Speeches & Floor Statements

Hearing Statement: Health Care Costs

Posted on April 4, 2019

Health Care Costs

April 4, 2019

  • I often suggest Tennesseans look at Washington as if it were a split screen television.
  • On one side of the screen, you’ll see the controversies of the day – the crisis at the border or the special counsel’s report.
  • But on the other side you’ll often see bipartisan efforts to improve the lives of every American.
  • Today, I am here to talk about one of those efforts – the bipartisan consensus that we need to lower health care costs.
  • Health care and health insurance coverage are often conflated in both Congress and in media stories, so I want to be very clear that I am talking about the bipartisan consensus that health care itself is too expensive.
  • Health insurance has gotten a lot of attention recently – the president tweeted earlier this week that “deductibles, in many cases [are] way over $7000, mak[ing] it almost worthless or unusable.”
  • I agree. High deductibles tied to high premiums make care inaccessible for too many Americans.
  • And I know that the president is looking at ways to give Americans more affordable health insurance and to protect patients with pre-existing conditions, and I look forward to hearing his plan.
  • But the truth is the cost of health insurance will not go down, or even increase more slowly, unless we lower the cost of health care.
  • And so, my top health care priority this Congress is to pass legislation that will give all Americans better health outcomes and better experiences at a lower cost.
  • And because we have a Democrat controlled House, a Republican Senate, and a Republican president, Democrats and Republicans will have to work together to reach a result. 
  • That is why Senator Murray, the lead Democrat on our health Committee, and I are working with Senator Grassley and Senator Wyden – the Republican and Democrat leaders of the Senate Finance Committee, which shares jurisdiction over health care.
  • We are working together on developing specific bipartisan steps to help deal with the startling fact that up to half of what Americans spend on health care services may be unnecessary, according to Dr. Brent James of the National Academies in testimony before the Senate health committee.
  • In order to help do that, last December, after the Senate health committee held five hearings on the cost of health care, I wrote a letter to the American Enterprise Institute, the Brookings Institution, Governors, State Insurance Commissioners, Doctors, Patient Groups, academic experts, and the public, asking them all to submit specific recommendations to Congress to lower health care costs.
  • As of the March 1st deadline, we have received over 400 recommendations, some as many as 50 pages long, and today I want to talk about some of them.
  • But before I do, it’s important to know that the cost of health care has, in effect, become a tax on the budgets of families, employers, the federal government, and state governments.
  • Warren Buffett has called the ballooning costs of health care “a hungry tapeworm on the American economy.”
  • Almost every day I hear from Tennesseans concerned that health care is too expensive. 
  • For example, Sherry, from Hermitage, Tennessee wrote to me about her daughter’s family, and said “they are new parents now and spend almost as much in health care premiums as they do on their mortgage payment. That doesn’t include the out-of-pocket expenses, such as co-pays and deductibles.”
  • Many people worry about “surprise billing” – which is when a patient receives care at an in-network hospital, but an out-of-network specialist, like an anesthesiologist for instance, also treats them.
  • Todd is a father from Knoxville, Tennessee who recently took his son to an emergency room after a bicycle accident. His son was treated, Todd paid a $150 copay because the emergency room was “in-network” for his health insurance, and they headed home.
  • So Todd was surprised when he received a bill later for $1800 – because even though the emergency room was “in-network,” the doctor who treated his son was not.
  • I hear about high cost of prescription drugs.
  • Shirley recently wrote me from Franklin, Tennessee, saying, “As a 71 year old senior with arthritis, I rely on Enbrel to keep my symptoms in check. My co pay has just been increased from $95.00 to $170.00 every ninety days. At this rate I will have to begin limiting my usage in order to balance the monthly budget.”
  • I hear from doctors about administrative burden:
  • Dr. Lee Gross, a Florida primary care doctor, testified at one of our hearings that insurance and government regulations were making primary care too expensive.
  • Dr. Gross founded one of the first direct primary care practices, where patients pay $60 per month for adults, $25 for the first child, and $10 for each child after, and receive all their primary care – strep tests, vaccines, minor surgical procedures, and more.
  • He calls it “Netflix for health care. After you pay your membership, you don’t have to pay for each episode of care.”   
  • Dr. Atul Gawande, who is leading the Amazon-Berkshire Hathaway- JPMorgan health care venture, told me that Direct Primary Care doctors are a powerful group for driving improved outcomes in health care, because the doctors take responsibility for the outcomes, risk and cost to the patient. 
  • And I hear about how the place where medical procedures are performed can make health care more expensive. 
  • Michael, from Johnson City, Tennessee shared that he recently had an endoscopy of his esophagus – a fairly common and routine procedure.
  • He had the procedure at an outpatient facility, which typically is less expensive than a hospital.
  • However, the procedure was billed as being done at a hospital.
  • Michael is on Medicare, and he wrote to me saying, “Not only am I charged a higher ‘hospital’ rate, the taxpayers are charged a higher rate as well.”
  • I imagine that every Senator has heard similar stories from people in their states and wants to do something about the cost of health care.
  • In addition to the more than 400 comments we received, AEI and Brookings sent us a detailed list of 18 specific policy recommendations.
  • Some of these the Senate health Committee can work on, some of these fall under the jurisdiction of other Committees, and some are steps the Administration can take.
  • My staff and I are still reviewing these recommendations, but there are some I will mention today. 
  • One reason health care is so expensive is that the cost is in a black box – patients do not know how much a particular test or procedure will cost, making it nearly impossible to adequately plan for future health care expenses.
  • Because of that, the health care system does not operate with the discipline and cost saving benefits of a real market.
  • Congress has already taken some steps to increase transparency:
  • Last Congress we passed and the President signed legislation by Senator Collins to ban so-called “gag-clauses” in pharmacy contracts that prevented pharmacists from telling a patient a drug was cheaper if they paid with cash instead of their insurance.
  • And now we’ve received recommendations on how to build on that first step:
