Click here to listen to Senator Clinton's remarks.

We are here today at the University of Rochester, in this magnificent hospital, to ask a simple question: what is wrong with our current health care system, and how can we make it right?

Of course, you and I know that this is not as simple a question. Many of you have spent your careers trying to make our health care system work better for patients, doctors, nurses businesses, the entire community. And as you know, I’ve done a little work on health care myself, and still have the scars to show for it.

In fact, we last sought to address the challenge posed by our nation’s health care system over a decade ago, during the Clinton Administration. And in the twelve years since, the problems confronting our system have only grown. Costs have continued to rise, the ranks of the uninsured have increased, and strains on our system and its ability to provide quality care have worsened.

I think it’s important, for our discussion today, to start with what’s right about America’s health care system, because, as President Seligman summarized in his introductory remarks, there is so much that we have to be proud of. And because we don’t hear often enough about what is right and what is working well, we miss an opportunity to learn lessons from what we can do to fix the problems that we have by really looking at what has been successful.

First and foremost we have dedicated, skilled, caring doctors, nurses and other healthcare personnel. We have Medical innovation that is second-to-none. And we have community innovation, like here in Rochester, bringing together business, patients, and medical leaders to try and hold down costs and make sure those who need care get it.

There is a proud tradition in Rochester of healthcare innovation. In fact, Rochester has historically been a model for everything that is right about American healthcare system. An efficient structure, substantially lower cost, greater insurance coverage and access to care, and satisfied patients.

Rochester led the country with its establishment of its community rating system in the 1930’s and the nation’s first community health planning council in the 1960’s.

Pooling risks across all local companies allowed Rochester to lower health costs for employers and families and reduce the number of uninsured, whose unpaid bills drive up the cost for everyone else.

Rochester's system has been described as “managed cooperation” and it was far more successful than most other communities in avoiding or reducing spare capacity, such as unused hospital beds, and wasteful duplication of services. And its so-called uniform – “all payer” – system prevented selective insurance coverage and kept administrative costs low.

For example, in 1999 the price of a family policy for a business was $4,400 in Rochester, while that same policy was $5,500 in Elmira where experience rating was prevalent.

But we are here for another reason as well. Rochester and Monroe County continue to outperform the nation, but we have seen the signs that Rochester's health care success story is at risk. Many of the pillars that Rochester's achievements were built in the past – they’re disappearing or at least eroding. Today, only 32 percent of Rochester employers insure through the community rating system. Employers, insurers, hospitals are looking more like their peers in the rest of the country. The spirit of cooperation is giving way to the same challenge plaguing communities everywhere.

And I was over at Rochester General Hospital this morning, and one of the questions I asked was, ‘How can we get back to cooperation? We used to have it and we saved money doing it and we had a system that worked well for everybody.’

So let’s talk about the challenge. Right now, we’ve got the incentives wrong in three ways: our medical system is numb to the relationship between cost and result; it’s blind to the need to pay for prevention; and it’s deaf to the need to reward good corporate citizens who provide decent coverage for their workers.

First, we’re not getting our money’s worth for our health care dollars. We spend in this country more per person than any nation in the world yet our life expectancy ranks thirty-fourth and more than 45 million Americans don’t have any health insurance at all – including 13 million children.

Last year, the U.S. spent over 1.7 trillion dollars on health care… 16 percent of our Gross Domestic Product. And that percentage is only expected to rise. If spending continues to rise at its current rate, we’ll be putting one-third of our GDP into health care costs by the year 2040.

Meanwhile, health insurance premiums are rising five times faster than incomes. In five short years, health insurance premiums for families have jumped by nearly 65 percent and deductibles by over 50 percent.

And when this Administration in Washington stepped in, it made matters worse – leaving our seniors alone in the maze of a confusing, under-staffed prescription drug program.

No wonder families can’t keep up – scaling back their coverage or going without – gambling with their health to put food on the table.

Second, the incentives inside our health care system are backwards and the payment system is upside-down: too often paying for costly and debilitating treatment but not for low-cost prevention. Medical professionals confirm this every day; a few weeks ago, the New York Times ran a series on diabetes that spelled it out as clearly as I’ve ever seen it in the media. The system, namely our system, will pay tens of thousands of dollars for a diabetic’s amputation, but not a low-cost visit to a podiatrist that could have saved someone’s feet. Hospitals struggle to provide preventive treatment and rehabilitation in the Byzantine system of reimbursements.

