Thank you for inviting me here today and thank you for that generous introduction, Chip. 

Health care was a great interest of mine before I became Governor, and I am proud of what we accomplished during my term.

I have learned one major lesson: that our hospitals are a critical component of our health care delivery system.  I can think of no better audience to discuss the need for comprehensive health care reform than this one.

I also want to recognize the role of Virginia hospitals. We had no stronger ally during our work on health care during my administration in Richmond. 

I believe health care reform is an economic imperative

The President made health care reform a key aspect of his address to Congress.

Before us is a critical debate about how best to reduce our nation’s total health expenditures in a way that allows us to cover all Americans.  

If we do it, it will allow us to eliminate cost-shifting from the uninsured to the insured, their employers and the hospitals and other providers who are burdened by uncompensated care.

Now I know the media focused on the $600 billion cost of the Obama plan.  But let's look at the ultimate total cost of health care.

Just last week, CMS announced that U.S. health expenditures had risen to $2.4 trillion in 2008 in public and private spending.

And we are scheduled to nearly double health care expenditures to $4.3 trillion in the next decade -- or about 20-percent of GDP. That assumes no reform and an increased number of uninsured.

This is not only a concern in terms of public budget deficits.  It also has a negative impact on America's ability to remain competitive in a global marketplace.

The direction in which we are headed is simply not sustainable -- either for the public sector, or for private industry. 

And because it is unsustainable, failing to act will still mean cuts in health care spending. 

These reductions can be done as part of a sustainable reform effort built around consensus -- or they can come in the form of arbitrary cuts driven by political considerations and budgetary limitations.

And while politically-driven cuts will hurt doctors, insurers, pharma and others, you and I know that the "health care providers of last resort" -- hospitals -- will bear the brunt of any arbitrary budget cuts.

So my message to you is this: now is the time for genuine, comprehensive reform.

We can and we must do better even as our nation grapples with difficult economic challenges. The rising cost of health care is a major factor of this economic crisis.  Few people understand that better than those of you who represent our nation’s hospitals.

 

Why Health Care Reform Can – and Should – Happen in 2009

First, I believe there is reason to be hopeful. 

We have a President who is determined to move health care reform this year.  We have health care leaders in both parties and the real opportunity for a bipartisan consensus.

And businesses of all sizes, from every sector, are emphasizing that health care costs threaten their ability to compete at home and abroad. By some estimates, American businesses pay twice as much per employee for health care costs than their global competitors.

Stakeholders like you are aggressively engaging on this issue. Consumers, labor, insurers, disease groups – all are calling for comprehensive reform, and each of these groups has significant “skin in the game.”

Health care reform must focus on cost and value or we will not be able to afford our current liabilities, let alone expand coverage.

Conversely, we will not be able to maximize our ability to make our health system efficient without covering all Americans.

In short, we cannot do coverage expansions without cost containment.  Similarly, we cannot do meaningful cost containment without expanded coverage.

And I believe we must work with our provider community to find new ways to deliver and finance care that places a greater value on quality and a lesser value on volume.

I believe that we need to reward the best health care and provide disincentives for poor quality care. That means moving toward a system in which doctors qualify for more incentives for high quality care -- rather than simply more care.

If we want to achieve an efficient, high performance health system we must ensure affordable coverage choices for all Americans not just because it is morally right, but because it is essential to making the system work.  We do this by:

a) Ensuring that health insurance plans compete on cost and quality, not their ability to avoid sick populations;

b) Significantly eliminate cost-shifting from the un- and under-insured; and,

c) Enabling us to have benefits that provide incentives for prevention and clinically-driven chronic care coordination.

So what does this mean in reality? It means we must emphasize quality and value through a commitment to modernization. And I have a three-pronged prescription -- you could call it “The Three I’s.”

 

The first "I" is for infrastructure.

We must build on HIT investment – HIT is an essential tool to eliminate errors, reduce paper work, and generate savings over time.

As you heard in the introduction, I have some background in the cell phone industry. I may be the only speaker today who will tell you it's OK to leave your cell phones turned on.

