Baltimore magazine: Senator, can you start by giving us an update on the status of the health-care reform debate in Washington?
Sen. Cardin: I think you're going to see significant reform with three major goals. One is to bring down the growth rate of health care cost. Secondly, there needs to be an affordable, quality option for all people in this country to get health insurance and to get their health needs met. And third, it needs to be done in a fiscally responsible way, and the President defined that very clearly, that it cannot add to the federal deficit, either in the short term or long term.
I think we've gotten off to a good start. There are certainly a lot of controversial issues that are unresolved. The public-insurance option, we can talk about that. How much subsidy will be provided to lower-income workers and what the responsibility of the employer will be. We know that it will include individual responsibility and that every person will have to have health insurance. We know that there will be employer responsibility, that is each employer will have to help provide health insurance for their employee. And we certainly know there will be government responsibility. The government will not only buy subsidies for low-wage workers and for small companies, but will establish the parameters in which the private insurance marketplace will work.
For the first time, you're going to see significant federal health-insurance reform that will dramatically change the way that health insurance companies operate. And that is by direct regulation, disallowing exclusions for preexisting conditions and having automatic renewability and certain guaranteed benefits that must be in the package, and also in establishing state exchanges. We are not exactly sure how broad that will be, but there will now be a way in which the consumers will have a lot more information, a lot more choice when they become consumers for purchasing private insurance, whether it's a business or an individual.
Baltimore: The health-care industry is so central to the economy of Maryland. How do the folks from hospitals and health systems here think this bill might impact you?
Warren Green: I think the direction the bill is taking is going to be positive for hospitals all over the country. No one would argue that the disenfranchised 46 or 47 million people isn't a huge burden, nationally and in Maryland, too. So, I think I speak for a lot of people in our state in saying that we are solidly behind the initiative to make a largely dysfunctional system work better. What we're concerned about, however, is the bridge period between the old world we have to let go of and the new world we have to try to define. We really are an industry running on very thin margins with a lot of debt and fixed costs. And we're concerned that the system has to be kept alive and vibrant during a time of reinvention. So, we have this bittersweet feeling that, in the long haul, something positive is going to emerge from this, but we may damage seriously, perhaps even irrevocably, the system that is now functioning, a system that we're going to need to be strong when the smoke clears.
Larry Merlis: I think Maryland is in a unique position in regard to implementation of health-care reform. The ability of our state, which has had a history of working together with insurance companies, the payers, the government, and legislative support on the federal and state level will allow Maryland to provide world-class medicine. I think we could all benefit from everyone having access to insurance. Some of the things that Maryland has done, such as expanding Medicaid, have already reduced the number of uninsured in Maryland and I think that's just another example of what could be done with reform. I think we all want to see that the bill that passes is truly reform, not just on the delivery system, but also focused on truly improving the health outcomes, whether it's chronic disease or diabetes or hypertension or obesity, where the true savings will take place over time.
Cardin: Can I comment on that? You can't look at this in a static basis. If nothing significant is done at the national level in health-care reform, the problems that you have at your two hospitals, the problems that you're going to have in the health- care system of Maryland, are going to get much more challenging. Because I'm not sure we can sustain the current cost curve. The projections are that by the year 2016, it's going to be $23,000 for a family health-insurance policy in Maryland. We don't have a lot of competition in our state. Seventy-one percent of our private insurance market is in two health insurance companies. So, I don't know whether we can sustain the current system. Today, families pay about $1,100 a year in health insurance premiums for the uninsured. So, I think, Larry, the points that you raise about innovation are important, we want to see that continue, but I think you have a better chance in a system that brings everyone into the system, doesn't leave people out. Warren, you raise a very valid point in transition. We're talking a good deal about that in Washington. But I would not fear transition as much as I would fear status quo. The status quo is much more challenging, to see how you continue to deal with the problems of the uninsured and insurance companies cutting back by denying claims and all the other things that they're doing.
Jeffrey Rivest: Senator, I think there's another area we all have a concern about during the bridge, as Warren put it very nicely. To your point, we have to go to a new world. And we're going to work hard to control the cost curve, [but] the demand curve will accelerate. All the statistics and public health data say that that will indeed happen, if nothing else because of the aging of the population. And we need to be sensitive in reform that we have enough revenue in the system to train the next generation of providers. In fact, maybe finish training this generation of providers. So, we could see nursing shortages, position shortages, demand increases. Is there anything in this equation that helps us fund the training of physicians for the next generation?