Third, the market now rewards businesses that unload health care costs onto their employees, onto other employers, and onto local, state, and federal government programs, while basically punishing companies that try to do the right thing.

Every day we hear companies are cutting benefits, shifting costs to workers, or dropping coverage entirely. The deck is stacked against good corporate citizens who provide decent coverage. Not only do responsible companies carry the health care expense for their workers, they often pay for coverage of their dependents whose own employers don’t provide health insurance.

In 2004, 83 percent of employers increased the amount of money that employees were required to contribute to health care. And last year, the number of employers offering insurance to their workers dropped for the fifth year in a row.

Remember, that our businesses are now competing with countries where health care costs are shared by everyone or with companies in countries like China where many workers have little or no health care benefits at all.

Republican Senator Lindsay Graham and I co-founded the Senate Manufacturing Caucus to look at what we can do to support American workers and businesses. I just came from a meeting with UAW representative of the Delphi plant here in Rochester. A plant – that is a very high tech plant – that produces extremely sophisticated equipment and is facing a serious challenge because of the threat not only from the bankruptcy of Delphi, but of outsourcing work that Americans have done and continue to do at a competitive price but for some of the costs we’ve built into our system including healthcare costs for retirees and active duty workers.

Now, this is something that Democrats and Republicans ought to be able to agree on: in today’s health care system, businesses are trapped in a race to the bottom… and nobody can win in that kind of a race.

It is past time to figure out together how to tackle our healthcare challenge. We have to keep attention on this problem and we need the leadership from both the public and private sector and the political will to get the job done.

Now there’s been a movement for quite a while now called “evidence-based medicine…” trying to help doctors and nurses keep up with scientific research and to make sure that the treatments they prescribe are backed up by fact.

Well, this is something we in Washington should adopt as well. But the Bush Administration and Republican Congress are doing their best to turn Washington into an evidence-free zone. Where you don’t need to examine the patient to diagnose her; where you don’t need to be concerned with the reality facing our families; where you don’t need to worry about the economic costs across our entire country by failing to deal with the healthcare system, and where you pay little attention to the experience of communities like Rochester and Monroe County.

After all, the response in Washington to our healthcare crisis has been to cut Medicaid, erode patient protections, and promote strategies that increase costs and reduce access to care.

We already know what kinds of proposals we will hear from the President at the State of the Union in about ten days.

I would sum up his message to American families in three words:

“On your own.”

You may remember the President’s approach to privatize Social Security. Families are promised more information, their promised more choice…

But there is a bait and switch going on here, because what Americans are really getting are more costs and more risks.

Senior citizens were promised real prescription drug coverage; they are now on their own. Prescriptions are not being filled. Costs are increasing for the poorest of the poor and the sickest of the sick. Forms can’t be processed, bills are not being paid.

The new Medicare prescription drug benefit went into effect on January 1st, and overnight, millions of our seniors and individuals with disabilities found themselves thrown into a confusing and complex transition.

And as a result of problems with computer systems, with phone lines, and the inability of Medicare and private plans to provide correct information, millions of people are facing obstacles in trying to receive help in getting their prescriptions filled. Across New York, we’ve heard reports from our poorest seniors who are being charged hundreds of dollars for drugs that used to be provided either free or at a minimal cost by Medicaid and Medicare. We’ve heard reports of disabled individuals asked to provide a doctor’s note certifying the need for their medications. People who’ve been on the same medication for years are now having to get their doctor to try and persuade the new private plan to keep the patient on the prescription that works. Many mentally ill beneficiaries who have been stabilized on specific medications are losing access to them, jeopardizing their health and safety. And I’ve been now in three pharmacies in our state where the pharmacists are trying desperately to figure out how to help their customers who can’t get through, can’t get accurate information and are being told they are going to have to pay for the help that they try to provide.

