Remarks as Delivered at the National Association of Health Underwriters Capitol Conference

Good morning. Thanks, Ken, for that warm introduction.

As Deputy Secretary, I oversee huge agencies like CDC, NIH, CMS, AHRQ, and FDA. I try to make sure these agencies are not at cross purposes, and unfortunately, there’s a lot of opportunity for that. It’s like the joke about the NIH and FDA scientists talking over coffee. The NIH scientist bragged that he had just discovered a drug that would confer immortality. The FDA scientist shook his head and said that finding out if it actually works would take forever.

Seriously, though, President Bush and Secretary Leavitt have been improving health care in America.

Far too often, people want the government to make decisions that should be left to individuals, families, and consumers. But that attitude has predictable results.

It’s like the joke about the hot air balloonist.

After a morning of ballooning about, he realized he was lost.

So he reduced altitude until he spotted someone. He descended a bit more and shouted, “Excuse me, ma’am, can you help me? I promised a friend I would meet him an hour ago, but I don't know where I am.”

The woman below shouted back, “You’re in a hot air balloon hovering approximately 30 feet above the ground. You are between 40 and 41 degrees north latitude and between 59 and 60 degrees west longitude.”

“You must work in health care,” said the balloonist.

“I do,” said the woman. “How did you know?”

“Well,” said the balloonist, “everything you told me is technically correct, but I have no idea what to make of your information, and I’m still lost. Frankly, you've not been much help so far.”

The woman scowled and said, “Okay, but you must work for the government.”

“I do,” said the balloonist. “But how did you know?”

“Well,” said the woman, “you don't know where you are or where you are going. You’ve risen to where you are due to a large quantity of hot air. You made a promise which you have no idea how to keep, and you expect people beneath you to solve your problems. The fact is you are in exactly the same position you were in before we met, but now, somehow, it’s my fault.”

This joke underscores some of the limitations of government-provided health care. For this reason, we believe that government can do a few things well, and that it should concentrate on those.

Government should:

• Empower the consumer,
• Help the needy, and
• Allow free markets to innovate and excel wherever possible.

The federal government can help by:

• Increasing competition,
• Expanding scientific frontiers, and
• Bringing the best minds to our most pressing problems.

We have accomplished a great deal by applying these principles, and we will continue to use them going forward.

Medicare Part D

• 39.5 million seniors now have some form of prescription drug coverage.
• 90 percent of seniors chose plans that offered more options than Congress’s basic plan.
• 85 percent of seniors are happy with their plan.

Stem Cells

• In 2001, President Bush drew a line that established federal funding for the research without encouraging the further destruction of embryos
• This past November, scientists discovered a way to reprogram adult skin cells to act like embryonic stem cells — giving us the opportunity to move beyond the past’s decisive debates.
• Our policies support technological research and advancement without using taxpayer funds to offend human dignity.
• That’s why, in his recent state of the union address, the President called “on Congress to pass legislation that bans unethical practices such as the buying, selling, patenting, or cloning of human life.”

Health Savings Accounts

• Remove distortions in the tax code to give families more control over their health insurance independent of where they work or what type of job they hold
• A tax-free savings account in conjunction with a high-deductible, low premium insurance plan
• Employers can contribute and help you pay your premium
• The money becomes yours and follows you year to year, job to job
• For 2008, an individual can contribute up to $2,900 and families can contribute up to $5,800 to pay for current medical expenses or save and invest for future medical expenses
• More than four and a half million Americans already have HSAs
• HSAs — thanks to smart consumers and less bureaucracy — will help control rising costs

Community Health Centers

• In 2001, President Bush launched the Health Center Growth Initiative, promising to fund or expand 1,200 community health centers.
• Just last year, in December, the President exceeded his goal.
• The total of comprehensive sites around America is over 4,000 — serving well over 16 million people.
• We are bringing more health care options where before there were few.

More to do

As much as we’ve accomplished, we have a great deal we’re working on over the next year. In the President’s state of the union address last week, he set forth many of our priorities. I’d like to talk a bit about each one of them.

You know, this week is one of the biggest in D.C. When you combine the state of the union address with today’s budget roll-out, it’s like our own Super Bowl.

In the Super Bowl, when a costume falls off, it’s a wardrobe malfunction. In D.C., when a politician tells the truth, it’s a gaffe.

In D.C., there are 535 members of Congress surrounded by lobbyists. In the Super Bowl, there are the same 535 members of Congress — in the stands — surrounded by lobbyists.

In the Super Bowl, advertisements cost five or six million dollars per minute. In the federal government, we spend five or six million dollars every minute.

