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Mike Leavitt, Secretary of Health and Human Services


American Medical Association, Renaissance Mayflower Hotel, Washington, D.C.


Tuesday, March 15, 2005

Fifty Days as Secretary

I'm honored to speak to the AMA, partly because of John, but also because this organization does a tremendous job in enhancing the quality of care your members provide.

I accept the gravity of the charge I've been given as Secretary. And I'm already enjoying the challenge.

Friday will be my 50th day as Secretary. I thought I would give you my fifty-day report two days early. Here are the things we've been working on that will affect physicians most directly.

Demographics is destiny. And there is a time in the life of every problem when it is big enough to see but small enough to solve. For Medicaid, that time is now.

Medicaid is the spirit of American compassion in action, and a vital part of our commitment to our most vulnerable citizens.

But this vital program is not meeting its potential. It is rigidly inflexible and inefficient. And, worst of all, it is not financially sustainable.

  • Over the past ten years, Medicaid spending has doubled.
  • State governments spent more on Medicaid than they spent on education.

To address these challenges, the Bush administration has initiated a serious discussion on Medicaid.

We must give states the flexibility to construct sustainable programs.

We must liberate long-term care from institutions and nursing homes. We must improve home and community care.

Demographics is destiny, and if we don't act, it could get worse.

We are working hard to implement the Medicare prescription drug benefit. This will be our main event this year at HHS, and we're resolved to carry it out successfully.

But the biggest challenge is making sure seniors know about the benefits, and understand how to take advantage of them. And that's where you come in.

You can be part of the solution. It will require a national effort, and I hope I can count on the help of the entire health community.

I know one factor that affects your bottom line is the physician payment rates under Medicare and the so-called Sustainable Growth Rate. As Dr. McClellan told you earlier this morning, we want to work with you to ensure that rates are fair and reasonable. And I hope you will continue to let him know your concerns and suggestions.

I'd like to talk with you about drug safety-Americans have become increasingly concerned about the safety of prescription drugs.

The Food and Drug Administration is a trusted partner that ensures that the food we eat and the drugs we take are safe. We have placed our trust in the FDA, and I am resolved to protect and enhance that trust.

Our first step is creating a new culture of openness at FDA.

Our second step has been the creation of a Drug Safety Board.

We also want to begin to use the power of technology.

Part D of Medicare also offers us an opportunity to enhance FDA's effectiveness by helping us expand our drug surveillance.

On the subject of health surveillance, I'd like to address our enhanced commitment to protecting Americans from influenza and what we are doing to prepare for a possible influenza pandemic. In the past century, the world has experienced three global outbreaks, or pandemics, of influenza and the emergence and persistence of a new influenza virus in birds in Asia, has raised the concern among scientists and public health professionals.

There is a strong chance that we may encounter a strain of influenza to which human beings have little resistance and the situation in Asia, where the virus is now endemic in a number of bird species, has refocused our attention.

Since we don't know where or when a pandemic would originate, we have enhanced our surveillance activities in Asia where we have people on the ground working with local researchers, clinicians, and governments. We are also in daily contact with the World Health Organization.

Last year, HHS spent $5.5 million on an initiative to build capacity for influenza surveillance in Asia. This included nearly $2 million to establish rural surveillance in countries with established surveillance infrastructure and to strengthen in-country laboratory capacity. We are also supporting the World Health Organization's efforts to assure timely shipment of viruses from the front lines to the W.H.O. collection activities, since ready access to the viruses is critical to determining whether person-to-person transmission is occurring.

And as part of our commitment to preparedness against the possibility of a pandemic, I am pleased to report that NIH is preparing to begin trials of a vaccine specifically designed against the H5N1 strain of avian influenza that is currently circulating in Asia. We have also gone ahead and produced 2 million doses of this vaccine.

While similar pandemics have happened several times in the past, never before have we had all of the advance warnings that the appearance and persistence of the H5N1 virus has made apparent. But never before have we possessed the wealth of knowledge on the problem and the ability to prepare and respond as we do now. The challenge is immense, but so is our will to protect and preserve.