That is why I’ve introduced comprehensive legislation to help bring immediate relief to millions of patients, physicians, pharmacists and states, to add more outreach and education, to help what are called the dually eligible. These are people who are poor enough to qualify for Medicaid, disabled enough to qualify for Medicaid and Medicare, and poor enough when they are on Medicare to need help from Medicaid. These are the people who are most at risk. We should be waiving the transaction fees that pharmacists incur when assisting beneficiaries and make sure that states like New York, which has stepped in to try and help, get reimbursed by the federal government. We also have tried to provide better information to the beneficiaries and to give them ways of navigating this complicated system they are confronting.

Instead of real insurance – real protection against the inherent risks of life – individuals and families will be asked to pay for their own health care. And, since many won’t be able to pay their high deductibles, hospitals will be left on their own, having to add even more bad debt to their books and shifting more costs to others who can continue to pay. I don’t think that we should be making healthcare policy on the basis of ideology. I think we ought to use evidence and we ought to be willing face the facts about what works and what doesn’t work. Not only for patients and for providers but also for businesses and our economy.

We cannot leave small businesses out there on their own. We need to be looking for ways to help them meet these costs.

I think that the Administration’s plans for small businesses will not do what is advertised. It will not lower costs and increase coverage. In fact, the evidence says otherwise. The Congressional Budget Office, which is non-partisan, analyzed the proposal for what are called association health plans for small businesses, and they found these so-called AHPs would add more than 1 million people to the ranks of the uninsured and they would cause premiums to increase by more than 20 percent for the sickest workers. That does not sound like progress to me… that sounds again, like a failed ideology from well inside the borders of the evidence-free zone.

Now it may be that 12 years ago we tried to do too much too fast but I think today we are making things worse with deliberate neglect and flawed policies that are diminishing the coverage that Americans have, that is shifting costs to others and leaving consumers, businesses, and local governments with the bill.

The cutting of Medicaid is a particularly troubling development. Because the reason Medicaid was cut was because of the deficit we face. In five years we’ve gone from a surplus and balanced budget to the largest deficit in history. That has meant that other programs have been squeezed because the Administration and the leadership in Congress persist in funding tax cuts to the most affluent among us. So one of the programs that will be cut to fund the tax cut is Medicaid.

The cut proposed will mean higher premiums and co-pays for over seven million people, including 3.5 million children. Nearly one hundred thousand children in New York alone will see their services slashed.

Now, again, we have research – we’re not flying blind here. The RAND Corporation and the Urban Institute among others have found that if you increase copays and premiums for poor people, they will skip needed care and they will lose coverage entirely. They will add to the pressures on our already overburdened acute care system and then they will enter our system through the emergency room when care is the most expensive. That’s why it is not just AARP but the Children’s Defense Fund – from both ends of the aid sector – oppose these cuts. Pediatricians, the children’s hospitals, and other medical groups are on record opposing them.

It is not only that these cuts violate our nation’s values; they are just short-sighted and will wind up costing us more money. Instead of being part of the solution, they will make the problem worse.

Now, President Truman’s motto was “the buck stops here.” But in Washington today, the buck never stops… on anybody’s desk. It just keeps getting shifted to someone else who then passes it on to yet another party.

We know what works. For example, the VA system, which wasn’t exactly a shining model of effective quality healthcare some years ago, now provides assistance in a quality environment in a fully electronic, paperless system.

That probably does not fit with anyone’s idea of a VA hospital from the past. But reforms undertaken in the last 10 to 12 years have improved the quality of care tremendously.

Recently, the results of the American Consumer Satisfaction Index survey were released, and found that VA patients were significantly more satisfied with both inpatient and outpatient care than patients in the private medical system.

The VA’s performance is not just a matter of opinion. It is supported by evidence. And it does demonstrate as the New England Journal of Medicine found recently that the VA health care system is ranked higher than Medicare fee-for-service in 12 out of 13 measurements of quality.

The National Committee for Quality Assurance (NCQA) ranks health-care plans on 17 different measures. How well does the plan monitor high blood pressure? How precisely does it adhere to standard protocols of evidence-based medicine such as providing beta blockers for heart attack patients? Winning the NCQA's seal of approval is a real accomplishment and in every single category, the VA system outperformed even the highest rated hospitals.

The VA also outperforms in delivering chronic and preventive care. In a 2004 study in the Annals of Internal Medicine showed that the VA system attains better rates of quality care for diabetes than commercial managed care organizations.

