Lawrence Mone: We are honored to have Senator Tom
Coburn with us today to share his comprehensive plan to
reform America’s health care system. As a still practicing
physician, Senator Coburn is specially qualified speak on
this subject. In fact, health care was the issue that first
prompted Senator Coburn to enter politics back in 1994.
Dismayed by the Clinton health-care plan and the move toward
bigger government in general, Senator Coburn, then a family
doctor with no political experience, shocked the pundits
by running for Congress and winning a House seat that had
been in Democratic hands for 70 years. As a congressman,
Senator Coburn played an influential role in reforming welfare
and other entitlement programs and spearheaded efforts to
cut the federal budget.
Believing that representatives should be citizen legislators,
he returned home to Oklahoma each week to see patients,
and as promised, left office in 2001 after serving three
terms in the House.
Since being elected to the Senate in 2004, Senator Coburn
has enhanced his reputation as a principled leader and staunch
proponent of limited government. To the chagrin of many
of his colleagues, over the past three years he has waged
an often solitary campaign against wasteful pork barrel
projects such as Alaska’s infamous $200 million bridge
to nowhere.
The citizen legislator still returns home every Thursday
night to see patients in his medical practice over the weekend.
While his colleagues are appearing on the Sunday talk shows,
Senator Coburn can most likely be found in the maternity
ward at the local hospital in Muskogee.
Last year he co-authored and sponsored the Universal Healthcare
Choice and Access Act. The legislation offers a comprehensive
plan to reform America’s two-trillion-dollar health-care
system based on the principles of competition, innovation
and personal choice. At the core of this plan is the idea
that, for the first time, all Americans will be empowered
to purchase and control their own health insurance. He’s
here to explain how his plan takes health care out of the
hands of employers and government bureaucrats and puts it
where it belongs—with consumers.
Senator Tom Coburn: I thought I’d talk with
you all about health care and three lessons I learned in
medical school, which are axiomatic to being a great physician
and also to reforming the health-care system. The first
is to do no harm. The second is to listen to your patients—they
will tell you what is wrong with them. If we listen to today’s
health-care system, we can know what is wrong with it. Then,
finally, if something has already been done, don’t
do it again. I want to walk you through this plan using
those three axioms.
The first thing is we shouldn’t do any harm. Eighty
percent of all the innovation in health care in the world
comes out of the U.S. health-care system. We should make
sure that whatever we do in health care, we protect that
great opportunity for innovation. We should not destroy
it. We should not undermine it. We should have it available.
The idea that greed conquers technological difficulty is
not a bad thing. Innovation works, and we get tremendous
benefit from it. How do we correct the system that has created
so many advances without damaging it?
Here are some key facts. Sixteen percent of our GDP is
tied up in health care. We essentially spend almost 50 percent
more of our GDP than the economy that is closest to the
United States. If you live in this country, and you get
sick, the health-care system gives you a better outcome
than anywhere else in the world. Our cure rates on cancer
are 50 percent better than anywhere else in the world. We
hear all these negatives about our health-care system, but
the only criticism of it is that our life expectancy isn’t
as great as it is in some of the countries that have government-run
health-care systems.
If you’re talking about the medical principle of not
doing what has already been done, let’s look at all
the government-run health-care systems. What are they doing
right now? They’re doing exactly the opposite of what
they had been doing: they’re coming back to private
health care. Sweden is doing the same thing. The United
Kingdom (UK) is now moving to privatize. One of the UK’s
greatest problems is the quality of care in its hospitals.
A breast cancer patient’s average wait time today for
radiation therapy is six months. Here, it’s four weeks.
We don’t want to do what everybody else has done wrong.
So the idea is, in every area of our economy and society,
we trust markets to allocate scarce resources, except in
health care and education.
What’s our problem in health care? We’re going
to spend $2.3 trillion in the coming year on health care.
Some analysts estimate that seven hundred billion dollars,
about a third of U.S. health-care spending, isn’t going
to keep anybody from getting sick, or help anybody get well.
In other words, it’s wasted money.
How can we take a system that is costing a third too much
and make it efficient? The way we can do that is to trust
what we trust in every other aspect of our society: a real
free and transparent market, where individual participants
work for their own best interests.
