Hillary Clinton Unveils Plan For Reducing Health Care Costs

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Main Category: Health Insurance / Medical Insurance
Also Included In: Medicare / Medicaid / SCHIP;  Litigation / Medical Malpractice
Article Date: 25 May 2007 - 11:00 PDT

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Hillary Clinton, Democratic Senator for New York and US presidential candidate made a speech at George Washington University yesterday where she unveiled her strategy for health care reform, focusing on a seven point plan to reduce healthcare costs.

Speaking to an audience of health professionals and academics, Clinton made light of the previous time she "tangled with the issue", in 1993 as First Lady, saying that she had the "scars to show for it" but had learned a lot from the experience.

Clinton said there were three parts to her approach on healthcare: lowering costs, improving quality and making sure everyone is insured which she described as a "moral imperative". The speech yesterday focused mainly on lowering costs.

Clinton set the scene by describing how US healthcare presently costs 16 per cent of Gross Domestic Product and by 2016 it will be 20 per cent, "That means that within less than 10 years, 20 cents out of every dollar produced in America will be spent on healthcare," she said. This compares with a maxmum of 12 per cent in other wealthy countries.

The Senator then talked about how obesity in the US had contributed significantly to rising healthcare costs:

"About 30% of the rise in health care spending is linked to the doubling of obesity among adults over the past 20 years."

And another two thirds of healthcare spending is on treatable diseases such as diabetes, asthma and heart disease, she pointed out.

But perhaps her most scathing comments were on the administrative costs and the amount of money wasted through inefficiency.

"More than one in four health care dollars goes to administration," said Clinton, adding that "64 per cent of private insurance plans' administrative costs are dedicated to underwriting health risks, sales, and marketing".

6 times more is spent on health care administration in America than in other countries, she said, and referred to a recent independent report that showed the US spends nearly 100 billion dollars more on administration that has " nothing to do with delivering good health care".

Clinton cited examples of labs that repeated tests because the previous results were unavailable, and examples of stroke patients being given thousands of dollars for surgery that didn't work.

If so much money is going into the system, then why doesn't it deliver better results, was the thrust of her opening messages.

"If we spend so much, why does the World Health Organization rank the United States 31st in life expectancy and 40th in child mortality; worse than Cuba and Croatia?"

Clinton used the event to unveil her seven point plan to tackle the spiralling healthcare costs:

1. Focus on prevention: wellness not sickness. For example the retailer Safeway changed their whole employee healthcare system to incentivise and resource preventive activity and their healthcare costs stayed flat when the rest of the country's went up by 7.7 per cent. Clinton mentioned incentivising insurers by requiring those that deal with federal employee healthcare to bring in preventive strategies.


2. Use more computer technology: to increase security and accessibility of records, reduce costs and errors, and share research. For instance at the moment if you get taken into an emergency department they can't access your medical records to find out your history and current use of medication. After Katrina, many people's medical records were lost because they were on paper and damaged by the floods. "In fact, if all hospitals used a computerized physician order entry system, an estimated 200,000 fewer adverse drug events would occur, saving roughly 1 billion dollars per year", said Clinton as a cost saving example.


3. Co-ordinate and streamline the care of chronically ill patients. The cost of caring for this patient population accounts for 75 per cent of national healthcare spend, said Clinton, something that she found "astonishing". She gave an example of a streamlined co-ordinated system that was already working in Oregon, where an elderly patient with several conditions was having her care managed and co-ordinated centrally to ensure her treatments were compatible and working together.


4. Offer individuals and small businesses market access to larger insurance pools. The purpose of this part of the plan is to "lower costs and end insurance company discrimination against people with pre-existing conditions," said Clinton. She sees this as part of a system of universal coverage, where "insurance companies cannot as easily shift costs through cherry picking and other means". This means that people with pre-existing conditions would be offered insurance on a par with others, "prohibiting insurance companies from carving out benefits or charging higher rates to people with health problems".


5. Improve the quality of care to help drive down costs: for example by "establishing an independent public-private Best Practices Institute". Clinton envisages the Institute being "A partnership among the public and the private sector, to finance comparative effectiveness research, so that doctors, nurses and other health professionals, as well as consumers and businesses, would know what drugs, devices, surgeries and treatments work best". She cited a recent study by Dartmouth researchers that found close to one third of the 2 trillion dollars spent in the US goes to care that is "duplicative and fails to improve patient health".


6. Get prescription drug costs under control. Americans pay the highest prices in the world for prescription drugs; and yet in most instances the research and development of those same drugs was carried out and funded in America. Clinton said studies had shown that branded drugs were up to 55 per cent more expensive in the US, with the top selling brands over 200 per cent more expensive, compared to other industrialized nations. The cost of prescription drugs as a percentage of total healthcare costs is going up faster in America than anywhere else. An important part of the solution would be to allow Medicare to negotiate for lower drug prices, to allow importation of cheaper drugs, and generics.


7. Reform medical malpractice: in a way that works for doctors and patients alike. By way of example, Clinton offers one alread in use: "I have offered one solution that has been used successfully at the University of Michigan Hospital system. It's called the National Medical Error Disclosure and Compensation (MEDiC) Act as I have borrowed it from the University of Michigan to put it into law".

When addressing how these changes would be financed, Clinton stressed the self funding nature of her seven point plan:

"The money we save from the waste we eliminate and the way we change how we care for people should be used to help finance coverage for the 45 million Americans who have no insurance. Also, when you insure everyone, it will maximize the impact of the prevention programs I have recommended -- with earlier care as opposed to emergency care -- as well as cutting administrative costs."

US Health Care: Facts About Cost, Access, and Quality(full document is downloadable free, by the RAND corporation).

Hillary Clinton's speech.

Written by: Catharine Paddock
Writer: Medical News Today
Copyright: Medical News Today
Not to be reproduced without permission of Medical News Today