Now what made this astounding success possible? In part, the use of information technology. We started during the Clinton administration to transition the VA system to a paperless system. The VA maintains electronic health records in 1,300 facilities for over 5 million veterans. With this foundation, the VA uses advanced technology, including mobile devices and wireless interfaces, to provide state-of-the-art care to patients.

And through the VA’s Barcode Medication Administration System, patients are given a bar coded ID tag. Nurses scan this tag when providing medications to patients, allowing them to confirm that the right person is receiving the right medicine at the right time.

The VA is leading the way in reducing medical errors, improving patient safety, and delivering high quality care; now this is a lesson about what can be done when we have a plan. A plan that is evidence-based, a plan that uses what we know works, and a system that we can actually get to respond to that evidence-based planning. The other thing the VA has done to keep costs down is negotiate for drug prices with the drug companies. Something which the Medicare system was forbidden to do when the Medicare prescription drug benefit was passed.

Now Health IT is one of the goals I’ve been pursuing because I am absolutely convinced we will save money, we will lower rates, we will improve quality, and we’ll save time for doctors, nurses and others. By developing a secure, interoperable health information infrastructure that makes patient privacy paramount, we can really achieve some significant accomplishments. I’ve been working on this for several years, and finally Senator Frist and I were able to pass our IT legislation in the senate last month and I’m going to work very hard to get this bill to the President’s desk for his signature. Because what it will do is provide us with the framework we need. Before coming in, I met with some of the representatives of Kodak who have done incredible work in imaging and creating one of the tools that a health information technology system will be able to use. We’ve got great advancements in technology, but we don’t have the framework, so people are going off on their own – they are spending money to buy systems whether or not those systems will ever be able to communicate outside their own boundaries. We will spend billions of dollars creating islands if we aren’t careful. So the goal of our legislation is to create a federal framework with some dollars behind it that will give us the incentive to do what we’ve done with the VA system so that Strong can not only communicate with Rochester General, but Memorial Sloan-Kettering and with everybody in the country. And that will give us the opportunity to really make good decisions based on the information that will be available.

I’ve also been working to help patients make better, more informed choices by supporting comparative effectiveness studies to determine the most appropriate, safe, and cost-effective treatments.

Recently, I visited the headquarters of Consumers Union’s, which is in Yonkers, and I had a chance to talk with them about what they are doing. They have created the Best Buy Drug website that they operate, where consumers can learn about the safety and effectiveness of treatments for common conditions. So can physicians, nurses, and pharmacists. Because we’re having some comparative data for the first time posted so that people can get the information not just from one perhaps biased source, but an unbiased one.

I pushed for – and secured – inclusion of comparative effectiveness studies in the recent Medicare law, and I believe that the information from these studies will help physicians ensure that they are providing the most appropriate treatment for their patients.

In fact, one of the first studies that the program that I authored will fund is for Vioxx and similar drugs in its class. We all remember the controversy that unfolded when the safety risks associated with Vioxx and the other drugs known as Cox-2 inhibitors became apparent in 2004, only after these drugs had been widely prescribed to Americans. Sales for these drugs accounted for over $5 billion in 2003. Now, if comparative effectiveness studies were the norm, we could take such information into account when administering programs like Medicare or private programs. And we could get better information in more timely way. And use this research with appropriate risk adjustments to move to a healthcare financing systems that rewards providers for high quality care based on evidence and clinical best practices.

Now some in the private sector are already experimenting with pay for performance and the discussion is ongoing in how we apply that approach in Medicare. We ought to be applying it also in Medicaid and in the Children’s Health Insurance Program as well. Not only do low-income and disabled individuals deserve to receive high quality care, but taxpayers deserve the most efficient, cost-effective program that would result. When you go and look at the 15 million people in Medicaid – so many of them for chronic conditions – the fact that we are not using pay for performance quality measurement, is a great lost opportunity and I am hoping we will be able to remedy that.

Long term care is another example of how the payment incentives in the Medicaid program just don’t make any sense. Currently the program favors expensive institutional care over home and community-based services by providing reimbursement for nursing homes but very little in the way of access to non-institutional care. And, today, since states do not share in the Medicare hospital savings that are achieved with prevention and drug management programs for the chronically ill, they have few incentives to do the right thing for seniors and taxpayers alike.