We know that markets are not perfect. We’ve seen that
in the housing bubble. But the fact is we know markets are
a better way of allocating this scarce resource than a government
bureaucracy. All you have to do is look at all the places
where we don’t use markets, and health care around
the world, and look at their numbers. What we do know is
if we go with a Clinton or Obama plan, we will control costs
by eliminating innovation and rationing care. That is just
a statement of fact.
We’re starting to see that with the Center for Medicare
and Medicaid Services (CMS) right now. If you are on Medicare
and you’ve had chemotherapy over the past year, CMS
has been in the business of practicing medicine, telling
your doctor how much Epogen you can have and when you can
have it. They’re not necessarily guilty of bad medical
practice, but they have started making decisions based on
economy rather than quality of care.
Our plan creates access for everyone. This doesn’t
mean we create care for everyone. You get a choice, but
we create a tool where everyone can have access.
According to a study that came out of the American Medical
Association, one hundred and twenty-six billion dollars
was being spent every year dealing with the threat of lawsuits.
Extrapolated to today’s numbers, that is why 8 percent
of the cost of our health care is doctors ordering tests
that you don’t need other than due to the threat of
a lawsuit. We could probably save half of that by giving
the states an extra one percent of their Medicaid match
to create a health court and then incentivize those courts
to create realistic parameters and a timely and fair response
to actual medical injury.
How do we create a real insurance market? We create a national
market so that you can buy insurance from any state you
want. You can buy whatever you want, and we incentivize
reinsurance or high-risk pools so that no insurance company
would find it beneficial to game the system if you have
a chronic disease. If they choose not to cover you, they
will have to cover you as a participant in a reinsurance
or high-risk pool. So all of a sudden they have an economic
incentive to manage your chronic disease rather than duck
your chronic disease. This would restore true spreading
of risk.
My position is that we don’t have real health insurance
in this country. What we have is prepaid health care, for
which 18 percent of our premiums go to the administrative
costs of having the bills paid.
Look at the 10Ks of any of the major players in health
care today. Whether you’re invested in them or not,
look at the total revenues, then go look at the EBITDA,
look at their overhead above that, and look at what percentage
of revenues don’t go toward providing direct services
in the health-care market.
Can we create a more efficient, transparent market where
individuals can participate for their own benefit? We can
set it up by creating a refundable tax credit, equalizing
the tax benefit under the code so that, no matter what you
earn, you’re treated the same. If you make more than
$180,000 a year and keep your Cadillac health-care plan,
you might see slightly increased taxes. If you shift to
a higher-deductible plan that doesn’t offer more than
about $14,000 a year in benefits, you will see no increase
in taxes.
We can take the write-off and distribute it fairly across
the board to everyone. That would create a $2,160 credit
for every individual in this country. Across the country
the average cost of an individual policy—not a group
policy—is $2,280, as of the end of last year.
We’re trying to create access. We’re not saying
that the American taxpayer ought to buy everybody’s
insurance for them. We’re saying we ought to make it
a level playing field, where everybody gets to buy what’s
best for themselves.
There is no way we will handle the health-care costs of
my generation—the baby boomers—unless we have
a dramatic paradigm shift in health care. Five preventable
diseases now consume 75 percent of all the money spent on
health care in this country. Why wouldn’t we start
trying to prevent the disease rather than pay the cost of
the disease?
We already spend $9 billion a year at the Centers for Disease
Control and Prevention on prevention, for example. We spend
$7 billion a year at the National Institutes for Health
for prevention, and another $6 billion on other programs
for prevention. But how much prevention do you see? How
many of you know that colon cancer, the second leading cause
of death in men, can be reduced in half if you take three
over-the-counter pills—Caltrate D, folic acid, and
an aspirin—every day? They decrease polyp formation
by 50 percent, we know, if we screen appropriately for colon
cancer and we prescribe them. Why wouldn’t we do that?
Why doesn’t the American public know that?
We know from a study released just this week that oral contraceptives
are very beneficial for women in preventing ovarian cancer.
But we also know that exogenous estrogen doubles the risk
of breast cancer. So we need to be teaching women about
the risks of exogenous estrogen and progesterone. That’s
a legitimate role for the federal government. But where
is the communication?
