On June 15, 2009, President Barack Obama addressed the Annual Conference of the American Medical Association (AMA) on the issue of health care reform. In his remarks, President Obama defined the health care reform challenge as "How do we permanently bring down costs and make quality, affordable health care available to every single American?" In an effort to preempt critics of health care reform, particularly the public option, the president strongly emphasized that the first thing he plans to do is protect what is working in our health care system. As a result, no matter how health care is reformed, the president promised that if you like your doctor(s) and health care plan you will be able to keep them. "No one will take them away, no matter what. Fix what's broken and build on what works…that's what we intend to do."
Accounting for rising health care costs
The president described our health care delivery system as "a system where we spend vast amount of money on things that aren't necessarily making our people any healthier; a system that automatically equates more expensive care with better care." First, we have "a model that rewards the quantity of care rather than the quality of care." The solution, according to Obama, requires “reforming the way we compensate our providers.” These reforms should include: (1) bundling payments so that doctors are not paid by a single treatment offered, but for how well doctors treat the overall disease; (2) creating incentives for doctors to team up to provide patient care; (3) bonuses to doctors for good health outcomes; (4) addressing the rising costs of a medical education; (5) rewarding medical students who choose a career as a primary care doctor; and (6) rewarding doctors who choose to work in under served areas.
The second structural reform recommended by the president is improving the quality of medical information making its way to doctors and patients. According to Obama, too many doctors and patients are making decision without the latest research. "Less than one percent of our health care spending goes to examining what treatments are most effective…and even when that information finds its way into journals, it can take up to 17 years to find its way to an exam room or operating table." Obama expressed support for figuring out what works and encouraging rapid implementation.
Medical malpractice suits and MedPAC recommendations
The president recognized that it will be hard for doctors to order less tests and treatments if "they're constantly looking over their shoulders for fear of lawsuits." The president, however, refused to advocate caps on medical malpractice awards, which he personally believes "can be unfair to people who've been wrongfully harmed." Instead, to scale back excessive defensive medicine, Obama would like "to explore a range of ideas about how to put patient safety first, how to let doctors focus on practicing medicine, and how to encourage broader use of evidence-based guidelines."
In an effort to continually evaluate how to eliminate waste, reduce costs, and improve quality, the president indicated that he is open to expanding the role of the Medicare Payment Advisory Commission (MedPAC), which happens include a number of doctors. Created by a Republican Congress, in recent years MedPAC has proposed approximately $200 billion in savings that have never been implemented. According to the president, these recommendations have now been incorporated into his broader reform agenda, and now we "need to fast-track their proposals…so that we don't miss another opportunity to save billions of dollars."
Health Insurance Exchange
For individuals who don't like their present health care coverage or don't have any insurance at all, the president proposed a Health Insurance Exchange, which will provide one-stop shopping from a number of health care plans that offer different packages (including an affordable, basic package), benefits and price comparisons between plans, and a chance to choose a plan — the same way federal employees, postal workers, and members of Congress do. In presenting his public exchange option, the president recognized as “legitimate” the concerns of the AMA that, given today's Medicare rates, the cost savings in the public option will come off the backs of doctors, but he dismissed as "illegitimate" concerns that the exchange option is a Trojan horse for a single-payor system.
The president expressed confidence that the public exchange plan would provide insurance at an affordable rate. Because of this confidence in the public exchange option, he is "open to a system where every American bears responsibility for owning health insurance — so long as we provide a hardship waiver for those who still can't afford it as we move towards this system." According to Obama, this hardship waiver would also apply to employers. “While I believe every business has a responsibility to provide health insurance for its workers, small businesses that can't afford it should receive an exemption.” Under the waiver, small business workers and their families will also be able to seek coverage in the exchange if their employer is not able to provide it.
Insurance industry input
Since the insurance industry has expressed support for the idea of covering the uninsured and certainly favors mandating coverage, the president welcomed them to the reform debate, however, Obama refuses to "simply create a system where insurance companies suddenly have a whole bunch of more customers on Uncle Sam's dime, but still fail to meet their responsibilities." In a further slap at past industry practices, Obama stated that "We need to end the practice of denying coverage on the basis of preexisting conditions. The days of cherry-picking who to cover and who to deny, those days are over. I know you see it in your practices, and how incredibly painful and frustrating it is — you want to give somebody care and you find out that the insurance companies are wiggling out of paying."
Price tag
The president conceded that expanding coverage to all Americans will not come without cost. Obama stated, however, that the costs "will not add to our deficits. I've set down a rule for my staff, for my team — and I've said this to Congress — health care reform must be, and will be, deficit-neutral in the next decade." Obama admits this reform package will cost $1 trillion over the next 10 years, but he believes the price tag can be met by the following actions:
The president believes that these cuts will not only produce $950 billion toward the $1 trillion price tag, but will actually extend the life of the Medicare Trust Fund by seven years and reduce premiums for Medicare beneficiaries by $43 billion over the next 10 years. Obama also anticipates that long-term savings from reforms like medical information technology and increased investment in prevention will make up the balance. In anticipation of fiscal criticism from Republicans and the Congressional Budget Office, however, Obama pointed out that these items are not scorable and, therefore, the CBO will not count them as savings in their analysis.
President Obama's Remarks to the American Medical Association, June 15, 2009.
For more information on this and related topics, consult the CCH® Medicare and Medicaid Guide.
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