Some people mistakenly think the Super Bowl winner has a positive influence on the stock market. Some people in Washington think they can have a positive effect on the stock market.

Super Bowls always have a blimp filled with hot air. Washington has – well, you know….

In all seriousness, though, the President and the Secretary have developed an aggressive, yet responsible budget for HHS. Secretary Leavitt will announce it this afternoon. This budget reflects our commitment to improving health care for all Americans, protecting our nation against public health threats, advancing medical research, and serving the needs of our citizens with compassion while maintaining sensible stewardship of their tax dollars.

Here are a few examples of what I mean by this. This is hot off the presses. You’re the first ones to hear this.

The F.Y. 2009 budget of $29.5 billion proposed for NIH [is the same level as in F.Y. 2008, but] will provide funding increases for each Institute and Center at the agency. It will also support more than 38,000 research project grants, including more than 9,700 new and competing awards.

And because our nation remains at risk of terrorist attack and war, we are continuing to strengthen our public health system’s ability to prevent and detect attacks and to respond to mass casualty events. So the President's budget requests nearly $4.3 billion for bioterrorism preparedness activities, including state and local preparedness and basic and advanced research.

Our priorities reflect the idea that instead of spending ever-increasing amounts, we need to help bring about careful structural reform and give people new ways of thinking about their health care. Here are some more examples of concrete actions we’re taking to improve health care with that as our guiding principle.

Value-Driven Health Care

In his last state of the union address, President Bush said “To build a future of quality health care, we must trust patients and doctors to make medical decisions and empower them with better information and better options.”

To do this, President Bush and Secretary Leavitt have been working to make health care more value-driven.

• Determining the directions we need to take in science, medicine, and technology — in particular genomics — to advance the understanding and quality of health care at an individual level.
• It’s about making health care more individually-tailored and more information-based than it is now.

Medicine in the past: an art based on what people could see, feel, and hear.

Medicine in the present: a science based on laboratory work — a rigorous, vastly-improved, instrument-based version of what had gone on before.

Medicine in the future: health care based on the power of computation.

• More preventive
• More predictive
• More personalized

None of this will happen overnight.

In the federal government, President Bush, Secretary Leavitt, and HHS are working to:

• Complement the work of private groups,
• Develop a shared vision of personalized medicine,
• Bring it to fruition more quickly than it might otherwise develop, and
• Create a platform that allows all the elements personalized health care needs to flourish.

Our work is complementing the exciting, innovative, market-oriented work that companies across the health care industry have been undertaking. Recently, for example, Microsoft launched a powerful new consumer-oriented electronic health records tool that people can use for free. It’s called HealthVault, and they expect 40 million people to adopt it. Google’s working on a similar service. WalMart — under the supervision of former HHS Assistant Secretary for Health, John Agwunobi — and other major retailers are planning to do so as well.

Four Cornerstones

So Secretary Leavitt has adopted a number of priorities that are directed at bringing this vision of value-driven health care about. He details them in a series of four cornerstones:

The Secretary’s four cornerstones:

• Electronic medical records,
• Standardized quality measures,
• Price transparency, and
• Incentives where everybody strives to deliver the best quality care at the most competitive price.

The Secretary has been meeting with consumers, employers, and providers and encouraging them to commit to the cornerstones.

• Plans covering 100 million Americans have signed on to adopting the four cornerstones.

Personalized Medicine

We expect that value-driven health care will bring about a health care system that focuses on the unique needs and challenges of each patient. We call this personalized medicine. The Secretary recently released a report that details all our efforts surrounding personalized medicine. It discussed:

• How we’re wrestling with questions about the structure of our regulatory framework
• How best to enable and encourage the market for different aspects of personalized medicine.
• How we’re bringing together all the parts of HHS working on topics related to personalized medicine.
• How we’ve made a commitment to enabling consumers to choose what’s right for them:
  • Genetically,
  • Psychologically, and
  • Economically.

Expanding Access to Health Care/Standard Deduction for Health Insurance

In the state of the union, the President also said that “We share a common goal: making health care more affordable and accessible for all Americans. [and] The best way to achieve that goal is by expanding consumer choice, not government control.” So the President has proposed “ending the bias in the tax code against those who do not get their health insurance through their employer.”

This proposal would repair the structural problem in our health care system by eliminating the World-War II-era distortion in our tax code that biases our health insurance system toward employer-purchased health care.

Right now, most Americans receive their health insurance through their workplace as part of their compensation, and the government helps employers provide health insurance with a tax break. This tax break has enabled the development of a private health insurance market that provides good coverage to the majority of Americans. Most Americans can get insurance through their employer, thanks to the tax break.