Let me provide another example. We will spend $36 billion
on food stamps this year. Eighteen billion of it is going
for foods with high-fructose corn syrup, the number-one
food promoting diabetes in our population. Why pay for foods
that cause chronic disease? Why shouldn’t we say that
food stamps can only be used for food that actually is beneficial
rather than harmful to you?
Why shouldn’t school lunches, which we pay for as taxpayers,
be a well-balanced meal, not loaded with high-fructose corn
syrup or starches, and have a balance of fats, protein and
carbohydrates? We haven’t done that.
We control costs by having true competition. We give personal
choice about personal things and create personal responsibility.
There’s about another hundred billion dollars in cost-shifting
that occurs every year with hospitals taking on payments
for people who can’t pay. Just by eliminating this
kind of cost-shifting, we could save $300 per person, per
year, or $1,200 per family in the cost of health insurance.
When you hear that 46 million people aren’t insured,
it’s important that you understand who they are. Eighteen
million of the uninsured are eligible for Medicaid but have
not been signed up by the states. Sixteen million are people
who truly have a need and can’t afford health care.
Another 16 million are people like my son-in-law, who thinks
he’s impervious and doesn’t want to spend the
money, but who have enough to buy health insurance. Our
plan offers access to all three groups. We create a transparent
system where you can see price and quality.
There’s a lot of criticism of doctor-owned hospitals.
The fact is their infection rates are one-eighth of all
the other hospitals in this country because the layer of
bureaucracy between the owner and the patient is at most
two people, a nurse and her supervisor. In a publicly owned
hospital I can hardly get what I want done for my patient.
But as an owner, I can say with a certain amount of force,
“You will do this for my patient.” Before the
Hill-Burton Act, which created federal subsidies and accompanying
regulations for hospitals, private charities and doctors
owned the hospitals. In doctor-owned hospitals today, even
if you control for cherry-picking, you find better outcomes,
lower costs, and greater satisfaction.
That is one small component of a true transparent market
that Washington is doing everything it can to squash. It
doesn’t want physician-owned facilities. Now there’s
no question there may be a conflict of interest, but there’s
a conflict of interest in every auto shop or dentist office
you go to.
The question is whether you’re going to have transparency
in outcomes and ownership. My hope is that we will look
back at our country and be able to say we have used what
works the best in health care. Assuming that we can convince
people of what is in their own best financial and health
interest, I believe they will make decisions that are good
for them.
Still, this bill is going to be very hard to sell. The
level of frustration is so great today among physicians
and some patients that they’re tempted to give up and
let the government run the health-care system. But the consequence
of lower administrative and management costs will be less
innovation. And we will destroy the level of care that is
available in this country, which is far above that of any
other country in the world.
Audience: You said Congress thinks that the doctor-owners
of hospitals have a conflict of interest. Can you please
explain?
Senator Coburn: They’re trying to kill it because
they believe that the physicians don’t have the patients’
best interests in mind. Except the data coming out of physician-owned
hospitals is, so far, superior to that of every other clinical
setting in this country. Have some bad things happened?
Yes. Markets aren’t perfect. Is there some cherry-picking?
Yes. But here’s what makes me think it works. The average
return on post-tax equity for U.S. physician-owned hospitals
in this country is twenty-two point eight percent. This
basically means they pay for themselves in four-and-a-half
years. Do you know of any other hospital that can be built
and pay for itself in four-and-a-half years?
Audience: What is your view on what we have in New
York, which is called community rating for groups—I
believe it’s groups of 50 or fewer—whereby young
people subsidize old people on the theory that old people
are poor and young people are rich. At least in my experience,
sometimes older people have more money than the younger.
Senator Coburn: If you have a true market, and you
have a high-risk pool, you don’t need community rating.
We let employees continue to do what they want to do. We
just recognize a tax credit against income. If your employer
wants to continue to buy you a $25,000-a-year health-care
policy, you can have that. But you also have the option
of saying to your employer that you’d rather have a
less expensive policy with a high deductible, and take the
difference in premiums as salary because you don’t
want to have to pay the extra income tax. This might give
you a tremendous benefit from the tax code. So it comes
down to an economic choice for every individual.
How do you make decisions when you buy a car? Do you ask
your employer what car you can buy, or whether there ought
to be a moon roof in it or a GPS system? We don’t do
that. Yet some assume that when it comes to health care,
we don’t have the capability to make decisions that
are in our best economic interest. That undermines the confidence,
responsibility, and the common sense of the American people.