To begin to address this problem, I introduced with Senators Grassley and Bayh, the Improving Long Term Care Choices Act, legislation that will improve access to home and community based services that will help seniors remain in their homes and communities. In addition, the legislation will provide tax credits for those who purchase long term care insurance.

It will not only allow seniors to remain independent as long as possible, but it will help contain Medicaid costs and encourage people to take some responsibility for their future health care need.

I also believe that forcing seniors to “spend down” their savings in order to qualify for Medicaid is not the answer to our healthcare problems, especially when the program is so biased towards costly nursing home care which may or may not be the appropriate form of care. So I am working on a proposal to improve access to needed home and community-based services for seniors who are just above the Medicaid eligibility cutoff, so that they possibly can receive services in their own home and stay out of the Medicaid program as long as possible.

Small businesses are the fastest growing part of our economy, they add more jobs than any other sector. And I believe we should work to create small business purchasing pools – like the Federal Employees Health Benefits Program (FEHBP). Small businesses, including self-employed Americans living and working at home, could receive tax credits for offering coverage, adding affordable choices and increasing purchasing power.

I also want to say a word about nurses. Because it’s absolutely clear if we are talking about evidence that the Institute of Medicine has found a direct correlation between nurse to patient ratios and quality care. And because I know how important nurses are to the quality of care that patients receive, I worked hard to push for the creation of a magnet hospital program in the Nurse Reinvestment Act, which would incentivize good nursing practices and create more decision making authority for nurses, and enhance the training and continuing education of nurses and I am particularly proud that Strong Hospital was recognized in 2004 for its excellence in nursing.

It’s also imperative though that we focus on prevention. Because if we don’t focus on prevention, much of what we are trying to do will come to naught. Obesity and its frequently ensuing increased incidence of diabetes, again, is a perfect, if heartbreaking, example: if we don’t do more to prevent this epidemic, we will pay a very big price indeed. The bipartisan Improved Nutrition and Physical Activity Act that I worked on that was passed, would train health professionals and students and provide more physical activity and improved nutrition in schools, things that you wouldn’t ordinarily expect to hear about in a speech about healthcare. But if we don’t start focusing on prevention, we will be even more bankrupt more quickly than anyone could have predicted a decade ago. When children as young as 10 and 12 are being diagnosed with diabetes, the future is grim. Because as these children age, and their health conditions become more acute, and perhaps they even become parents with children of their own, the costs are going to explode.

There are a lot of good ideas that could help increase access, constrain cost growth, and make our health care system work better now and in the future. Why not let early retirees into Medicare? Why not lift the legacy costs off of our productive manufacturing sector so that it can once again compete with Japan, China, and South Korea and keep good paying jobs here Rochester and elsewhere in New York. Why not let families and individuals who don’t have access to employer sponsored health insurance buy into the federal government’s healthcare system? Why not lower businesses’ and workers’ premiums by providing federal assistance to help firms that are burdened with high cost patients which often drive costs up for everybody else? Why not stick to the Medicare prescription drug benefit so that it is understandable, it’s efficient, and we negotiate for a lower price?

Now the issue is about our economic health and our families’ health; is about practical policies and moral values. What kind of country do we want to live in? I believe in a healthier and better America, where every single person has the best chance at a healthy future.

The private sector and public sector must work together to craft a uniquely American solution. America has never been about racing to the bottom, never been about ignoring evidence and going with ideology over fact. My wonderful predecessor Senator Moynihan memorably said, “Everyone is entitled to his own opinion, but no one is entitled to his own facts.” Well, right now, we see a lot of people who are claiming facts that have no relevance whatsoever to evidence. We need to develop a health care system that reflects and responds how people are living today that does incentivize people to take better care of themselves but doesn’t leave them on their own.

And what better place to start this than right here in Rochester, New York. A place that for decades has shown the way, has demonstrated what could be done. And I look forward to working with you all as we try to jumpstart this conversation. I’m ready to get back into the fray knowing how difficult and controversial it is because I think now many more people understand that the status quo is not sustainable and we can and must come up with a better solution to the problems that we face.

Thank you all very much.

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