Without healthcare reform legislation, the number of uninsured in the United States will rise from the current 46 million to 72 million by 2040, according to Christina Romer, chair of the White House Council of Economic Advisers, who was the lead-off witness before the House Education and Labor Committee this week.
The hearing, the first full committee hearing this week of the three House committees that released an 852-page healthcare reform draft last Friday, focused on the potential impact of reform on a variety of groups: Small business, consumer, academic, and healthcare. The Energy and Commerce Health Subcommittee held hearings as well.
Romer noted that healthcare expenditures are currently 18% of the gross domestic product (GDP), "by far the highest of any country," she said. By 2040, without reform, healthcare could roughly account for one-third of the total output of the American economy, she said.
For Medicare and Medicaid, government spending for healthcare would lift from 6% to 15% of the GDP by 2040. Only about one-quarter of that increase would be related to demographics; the rest of that increase would be linked to healthcare spending that is rising more quickly than the GDP, she said.
"When we talk about slowing growth rate of cost, we talk about doing it through efficiency. And the crucial part is that as good as the American system is, we do feel there is a lot of inefficiency," Romer said. The current healthcare system has up to about 30% that is "just being wasted," which means there is “a lot of fat that can be cut out without diminution of care."
If inefficiency was eliminated at the rate of about 1.5% a year, it would take about 25 years to totally eliminate it. "One-and-a-half percent may sound small, but it's enormous in terms of its effects of the economy," she said.
One way to achieve this would be through bundling of care when a patient is hospitalized and then released into the community for a 30-day period--where the providers are given the right incentives so patients aren't sent home too early. "That is such a win-win for patients and cost-effective," she said.
Insurance exchange
In additional testimony, a recent survey of small business owners in 16 states that was released at the hearing found that 81% of small business owners would support a health insurance exchange and that 66% of small businesses would be willing to share responsibility for paying for it.
"A system requiring an employer contribution--with appropriate levels of tax credits, sliding scales, and exclusions--will give small businesses the relief they need, potentially saving as much as $855 billion over the next 10 years, reducing lost wages by up to $339 billion and minimizing job losses by 72%," said John Arensmeyer, founder and CEO of the Small Business Majority.
Public plan
Jacob Hacker, a professor and co-director of the Berkeley Center on Health, Economic and Family Security at the University of California at Berkeley, encouraged the committee to consider public plans--particularly from the aspect that they could promote cost control.
"Medicare has a better track record than private health plans in controlling costs while maintaining broad access to healthcare, especially over the last 15 years," he said. As a way of illustrating this, he said that between 1997 and 2006, health spending per enrollee for comparable benefits grew 4.6% annually under Medicare compared with 7.3% annually under private insurance.
The committee also received feedback from its Republican members--many of whom had been closed out from the draft's creation. Rep. John Kline (R-MN), the new ranking minority member of Education and Labor, voiced a common sentiment among GOP lawmakers that the process was being rushed to meet a goal of completing a bill in the House before the August recess.
"That doesn't give us much time," Kline said.
He suggested that lawmakers consider a Republican proposal unveiled last week by the GOP Solutions Group.
"Today may be our first hearing but I hope it won't be our last. The proposal we are debating today is clearly partisan but I continue to believe that Republicans and Democrats can and should come together to develop an American plan,” he said.