In every other market the American people do great—except
maybe sub-prime mortgages.
Audience: People talk about health-care coverage
for everyone, but not everyone is included. What about illegal
aliens, who rely on hospitals?
Senator Coburn: Society would still absorb the costs
of the illegal immigrant population because basically this
bill doesn’t cover people who are here illegally. If
we’re truly going to help people, we should aim at
prevention of diabetes, metabolic syndrome, hypertension
and so forth.
If you are on Medicaid in this country, under this plan
you no longer have a Medicaid stamp on your forehead. You
have an insurance policy. You’re no longer discriminated
against because you get some help from the rest of us. And
that’s the big difference. Forty percent of the physicians
and suppliers and providers in this country won’t see
a Medicaid patient today. That inequality in care goes away
with this plan. Everybody is treated the same because everybody
has their own care. It’s not government-run; it’s
what you want, and you may receive some help in getting
it.
Audience: For the last seven years we’ve had
an administration in power of your own party. Why then hasn’t
any of this been done?
Senator Coburn: I don’t have an explanation
for what hasn’t been done by the Bush administration.
There’s a lot about the Bush administration that I’m
not happy with, but I’m not looking back. The fact
is there is an economic tsunami coming for our kids. We
can deny it if we want. But I believe it is immoral not
to make the case that our kids are worth our embracing sacrifice,
as our parents sacrificed for us. Do we really want the
government to control 16 percent of our GDP? Do we really
want to undermine innovation in health care? Do you think
that we will see the same amount of innovation when the
same profit potential isn’t available? What do you
think will happen in terms of breakthrough drugs if the
government is the sole purchaser of all drugs? How well
are Medicaid and Medicare doing with fixed prices right
now? What we’re seeing is a different standard and
quality of care. And when we see fixed prices, we see over-consumption.
Let me take a minute to describe what’s actually happening
in doctors’ offices today. In walks the doctor, who
doesn’t sit down. He asks why you have come to see
him. Five seconds into why you’re there he’s interrupted
you and asked five questions so he can hurry to see the
next patient. On the way out the door he orders a bunch
of tests you may or may not need because he didn’t
have time to listen to your real complaint.
Medicare has driven prices down to the point where the only
thing doctors have to sell is their time. So what do they
do? They see more patients in the same amount of time. What
do you think is going to happen to quality and costs five
years from now if we continue the same process? Let’s
pay for prevention. Let’s pay doctors to listen to
your complaint rather than waiting for you to become seriously
ill before they can get paid.
I had two patients in 2003. I diagnosed with astrocytomas
of the brain. Neither of them had anything but the softest
of soft neuralgic signs. Both patients’ insurance companies—United
Healthcare and Blue Cross Blue Shield—denied them MRIs.
I paid for them myself. The MRIs showed they both had astrocytomas.
We should pay physicians to be physicians rather than to
work for an insurance company and follow what it says is
right rather than what the physicians’ skill set says
is right.
Audience: We’re all happy to see that your
bill empowers the individual, deregulates the insurance
market so that people can make more choices, and provides
for medical courts. But why does Section 101B of your bill
commit $500 million to the Centers for Disease Control and
Prevention to orchestrate a national prevention plan instead
of trusting the private sector?
Senator Coburn: I have even less faith than you
in the 27 federal government agencies that are spending
billions of dollars right now. We will spend $500 million
instead of $6 billion on putting a message on television,
the internet, and other media to teach you about colon screening
and diet. In other words, it’s pure advertising. It’s
not meant to create another bureaucracy. The $500 million
would go to Madison Avenue. We’d ask them, How do we
teach people about breast screenings or metabolic syndrome
and get the message out? How do we get it into the schools?
Texas is now putting exercise back as a mandatory portion
of grade school because we’re seeing Type 2 diabetes
in seven-year-olds due to obesity and lack of exercise.
Audience: The big number that everyone is hiding
is the 15 percent of Harvard’s medical school graduates
who did not choose an internship five or six years ago.
Our brightest people are dropping out of medicine. It is
a disaster waiting to happen.
Senator Coburn: Let me describe the disaster a little
further. In 2020 there will be a 225,000-physician shortage
in this country. You’re going to have “physician
extenders” caring for you. In Alaska we give veterans
a dental assistant to do their root canals.