Cardin: I hear that probably more than any other single point from those that are directly responsible for health care. And you're correct: If next year every person in America had health insurance and was knocking on your door demanding care, you don't have the facilities to do it. So, one of the provisions in the health reform, I think, will be, at the end of the day, doubling the resources for federally qualified health centers. That puts in place at least the physical structures in our community, so that the primary care and preventive care and family care can be provided. Secondly, the transition period's going to be many years. We don't expect to put this in overnight, we don't want to put this in overnight; I don't think we can do that. So there's going to be a transition period that we hope will give us enough time to modify the workforce to deal with the realities of a more efficient health care system by training more primary care, by having more nurses in our community, and providing incentives for professionals going into this field. And yes, we think this is a key part of health reform. We don't talk a lot about it, because it isn't one of the controversial issues, but we understand that we don't have the doctors, nurses, and allied health care professionals necessary to meet the most cost-effective, efficient system that President Obama envisions in this health- care reform proposal.
Baltimore: I want to move the discussion toward the situation for patients and citizens. People always say if you like the insurance you have, nothing will change—–
Cardin: No one is saying nothing will change. They're saying there's nothing in this legislation that would require you to give up your current insurance. Nothing in the bill will require you to do anything different.
Christopher Summers: Until your employer drops you. That is, until the employer decides that there's enough government intervention, which is the root of all the problem in health care right now—too much government. Maryland is a prime example. Senator, in going back to your point that there's really no competition [among insurers] in this state, we could allow purchasing insurance across state lines, we could eliminate the enormous number of mandates. In Maryland alone, I think on average, we pay 12 percent more for our health care because of the 65 or 66 mandates that are on insurance. And that's a significant problem with controlling cost.
We need to go beyond making sure everyone has insurance cards and dealing with uninsured. We looked at the number of uninsured in Maryland three or four years ago and it was 800,000 and a large portion of them can afford insurance, but the market is not providing the product that they want. In some cases, they don't need that much insurance. So I think having faith that this enormous bureaucratic function is going to somehow provide a lower cost of return—I don't think that there's a proven track record that that's taking place.
Cardin: Let me first answer the moderator's question: There is clear intent and a desire to make sure that those who are satisfied with their private insurance today maintain and can keep that private insurance after the reform. And again, I bring us back to the first point I raised: What happens if we do nothing, status quo, versus what happens if we pass reform basically accomplishing the goals I set earlier. If we maintain the status quo, I would suggest that 10 years from now, it's highly unlikely that someone who has private insurance wouldn't see radical change in their coverage and cost. Employers are going to continue to put more on the employee, insurance companies are going to continue to look at ways to deny certain coverage. So you're going to find, I would say, a general weakening of the insurance that people currently have, if we do nothing. If we're successful in accomplishing the reforms I spelled out, I think there's a much stronger chance that companies will maintain their commitment on health insurance and that you, as an individual, will truly be able to maintain your insurance into the future.
Christopher, in response to your point about government intervention—it's a very interesting point, because in the United States, we have much less government intervention than probably any other industrial nation in the world. We can claim whether we have the best or not, but we do believe, by and large, in private doctors and private hospitals who provide our care. We also have private insurance companies to pay for most people's health-care needs. And we have individuals who pick up a large part on their own. Government is a player, but government is not the sole player, and certainly government does not provide the health care that's provided by private doctors and hospitals.
The question is: How much of a federal hand do you want in this proposal? I don't think there's been a heavy governmental hand here. My constituents would like to see more federal help as it relates to their dealings with private insurance companies. They think private insurance companies are too arbitrary. And they would like to see more help in how they determine their claims. Medicare, which is a very popular program in this country—that's government insurance—that's a public insurance option, and we could certainly do it better, but I'm not so sure that our seniors and disabled population would like to see us go to private insurance as a substitute for the public insurance option.
Baltimore: I'm curious to hear what Mr. Burrell thinks.
Chet Burrell: Well, we are obviously one of those insurers that cover the biggest single piece of the population. We do it as a not-for-profit—skinny margins of a percent or less, so the costs actually reflect what the cost of care is. We cover 43,000 employer groups in Maryland. And 41,000 of them are under 50 in size, the others are 51 to 200—when they get above 200, it's typically self-insurance—the group determines its own benefits and takes its own risks. But for the smaller markets, there's already a lot of protections built in from the state, no preexisting exclusions, and so on. There are mandated benefits.
What we see is this: The cost curve in Maryland is, like the nation, going up, nine to 12 percent a year, per person. And the reason for that in Maryland is not because hospital costs or physician fees are going up that much—they're not. They're going up pretty much at single-digit rates, and in some cases low single-digit rates. What is going up is use of the system and that is largely driven by chronic disease, multiple chronic disease, lifestyle-related disease, particularly with the aging of baby boomers, this huge demographic wave washing through, people demanding more and more service. Your statistics, Senator, are right. It would grow to be so expensive that virtually nobody affords it.