But, as someone who was there in the earliest days of cellular, I can tell you -- if we had not come up with a common national standard, we never would have been able to build-out the network we have today.

So I’ve learned a thing or two about technology, and one of them is this: I-T is a means, not an end. It is a necessary but insufficient pre-requisite for improving any system.

In the stimulus package adopted by Congress, I was proud to be one of the advocates of a dramatic investment of new resources into the system because I know it is a necessity.

As a result, federal support for HIT will grow exponentially – from an average of 15-million-dollars a year to more than 30-BILLION dollars in federal support over the next two-years. Federal dollars alone will not get it done. 

And this may not make me very popular here in this room, but I no longer have any patience with those who keep kicking the HIT can down the road.

Providers who simply do not want to change the way they practice, and hospitals who plead that they have invested too much in proprietary legacy systems -- we simply cannot have those excuses anymore.

We must act now. This is not a technology problem. And we cannot afford to wait for the market to eventually drive us to a common solution. 

This is an area where we must have the political will to set national standards -- and use incentives and strict timelines to meet standards that include workable privacy protection and interoperability features.  

 

The second “I” is information.

We must feed this modern HIT system with sound information to empower providers, patients, and payers. That will require both information on what works and what does not, as well as clinically-based measures of performance.

It amazes me that we have over the years spent so little money actually measuring what works and what doesn't. I want to emphasize once again that this may be our best opportunity to get it right.

In the stimulus bill there is a $1.1 billion investment in Comparative Effectiveness Research.  Now it’s time to make sure we spend it right. And I want to work with you to ensure that we do.

Research shows that when we measure performance, quality increases. I want to commend this Federation for its commitment to quality in both your policy advocacy and your work through the National Quality Forum. 

 

The third “I” is incentives.

We must realign payment incentives in creative ways to make sure we are capitalizing on our HIT investment and the data we will gather from the Comparative Effectiveness Research to promote value over volume.

I realize that we are and will be asking a lot of health care providers.  We are asking them to adopt health information technology, to help develop clinically sound measures, to use and to report on those measures, and to better coordinate care to improve quality and save money in our health care system. 

But, in return, I think we should reward the best providers for the best care, through specific incentives like: 

Risk adjustment – Quality incentive payments should be risk-adjusted to reflect that some sicker patients require more intensive services to achieve the same quality outcomes.

Shared savings – To the extent that care coordination for the chronically ill and other health reforms result in federal savings, providers should share in a percentage of those savings through gain-sharing or other means of reimbursement.

Medical liability relief - Those providers that adhere to clinically-based practice guidelines or quality measures should receive relief from the burden of high medical malpractice costs.

This can come either through reduced premiums or tort reform that includes a rebuttable presumption in court that the provider acted appropriately by adhering to these practice guidelines.  This would provide stronger protections against malpractice claims.  

And we need to have a real discussion about end-of-life issues. This is a medical, political, religious and moral issue that must be addressed. We leave it to families to resolve these extraordinarily difficult decisions with little guidance. 

We must do a better job of informing the public about living wills and durable power of attorney contracts, but we also need to do more.

There are no easy answers. 

We must engage in a national discussion with our religious leaders, with medical ethicists, with patients and their advocates, representatives of older Americans and, of course, with care providers.

Other industrialized nations have dealt with the end of life issue. It's time we did as well.

 

Conclusion 

I recognize that other issues are going to pose real challenges in this debate, such as how we balance regulation, calibrate benefits, and how we address utilization of care.  

But the question remains: Can this be done? I say yes. 

When I ran for this job, I often told people I wanted to be a bipartisan radical centrist.  

This debate in particular will require that all stakeholders and all political perspectives are fully engaged.  For us to achieve true comprehensive reform, we can't allow traditional partisan thinking to get in the way.  

In my short time in the Senate, I've learned how difficult it is to build meaningful consensus on the challenges facing this country.  

In the case of health care reform, failure to do so is simply not an option. 

It's time to get to work. 

Thank you.

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