The fact is, most young people in medicine today are either
truly altruistic or they’re not in it to be a true
physician. Notice that I said “physician,” not
“doctor.” There is a big difference.
Audience: Why haven’t your hundreds of thousands
of fellow physicians risen up in revolt against the pervasive
regulation and anti-market forces that have diminished their
status, their prerogatives, their incomes, and their ability
to treat patients?
Senator Coburn: I’m not sure I know the answer.
What I see in my own medical community are people who hit
the hospital at seven o’clock every morning and get
home at 9:30 at night, after they see all the patients,
pay the bills and go back to see their hospital admissions.
They’re on a treadmill. The leading indicator is who
is going into medicine today. Our best and brightest aren’t.
What was so satisfying in medicine was to be in a very personal
relationship between somebody and their health. You didn’t
worry about the economic rewards that were supposed to come
along with that. Now, you do. And so what you have are doctors
who are no longer physicians. They are clerks who have to
see so many patients a day to make sure that they’re
paying for their overhead. My group has 38 employees, and
14 of them don’t do anything to help anybody get well.
We haven’t seen the benefits of IT in health care that
we’ve seen everywhere else. We’ve spent $800 million
on electronic health records, and we still don’t have
an interoperable standard. The banking industry has an ATM
system—it took them about 11 years to do it—and
99 percent of the ATMs in this country connect without a
problem. And yet we’ve decided we’re going to
allow a bureaucracy to develop an IT system for health care.
But if we create a true market, where quality and expertise
are rewarded not just in diagnosis but in care-giving, you’ll
see the brightest flock to medicine.
Audience: To what extent are Americans prescribed
drugs that don’t do the job?
Senator Coburn: Drug costs are high here because
the cost of research is recaptured here, not anywhere else.
You can buy any name brand more cheaply everywhere else
in the world because they have government-buying groups.
The second point I would make is that the FDA’s regulation
is tremendously responsible for raising the cost of new
medicines. If you have a diagnosed disease that is going
to take your life, there should be nothing you can’t
have. I believe that is an individual human right. We have
destroyed the idea that we can generate new drugs because
we built hurdles through the FDA—almost a billion dollars
to launch each new drug today.
Many people are in trouble today because Vioxx is not available.
I have rheumatoid arthritis patients who are addicted to
narcotics because Vioxx is off the market. We allow one
study to direct us. Rather than doing pure scientific research,
the FDA makes a political response. I believe you could
safely prescribe Vioxx to lots of people. But we don’t
have the opportunity, and of course Merck has lost the tremendous
investment it made because it wasn’t perfect.
Audience: Where does the bill stand on the elderly
who have no family to take care of them?
Senator Coburn: Most of them end up on Medicare
and Medicaid. In our bill we create what is called Medicaid
Advantage. That individual costs twice as much per year
as the average Medicare recipient. And we take those individuals
and prospectively manage their care so that not only do
they get better care but the costs go down.
Audience: The CEO of Blue Cross Blue Shield is advocating
legislation that would enable a nonprofit institute to collect
what he calls evidence-based medicine. The idea is that
physicians, who supposedly show a wide variance in the treatments
or drugs they prescribe, would be guided by research on
which are the most effective. The legislation would also
create some sort of safe harbor, so that if physicians did
prescribe accordingly, they would not be as vulnerable to
litigation.
Senator Coburn: It’s already out there. As
a matter of fact, this started in Oklahoma, where MedEncentive
took a group of physicians who agreed to follow best practices
out of Vanderbilt, signed them up, and paid them 15 percent
extra if they would follow best practices. And then they
also cut the co-pay and deductible for patients if the physicians
did a post-visit assessment of what they were supposed to
do on the basis of their diagnosis. The plan has already
been studied and carried out in Duncan, Oklahoma, and Cushing,
Oklahoma. It cut health-care costs 30 percent.
We don’t need to advantage the Blues health insurance
companies. If we had a real transparent market, and people
wanted to buy what is good, the market would reward and
accentuate that. The Blues are either going to be glorified
bill payers or they’re going to go out of business.
My prediction is that within three years we’ll either
have a national health-care system or true market-based
health care, and we won’t continue what we’re
doing today.