This is a disturbing trend: Three years ago, if you asked how many employer groups of those 43,000 actually offered broad coverage and broad network, almost everybody did. And there was little presence of high-deductible health plans, maybe 3 percent. Flash forward three or four years—a nanosecond in history of the region—53 percent of the employer groups that we cover have gone to high-deductible health plans.
There are two things going on simultaneously in reaction to cost. One is that cost shift in the form of bigger deductibles, and the other is less and less of the premium being paid by the small group employer, because they can't afford it. And so we're seeing that a lot of small employers are dropping their contribution rate below 50 percent of the premium, which puts more strain on the individual member of the group.
So if you're going to find a sustainable long-term system, what are the drivers that cause this cost-use to go up? So much of it is chronic disease, which suggests different types of policies, for example, rewarding a healthy lifestyle. If you do, can you get a credit, like a safe-driver credit? And then if you do get sick, and your care could be better coordinated, not by an insurance company—which I think we would say is not the best way to do it—but by a provider system of care set up to do it. Is there an incentive to give the provider that says, "If you can do this better, you can keep a piece of the reward from it." And right now, the fee-for-service system is not there, but we would like to work with the providers to introduce that. We would like to see the law move in a direction to reward healthy lifestyles over the long term.
Cardin: I think you're going to see that. When I say the bill has to bring down the cost curve, we're not talking about the cost curve for employer or cost curve for government; we're talking about the cost curve for providing health care in America. So, the most promising areas you just talked about is trying to manage people who have serious diseases, that deal with wellness, that deal with personal responsibility.
I often cite the Safeway supermarket case. We had the CEO of Safeway come in and meet with us. It was a defining moment in the health-care debate in Washington. We were so impressed by what they've been able to do. This is a volunteer program, because it can't be mandated under federal law today. It started off with a few employees and it's now the most popular plan that Safeway offers. It's very simple: You agree to join this plan, and your premiums will be less and your benefits will be more. What's the catch? The catch is that you have to agree to manage your own personal lifestyle, and you're monitored. You're going to go through tests and they're going to make sure you're doing what you say you're going to do. So you've got to manage your heart issues with blood pressure and cholesterol and manage your weight. You can't smoke or, if you're smoking, you have to go on a cessation program. And you have to manage your diabetes, which can lead to a lot of other complications, and they monitor that. For four years, they've been able to keep health-care costs constant—constant, not an inflationary adjustment which would be great—but they've kept their rates constant for four years. It works.
Second point, on health information technology: We all talk about that and know there's an administrative savings from health information technology when it's fully implemented. But it's also management issues, trying to manage the types of diseases and medications in order to have a much more cost-effective system. It also prevents unnecessary testing. My doctor told me if I end up in a hospital one day, and I'm still lucid, please call him first, so they don't perform all these tests that are unnecessary on me. Because they already have the results, and you won't be able to get the results because today you don't have it [electronically]. We hope tomorrow we will have a system that will allow you to have all the information of people that go into your emergency room so you don't have to do those unnecessary tests.
Eric Wagner: As I listen to how the premium is shifting over to the employees, it really strikes me that that is why we have to have some government action. The reality is today, when somebody has bought one of these policies that caps the expenses at some ridiculously low amount, lets say $100,000—and this happens on a weekly basis, certainly in our organizations—and then this person who bought that policy comes in and they need to have a kidney transplant or a liver transplant or a heart transplant, in fact, their insurance isn't going to cover the thing that they need the most to save their life. And they didn't have a clue when they bought the policy. This isn't some experimental procedure—this is accepted medical practice that could save somebody's life. And then we're in the position, collectively, as providers of trying to say, 'Well, who is going to pay the bill?' Until we get meaningful reform, those questions aren't going to get answered or those questions are going to be answered in an ad hoc form, which I don't think serves the residents of Maryland or any other jurisdiction in America. We shouldn't be in this situation where people can't get the care they need.
Green: If we could only figure out a way to distribute income such that primary care practitioners can earn a respectable living given the extent of their training and the amount of work they have to do. The knowledge exists to help people avoid complications from chronic disease and to live a healthy lifestyle. But when a doctor can only spend seven or 10 minutes with a patient and has to see 40 to 50 patients and has to get up and do it again the next day, that's not really providing good medical management. And I don't think a 4 or 5 percent tweak in income is going to define a change. There has to be a really different, completely different way of recognizing the value of primary-care practitioners.