  • For example, patients should not be prohibited from knowing the cost of a surgery or doctor’s visit in advance of scheduling the procedure or appointment.
  • And insurers and employers should not be prohibited from providing patients with information recommending lower cost options or higher quality providers.
  • Another recommendation, this one from AEI and Brookings, is that employers contribute claims data – which is information on how much a test or service costs and how much insurance paid for it– to what is known as an All Payer Claims Database.
  • 18 states currently have these databases so employers and insurers can see trends in health care spending.
  • This would break open the black box around the claims data for the 181 million Americans who get their health insurance on the job.
  • One of our new health committee members, Senator Braun, who owned a manufacturing and distributing company and employed over one thousand people before he became a Senator and was aggressive about helping his employees reduce health care costs. 
  • Healthcare Bluebook, a Tennessee company that testified at one of our five hearings on how to reduce health care costs recommended we look at the clauses in contracts employers sign with insurers that block the employer from accessing de-identified claims data that they could use “for purposes of price and quality transparency.” 
  • The Trump Administration is also focused on transparency – for example, Secretary Azar has proposed a regulation to start requiring advertisements for prescription drugs include the list price, and has asked for feedback on the idea of requiring that the prices patients pay for medical services be disclosed.
  • Another strategy for achieving better outcomes and better experiences at lower costs, is to focus on the 300,000 primary care doctors in our country.
  • Dr. Sapna Kripalani of Vanderbilt testified at one of our health care cost hearings that primary care providers are the “quarterbacks” of health care.
  • By coordinating a patients’ care, managing their chronic diseases, and providing other preventive care, primary care doctors are able to help patients stay healthy and out of the emergency room.
  • Adam Boehler, who leads the Center for Medicare and Medicaid Innovation, told me that while primary care accounts for only 3-7 percent of health care spending it can affect as much as half of all health care spending.
  • One recommendation we received came from Dr. Gilliam, a primary care doctor in West Tennessee who runs a direct primary care practice – the same type of practice I mentioned earlier that Dr. Gross runs.
  • Dr. Gilliam said, "[direct primary care] is the only model that is able to offer affordable healthcare with complete price transparency.”
  • One suggestion we have heard is to change Internal Revenue Service rules that block Americans from using their Health Savings Accounts to pay for the monthly direct primary care fee.
  • Many recommendations are focused on reducing what we spend on prescription drugs – which is about 17 percent of all health care spending.
  • One way is reforming prescription drug rebates, the discounts that pharmacy benefit managers negotiate with pharmaceutical companies. 
  • The Trump Administration has proposed a new rule for the $29 billion rebates on prescription drugs that the government pays for through Medicare Part D. 
  • One recommendation is to expand that to the estimated $41 billion of rebates negotiated in the private market.
  • Another way to lower drug prices is to increase competition through generic drugs, which can be up to 85 percent less expensive than brand drugs when there are multiple approved generics. 
  • I have heard concerns about brand drug companies not providing generic companies the samples needed to make generic drugs, and other ways that brands delay drug competition.
  • It was recommended we increase competition for the generic versions of biologic drugs – which are called biosimilars.
  • One way to do that may be a bill Sen. Collins introduced last week to ensure that biosimilar manufacturers have access to the information they need to develop and bring to market more biosimilars.
  • AEI and Brookings also recommended we focus on helping eliminate surprise medical billing – which is what happened to Todd after he took his son to the emergency room.
  • AEI and Brookings said that the issue is not that insurance companies have limited doctors and hospitals in their networks, but that “[Emergency Department] and ancillary physicians, as well as hospitalists and ambulance companies, have a lucrative out-of-network billing arrangement unavailable to other providers” which encourages doctors to go out-of-network and send patients high bills. 
  • Senator Cassidy and Senator Hassan are leading on finding a way to help eliminate surprise billing.
  • We received comments about the importance of the seamless exchange of information between electronic health records, which includes stopping information blocking.
  • A goal of the 21st Century Cures Act was to make it easier for patients to access their health records and for doctors and hospitals to get the information they need to treat patients.
  • Last month, the Department of Health and Human Services released two proposed rules, required by the Cures Act, to lead to better coordinated care and less unnecessary health care.
  • The Senate health committee held a hearing on these rules last week, and we heard a story of the better experiences and outcomes that can happen when health care records are interoperable.
  • We received comments on the decreasing choices and competition in in the health care system – which is when hospitals merge with doctors’ offices or other hospitals, insurers merge with other insurers, or hospitals and insurers merge, so that these hospitals or insurers have even more control over the market.
  • Some argue that consolidation in health care can benefit patients and lower costs.
  • Others argue that that patients have fewer options, health care prices increase.
  • AEI and Brookings suggested that one way to address the potential negative consequences of consolidation would be improving oversight of the 340B Drug Discount program, which has been found to incentivize hospitals to purchase physician practices, or employ physicians directly, to bring in additional revenue from 340B discounts. 
  • This echoes what we heard at our committee’s three hearings last year on the 340B program.
  • Today, I am also asking that Senators continue to come forward to Senators Murray, Grassley, Wyden and me with their specific proposals for how we can reduce health care costs.
  • What I hope to do is compile the proposals that fall under the Senate health committee’s jurisdiction into a package of legislation that the Committee will vote on early this summer.
  • We can then combine that with what the Senate Finance Committee passes, ask the Leader to put it on the Senate floor, and work with the House to send legislation to the president’s desk.
  • My staff and I will continue to review recommendations and work with other Members to incorporate ways to give Americans like Sherry, Todd, Shirley, and Michael better outcomes and better experiences at lower costs.