As you know better than anyone, many states have medical liability systems that are irrational and out of control.

When medical errors occur, patients should be compensated fairly. But fair compensation is not what our current liability system provides. The median payout payment more than doubled from $64,000 to 136,000 from 1991 to 2000. There were 298 payments over $1 million in 1991, but this number rose to 806 in 2000. The problem is concentrated in high-risk specialties.

The result has been a dramatic increase in medical liability premiums. In 2003, premiums in many states increased by more than 20%. For certain specialties like OB/GYN's, they increased more than 75%.

In this environment of skyrocketing premiums, many physicians are retiring or moving their practices because they cannot afford the liability insurance. That means families can't go to their family doctors. And expectant mothers have a hard time finding an OB/GYN.

To demonstrate the flaws in this system, let's look at two states: Indiana and Kentucky. Physically, these two states are separated only by the Ohio River. But in terms of their medical liability systems, the difference between the two states is as vast as an ocean.

Relatively, Indiana is in better shape than many other states, because the state has taken some actions to improve its medical liability laws, although premiums in Indiana are still too high.

In Kentucky, however, the situation is much different. Physicians in Louisville pay much more for liability premiums than their friends across the river in southern Indiana.

Last year, Indiana surgeons paid average premiums of $21,000 to $30,000, while Kentucky surgeons paid an average of $28,000 to $47,000. For OB/GYN's, the difference was even more dramatic: Indiana premiums ranged from $32,000 to $47,000, while Kentucky premiums ranged from $40,000 to $85,000 a year.

And there are real effects for families in both Indiana and Kentucky. Last year, an article in the Louisville Courier-Journal reported that at least nine Louisville obstetricians had restricted their practices to gynecology, retired early, or moved out of state because of liability insurance premiums. Eighty-two counties had either no obstetricians or only one. Those of you who are parents-imagine having only one choice of an obstetrician. Now imagine having none at all.

That's why this is a national problem. And if it is not addressed at the national level, it's only going to get worse.

Ultimately, this crisis isn't about doctors or hospitals or insurance companies or even lawyers; it's about patients. This crisis is threatening the quality of care; it's threatening access to care, and it's hiking the costs of care.

President Bush has outlined a framework for addressing this national crisis. Under our proposal, injured patients would collect full actual, out of pocket damages-not unlimited non-economic damages.

Congress came close to passing these common-sense reforms. But opponents of reform filibustered these reforms in the Senate. This is just plain wrong. Trial lawyers should not be driving good doctors out of medicine.

Our reforms would be better for patients. They would be better for doctors. They would be better for hospitals. They would make health care easier to afford. And we must work together to achieve them.

In the meantime, there are other steps we can take to alleviate the problem. And I want to give you an update on our Early Offers pilot program, which is an innovative way to handle medical liability cases.

On average, it takes at least 4 years for a medical liability suit to settle. This delay is expensive for both sides.

To reduce this time, we designed an Early Offers program to encourage rapid settlement of cases, provide quick payment in deserving cases, and avoid the delay, cost, and emotional distress of litigation.

Early Offers focuses on early resolution and speedy compensation. That way, patients harmed by medical errors or negligence are assured of fast and fair compensation, without having to undergo long periods of waiting, great legal expenses, and the trauma of the litigation process.

Here's how it works. When a patient who has been served at a federally funded health center or Indian Health Center facility files a medical liability claim against HHS, we send a standard notice explaining our early offers program. Both sides have 90 days to submit a confidential offer to a neutral third party who will compare the offers and notify both sides only if a match is made. Not only are offers voluntary, their amount and existence remain confidential forever if no match is made. So neither side tips its hand or loses leverage if the case goes to court.

The program is up and running at HHS. And we're hopeful that it will show promising results in the months to come.

Any doctor or hospital can set up an early offers program. Because an early settlement only occurs when both parties agree, you're not losing any options by setting up a program, and no government action is required. I encourage all of you to think about setting up early offers programs.

Together, we can help Americans live longer and live healthier, and do it in a way that preserves our competitiveness as a nation.

Last revised: March 16, 2005


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