Baltimore: I'm going to ask Dr. Saunders, if you could, from a medical perspective, your thoughts on where the priorities should be.
Dr. John Saunders: The physician community does care about this process, they're deeply involved as citizens, but I think they may see that this kind of bill is more about hospitals, health systems, and health insurance that may not trickle down to affect them. My fellow physicians and I care deeply about our patients' health. That's why people go into medicine for the most part. But in Maryland, it's very difficult. It's difficult to recruit new physicians to come into the state, and we all know reasons why: Reimbursements here are real low for individuals, the malpractice climate is not as friendly as other states, and when you talk about primary care, you talk about low reimbursements to physicians. My residents finish about age 35, and they're all in debt for about $150,000. And if you were the bank giving them loans, and saw what they were going to make in their career, you might not think that to be a very good loan, and you wouldn't be responsible to give them loans, so something that fixes the cost of medical education and revamps it would be helpful.
Also, we want to provide good care, but we don't always know how to do it. And the systems to help physician provided care are not there. And all the incentives are not there. We are a procedurally reimbursed group. I get paid for operations I do. Hospitals get paid for patients who get admitted. Everyone gets paid for all the tests they do, many more tests than are reasonably necessary. We spend a lot of money. We're not engaged in keeping people healthy, we're not engaged in taking control of patients. We're kind of putting Band-Aids on here and there. So all the incentives for physicians and all health-care providers and hospitals is really kind of mixed up. How you can change that without mandating that everyone belongs to one club and everyone gets a certain salary and actually mandating how you provide health care? I don't have the answer to that, but I think there are ways we can have more collaboration.
Baltimore: I want to add in the thoughts from Ms. Walker. What do you all see as the priorities in terms of the legislation?
Keisha Walker: I definitely feel that the focus on prevention is very important. We have this illness model, and you have seven minutes with a patient and it's usually some acute issue and there's no time for any care coordination, no time to plan, so you see the doctor for a few minutes or a practiced nurse and you talk about whatever's going on and that's it. And, usually, it's nurses or allied health professionals who are trying to coordinate care, and beyond there, trying to consult with the physician or the provider. None of them are incentivized, there's no reimbursement for that sort of care coordination that's going on with patient education. I really think there needs to be a re-education for everyone. Patients don't realize they don't have the right insurance until they have some sort of diagnosis and they're trying to get approval to get the care they need and then they can't get it.
As far as working in teams, nurses are great at coordinating care and getting everyone together and calling on other departments, whether it be social workers or nutritionists. We see what happens after physicians leave the room. We're calling or taking the triage calls, finding out they can't get the meds the doctor prescribed them because they don't have funding for that, so let's find a program for this. There's no provider that will take their insurance because reimbursement is poor and they're not accepting this type of insurance or this type of provider. I think nursing can play an integral role in this.
Burrell: I'd like to support what's just been said by both of the speakers. Put a number in perspective. The top 5 percent of members we have consume about 60 percent of the money that's spent. It's usually multiple chronic-disease patients. It's not just that they have diabetes, but they have heart disease, and they have all the things that go with it. We ran on our database how many [of those] people ever saw a primary-care physician in the last two years: 50 percent. The other 50 never went to primary care. Much of the remission rate is people who were discharged, never saw anybody, and went back in and there's a lot of cost associated with that. If you look and say, 'Well, could a primary help a patient lower blood pressure, deal with their diabetes, prevent some of the breakdowns that are coming down the line?' The answer is, absolutely. Do they have the time to do it? Most of them will say no.
Primary care built around incentives to the primary [doctor] to actually find ticking time bombs and manage them better is critical to the overall health care equation. And then, when you have a real breakdown, I have a cluster of conditions—I am obese, I have heart disease, I have diabetes, and it's a cluster—what are my options? Where would I go? Am I going to shop that on my own? Do I know that as a patient? What the primary can do is help inform the patient about where to go. And that probably is a team, at that point, of doctors and nurses and other things within the health system and we want to provide the incentives to the health system to provide that coordinative care. Failure to do that means you cannot deal with the underlying cost problem.
Merlis: What I'm hearing from everyone is higher quality equals lower costs. And I think the industry, and all stakeholders in the industry, need to be pushed by reform into coming up with the innovations to do this. Numbers you're hearing about 5 percent of Chet's subscribers using so much of the spend—another study said 80 percent of the health care spent in the country is spent on those who are chronically ill with one or more chronic conditions, but they only get 50 percent of the effective [primary] care—if we focused our effort there, we would get benefit back, not only healthier outcomes, because I don't think we can be proud of our health outcomes compared to the rest of the world, especially the western countries, but we have to do something different. We're not competitive because of our health care costs. And health-care reform can't forget, that's where the focus needs to be. We have all these other things, but if the outcomes can be improved, we'll have higher quality of health care.
