Generic Comprehensive SB 840 speech,
with integrated rebuttal to opposition positions.
(prepared by Nurse Judy Spelman, July 2005)

Good morning. Thank you for inviting me to talk with you about Senate Bill 840, the California Health Insurance Reliability Act introduced by Senator Sheila Kuehl. SB 840 is a comprehensive health care reform. It is the only reform before the state legislature that would provide health insurance, (hi), for all residents, call for no new spending, include meaningful cost controls and address problems with care quality.

This morning I'll talk about the problems facing the health care system, (hcs), and what's causing them. Then I'll discuss SB 840: how it would work and how it would solve the problems causing the health care crisis. (hcc).

The Problem

When you talk about the hcc, most people think first about the 7 million Californians who have no health insurance. But the problems go far beyond lack of insurance. The problems reach into every home, every business, every hospital, clinic and doctor's office, every state, city and county government office. The problems affect all of us. What are these problems that people are calling a "health care crisis"?

1. The first problem that affects all of us are problems with the quality of care we receive, regardless of whether or not we have health insurance.

"The dominant finding of our review is that for most care that has been studied, there are large gaps between care that people should receive and care that people do receive. This is true for all three types of care, preventive, acute and chronic. It is true whether one looks at over-use or under-use. It is true in different types of care facilities and for different types of health insurance. It is true for all age groups, from children to the elderly."(RAND), (fyi- Overuse is what typically occurs in the fee for service sector where money is made for each service offered. The more you do, the more money you make. Under-use is what typically occurs in the HMO capitated sector, where more money is made when fewer services are provided)

"Using 439 indicators of quality developed by multi-specialty expert panels, the analysts found that participants received only 54.9% of recommended care---a proportion that varied little across the categories of preventive, acute and chronic care." (RAND)

"The Institute of Medicine has estimated that between 44,000 and 98,000 Americans die each year from preventable medical errors in hospitals. "

"According to the CDC, 88,000 Americans die because of infections contracted during hospitalization."

"The IOM and CDC estimates do not include deaths due to preventable medical errors in settings other than hospitals."

"126,000 die annually from failure of physicians to use evidence-based standards of care for hypertension, heart attacks, pneumonia and colorectal cancer."(RAND)

"29,000 Americans with diabetes experience kidney failure each year and 2600 go blind each year because of physician failure to monitor blood sugar levels or to teach patients how to do it." (RAND)

"Mistakes in the use of medical technologies across all settings are calculated to account for at least 400,000 deaths annually, of which about two thirds can be attributed to preventable "health care accidents". These numbers do not include the impact of failing to treat what we know how to treat. They do not include the impact of overzealous use of the care. Were fatalities from these additional sources added to those from "health care accidents", the number of deaths would climb significantly." (Dr. David Lawrence, former chairman and CEO of Kaiser Permanente)

"Improvements in American health care are both feasible and can contribute to substantial, double-digit reductions in the total costs of care….of nearly 30% below current levels." (Dr. Don Berwick, President of Harvard University Institute for Healthcare Improvement)

"30% of all direct health care outlays today are the result of poor quality care consisting primarily of overuse, under-use and waste."(Juran Institute and Severyn Group for the Midwest Business Group on Health)

The lesson to be learned is that everyone is affected by these problems, everyone would benefit if we solved them and a lot of money would be saved too.

2. Another problem that affects everyone who has health insurance is "under-insurance", which refers to benefits your policy doesn't cover, co-pays and deductibles you pay and the total benefit limit on your policy.

3. Another problem we all share is the effect of the hcc on the state budget.

4. The rise in the price of health insurance premiums affects everyone.

5. Of course we cannot talk about the hcc without talking about the un-insured.

I'll talk now about what is causing…and what is NOT causing these problems.

There are six underlying problems causing the health care crisis.

1. The first is excessive expenditures on administration.

2. The second underlying or foundational problem is the absence of a comprehensive state or national purchasing policy that achieves fair pricing for consumers and manufacturers of medical goods.

3. The third foundational problem is the absence of system wide planning and budgeting for the health care needs of the population.

4. The fourth foundational problem is excessive and preventable loss of life and limb because of the absence of system-wide oversight of care quality.

5. The fifth structural problem is the linkage of health insurance to employment. Why is this a problem? The linkage of health insurance to employment ties the financial fate of businesses to the financial fate of the health care system. It hasn't worked well.

6. The sixth foundational problem is the structure of the health insurance market. The market for hi is characterized by three features that are the cause of un-insurance and under-insurance.

We've talked about the nature of the hcc and its underlying causes. Now let's talk about a reform that can solve the underlying problems, because if we don't solve the underlying problems, we will just continue to throw good money at a broken system.

SB 840

1. Under SB 840, the state of California would establish a health insurance plan that covers all residents and a HC Fund into which all money to be spent on hc would be deposited and from which all hc payments would be made. Analyses show that these two changes could save around $20 billion dollars in the first year, more than enough to insure everyone who is now un-insured.

2. Under 840, California would use its purchasing power to negotiate a fair price structure for drugs and medical equipment and would conduct cost-benefit analyses of new technology and drugs. Analyses show this would save $5 billion a year.

3. The system would be administered by an elected health Commissioner who would establish a statewide hc budget and to plan for the health needs of the population.

There would be an Office of hc Planning, headed by a planning director, and up to 10 regions would be established to plan for the health needs of the population on a local basis. Local, rather than centralized planning, is extremely important. No one is going to be comfortable if day-to-day decisions about their care are made by the state government. SB 840 strongly supports local planning and decision making.

4. Eligibility for the plan is based on residency rather than employment.

5. The benefits under SB 840 are comprehensive. They include dental and vision care, prescription drugs and DME, hospitalization, outpatient and home care and a lot more. This is the first step in solving the problem of under-insurance.

6. There are no co-pays or deductibles for at least the first two years. This is the second step in solving the problem of under-insurance.

7. Everyone can choose their own primary doctor.

8. All licensed providers and accredited facilities would be part of the hc system.

9. Doctors would decide how they want to practice medicine: privately, in clinics or in HMO's and would negotiate their reimbursement through their chosen representatives. 10. Doctors would be paid for all covered services they provide. If a patient turned out not to be eligible for the California health plan, the hcs, not the doctor, would assume the costs of care.

11. Hospitals, clinics and integrated health care organizations would get their operating funds from the state health fund, rather than having to file claims with 1000's of insurance companies. They would negotiate a budget and receive predictable funds on a regular basis.

12. The plan is paid for with money we already spend on hc. No new spending is required to fund this program.

13. What each person pays would be in proportion to their income. What each business pays would be in proportion to the wages they pay. This would make the premiums affordable for everyone.

I'll conclude with these thoughts:

It is estimated that the current hc system wastes 50% of the money that's put into it. Most of the waste is on administration, excess drug prices and poor quality care. SB 840, as a single-insurer system would solves the underlying mis-spending problems of the current system and would get 90%-95% of every dollar we spend into hc.