Indian Health Service. http://www.ihs.gov/PublicInfo/
Publications/trends98/trends98.asp.
7 Adjusted to compensate for miscoding of Indian race on death certificates.
8 Trends in Indian Health 19981999. Indian Health Service. http://www.ihs.gov/PublicInfo/
Publications/trends98/trends98.asp.
2 National
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Fetal Alcohol Syndrome (FAS) 1.5 to 2.5 Native children per 1,000 live births
are afflicted with FAS.
By Comparison, the general U.S. population is 0.2 to 1.0 per 1,000 live births.
Substance Use
19 percent of the Native population aged 12 years and over are substance abuse
dependent.
By Comparison, the general U.S. population is 9 percent of those aged 12 years
and over are substance abuse dependent.
2 percent of the Native population currently abuses methamphetamine.
By Comparison, the general U.S. population is 0.07 percent currently abuses
methamphetamine.
Mental Health
30 percent of Native adults have had a serious psychological distress.
By Comparison, the general U.S. population is 11 percent.
Health Insurance Coverage in Indian Country
American Indians and Alaska Natives have limited health care options. Because
of higher rates of poverty and economic insecurity, American Indian and Alaska Natives are less likely to have continuous health insurance, and as a result, less access
to healthcare resources. In 2003, 45 percent of American Indians and Alaska Natives have private health insurance coverage, 21.3 percent relied on Medicaid, and
30 percent had no health insurancethis compares to the 8.8 percent of uninsured
in the majority population.9
Indian Health Service (IHS), the agency tasked to uphold the Federal Governments obligation to provide health care to American Indians and Alaska Natives,
largely provides primary, onsite treatment. Coverage varies widely among Indian
health programs and should not be assumed to be equivalent to the defined benefits
packages of private insurance.10 In fact, according to the U.S. Census Bureaus Current Population Survey, individuals who solely report IHS health coverage are classified as uninsured.
Uninsured American Indian and Alaska Natives, which includes those receiving
health care thought IHS, are less likely to see a physician than those with insurance coverage. Uninsured Americans are also less likely to get screened for cancer,
more likely to be diagnosed with an advanced stage of the disease, and less likely
to survive that diagnosis than their privately insured counterparts.11 Strong evidence suggests that having a usual source of care produces better health outcomes,
reduced disparities, and reduced costs.12 Considering the staggering health disparities faced by American Indians and Alaska Natives, it is clear that action must be
taken to improve the health and well-being of our tribal communities.
Indian Health Care Improvement Act
The United States has a longstanding trust responsibility to provide health care
services to American Indians and Alaska Natives. This responsibility is carried out
by the Secretary of the United States Department of Health and Human Services
through the Indian Health Service. Since its passage in 1976 the Indian Health
Care Improvement Act (IHCIA) has provided the programmatic and legal framework
for carrying out the Federal Governments trust responsibility for Indian health.
The need for this reauthorization is clear. The American Indian and Alaska Native population is the most negatively impacted by health disparities and suffers
from chronic diseases and other illnesses at a rate disproportionate to that of the
mainstream population.
The statistics provided accurately illustrate the deplorable health conditions of the
American Indian and Alaska Native population at large. Many of these diseases and
illnesses could be treated and/or prevented with adequate funding and proper care.
While the health services delivered to American Indians and Alaska Natives have
improved over time, the current service level is not adequately addressing the
chronic need in the American Indian and Alaska Native population.
Reauthorizing the IHCIA would allocate funding to address the current needs in
Indian health and provide Indian people with the same modernized and techno-
9 Henry J. Kaiser Family Foundation Issue Brief, February 2004 & Income, Poverty, and
Health Insurance Coverage in the United States: 2005.
10 Zuckerman et al., American Journal of Public Health, Volume 94, Number 1, January 2004.
11 American Cancer Society report February 2008 issue of CA: A Cancer Journal for Clinicians.
12 De Maeseneer JM, De Prins L, Gosset C, Heyerick J. Provider continuity in family medicine. Ann Fam Med 2003;1:1448.
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logically advanced health care delivery systems and services that are already afforded to mainstream America.
Nationally, health care has progressed to provide in-home care and to focus on
disease prevention and health promotion. The IHCIA addresses these progressive
approaches to health care delivery and will help move Indian health care into the
21st Century.
The reauthorization of the IHCIA is critical to ensuring healthy Indian communities nationwide. It is necessary to modernize the outdated health care delivery
system and services that are currently found throughout Indian Country. Indian
people must be given the opportunity to access health care that is up-to-date and
directly addresses their needs. Indian people deserve to live in a world where their
health care is as cutting edge as their fellow Americans.
Tax Treatment of Health Care Coverage
In light of these shattering disparities, tribal governments have been trying to be
creative in addressing the health care challenges in their communities. Some tribes
have met this challenge by providing an affordable healthcare plan for all their citizens regardless of need. This type of universal health coverage is similar to Medicare. However, some IRS agentsin examining specific tribal governments for their
compliance dating back to 2002 or 2003are asserting that this type of coverage,
when provided by a tribal government, should be treated as a taxable benefit unlike
Medicare which is another government benefit health plan that is not viewed as taxable to those eligible for coverage.
By virtue of this IRS action, Tribes are being penalized for providing creative solutions to their healthcare challenges. The penalty asserted is substantial: Withholding tax equal to 30 percent of the entire expenditure for tribal health care, IRS
reporting penalties, possible negligence penalties, and interestamounts totaling
several millions of dollars each year. In the interim, no IRS guidance has been
issued. The justification given by these IRS agents is that (1) government provided
health plans do not have the benefit of a statutory exclusion (unlike employer-provided health care), (2) exclusion under the general welfare doctrine is not available
where the coverage provided is universal (i.e., not restricted to low-income members), and (3) healthcare benefits, when funded with gaming revenues, are considered to be deemed per capita distributions by a Tribe. This justification fails to recognize the basic function of a government which is to provide for fundamental citizen needs.
NCAI encourages the committee to begin oversight of this important issue in Indian Country. Guidance is needed at the highest level to ensure that Tribes who
are diligently working to address the health needs in their communities are not subject to tax disincentives. If necessary, NCAI would support legislative action consistent with the sovereign power of governments to provide health care for their citizens.
Conclusion
The Federal Governments constitutional and treaty responsibility to address the
serious health needs facing Indian Country must be met. We at NCAI urge you to
make a strong commitment to meeting the Federal trust obligation in passing the
Indian Health Care Improvement Act, investigating the tax treatment of health care
coverage in tribal communities, and fully funding Indian Health Service. Such a
commitment, coupled with continued efforts to strengthen tribal governments and
to clarify the government-to-government relationship, truly will make a difference
in helping us to create healthy communities in Indian Country.
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The Instability of Health Coverage in America: Hearing

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The Instability of Health Coverage in America: Hearing

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THE INSTABILITY OF

HEALTH COVERAGE IN AMERICA

COMMITTEE ON WAYS AND MEANS

APRIL 15, 2008

Serial No. 11078

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For sale by the Superintendent of Documents, U.S. Government Printing Office

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COMMITTEE ON WAYS AND MEANS

DAVE CAMP, Michigan

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Advisory of April 15, 2008, announcing the hearing ............................................

SUBMISSIONS FOR THE RECORD

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American College of Physicians, Statement ..........................................................

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U.S. HOUSE OF REPRESENTATIVES,

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FOR IMMEDIATE RELEASE