Wagner: I'd like to go back to professional liability, medical malpractice, which I think has not gotten enough focus in the reform discussion. And certainly we were very pleased to see the President highlight that that would be something we could look at as part of a reform package. Our concern is that it's been viewed narrowly. The Congressional Budget Office has concluded that medical malpractice only adds a relatively small amount to the spend. We think that's been looked at far too narrowly. Every practitioner that we speak to says about 20 to 30 percent of the testing procedures that get done are tied to concerns about liability, as opposed to what actually needs to get done from a medical management perspective. As long as people are afraid of what's going to happen to them if they don't do a test, we're going to end up right where we are today, which is that we're over-testing.
Baltimore: Sen. Cardin, what is the likelihood tort reform will be part of the reform?
Cardin: On tort reform, I think the President really brought it in the right format. And that is, we can save money by providing patient safety and care and quality as well as reforming our tort system itself. It's certainly a legitimate area that should be included in health-care reform. The committees are looking at it, the floor's certainly going to have opportunities for amendments in this area.
Baltimore: Mr. Erdman, since Johns Hopkins is the largest employer in the state, do you think reform will have an effect on the broader economy of Maryland?
Stuart Erdman: Certainly if it results in a contraction of payments and revenue, it would have an impact on the economy in Maryland, but there's nothing that I see in reform right now that's aimed at doing that. It seems to be broadening the services and trying to line incentives between doctors, hospitals, and home care groups, to revive a better system of service. So I don't personally see a direct impact in that respect. Hospitals alone in Maryland are a $13 billion industry. And there's probably triple to spend off of that in terms of services we use or provide in other areas.
One of the things we didn't talk about yet that I think is important, in the hospitals and at Hopkins in particular, is the whole billing process for patients.Do you know their insurance and do you know their coverage and is it approved and sending a bill and you may or may not get paid and why didn't you? That process right now is really not organized, it's still paper-driven. We have hundreds of people that process these at Hopkins, I don't know how many in the state. I see them just as nonproductive costs. I really believe that in the country and in Maryland, there's just tremendous savings in that.
Cardin: It is. On the issue of Maryland and our economy, our economy is very much benefited by health-care industries. It's huge in the United States—I think one-sixth of our economy—but in Maryland, it's even larger. We are a center of health-care opportunities. From the biotech firms to the work of our hospitals, it's a growth industry for Maryland. And I think the point you raised about making it more efficient on the administrative side can help Maryland. And there's a great deal in this bill. We're working to the day that we will have this seamless system where the billings and everything will be done through one card that a person will carry. We think it will even be safer from the point of view of privacy than the current system. We think we can get this done and save a significant amount of money.
One last point on this though: I think if you have a predictable, sustainable health-care system, it's going to be good for the health care industry and for the Maryland economy. I think one of the risks today is that there will come a point where investors will say, 'We don't know what the future looks like. And if we can't have a more predictable future for health-care investors, it could make it more difficult in Maryland for this part of our economy to grow.' So, I think health care reform done right can be very beneficial to the Maryland economy.
Baltimore: I think that's a good place to wrap up. Thank you for coming.
Cardin: I tell you, I've participated in a lot of town hall meetings and this one was a lot more pleasant. I'm not used to this. I don't know what it is to go home at night and not have a drink after a town hall!
Summers: But Senator, wouldn't you attribute that to the fact that the majority of people don't want what Congress is proposing, to do away with the private arrangement of private contractual health insurance?
Cardin: I think that there's a large number of people that don't understand what health-care reform is about. And part of that has been the fault of Washington and the way it's been presented. Part of it's been the legislative process itself—we don't have a bill yet, so we can't answer specific questions—and part of it is that there's a general mistrust of government. So, where the government appears to be taking on a larger role, there's skepticism of whether we can do it in a more cost-effective way as we claim we are going to do it. The best way to counter that is to get the information out, and, if we get it done right, we'll be able to demonstrate a lot of things you all are talking about. We have to do a much more effective job in understanding what the public wants but also explaining what health-care reform is about and not about. And then make sure we get it done right. I found the summer town hall meetings very helpful by the way—90, 95 percent of that experience was pleasant. There was 5 to 10 percent where people went over the edge where they shouldn't have. But I took away from that that this is a personal issue. People are concerned about whether their daughter will be able to get the type of care she needs. We have to be able to demonstrate that we're doing this right.