Millions of Americans can’t, however. Their employer might not — or cannot — offer insurance. Or they might be self-employed. These people — waitresses and construction workers, students and day care workers, small business owners and self-employed entrepreneurs — have to buy health insurance on their own.

A person who buys insurance as an individual should be treated just as well as a person who buys insurance through an employer. The President’s proposal would ensure that whether you buy health insurance through your workplace or buy it on your own, you get the same tax treatment.

Specifically, the President proposes allowing every taxpayer with health insurance meeting certain basic criteria to deduct $15,000 for families or $7,500 for individuals from their income for health insurance. It would substitute this deduction for the current uneconomic and unlimited exclusion for employer-provided health insurance.

As the President said in the state of the union, “This one reform would put private coverage within reach for millions.”

Association Health Plans

In his state of the union address, President Bush also called for Congress to “create Association Health Plans for small businesses.”

Association Health Plans would enable small businesses and faith- and community-based organizations to come together through associations to purchase health insurance for employees and their families. Association Health Plans offer the potential for lower health insurance premiums through decreased administrative costs, no state mandates, and increased bargaining power with medical providers.

Health Information Technology

The President also called on Congress in his state of the union address to “promote health information technology.”

So the Secretary has been encouraging and supporting the development and implementation of interoperable electronic health records systems.

Let me tell you how important EHRs are:

• EHRs can be accessed anywhere by a handheld computer. It can look like an electronic clipboard. Doctors can carry it with them when they make their rounds. It has everything they need.
• It has your lab results, your X-rays, your medical history, your allergies, any medications you’re taking.
• Your doctor won’t have to read through pages and pages of handwritten notes to find the little details that can make a big difference in treatment.
• If a doctor prescribes a drug you’re allergic to, the EHR will alert him to the danger automatically.
• If he prescribes a drug that interacts with something else you’re taking, it will alert him to that danger, too.
• He can send your prescriptions electronically directly from the clipboard to the pharmacy, so the pharmacy can have them ready before you leave his office.
• Because EHRs are interoperable, they can be shared among doctors so your records are always where you need them to be.
• Patients can have access to them, too, and can keep closer tabs on the care they’re getting.

So EHRs make things a lot easier and more convenient for both doctors and patients.

They also make health care safer. There’s less chance of error using EHRs, and patients have more control over their treatment.

EHRs also allow researchers to track treatment outcomes. This is important for two reasons:

• So that they can gauge the quality of care.
• And so they can learn from clinical practice what works best.

One problem with electronic health records is that too often, they aren’t interoperable. They’re like cell phones that could only call phones on the same carrier. Or A.T.M. cards that could only be used at one bank.

To help realize the promise of interoperable electronic health records, the Secretary created the American Health Information Community. The Community is a partnership between the government and the free market that will harness the best of every area of the economy in pursuit of national standards for exchanging health information and the infrastructure to support it.

Another problem with electronic health records is that too few doctors use them.

To correct that, the Centers for Medicare and Medicaid Services are beginning a new EHR demonstration project.

• This new demo will get EHRs into use at as many as 1,200 small and medium-sized physician practices.
• There will be funds available to help cover the cost.
• There will also be incentives offered to physicians for using EHRs to actually improve the care they provide.
• Those who use certified, interoperable EHRs to improve quality of care for their patients will receive a monetary incentive in addition to their Medicare reimbursement.
• We hope to reduce errors and improve health outcomes for an estimated 3.6 million Americans.

We will select 12 communities to participate in the demo. We will begin accepting applications in the coming weeks.

But this demo isn’t the only way we’re leveraging health information technology to connect people to better health care.

• The Health Resources and Services Administration has awarded $24 million to hospitals to speed adoption of EHRs and other health IT improvements.
• The Centers for Medicare and Medicaid Services has provided $64 million to fund EHRs and e-prescribing for Medicare beneficiaries.
• We are also working the Federal Communications Commission to fund high-speed fiber-optic networks linking rural hospitals electronically. This will bring telemedicine to many underserved communities, saving people time, money, and trouble.

Junk Medical Lawsuits and Preventing Medical Errors

In his state of the union address, President Bush called for Congress to “confront the epidemic of junk medical lawsuits.”

To do this, we’re giving physicians opportunities to resolve malpractice issues rather than resorting to the courts with our early offers proposal. Early offers focus on early resolution and speedy compensation. That way, patients harmed by medical errors or negligence have the possibility of fast and fair compensation, without having to undergo long periods of waiting, great legal expenses, and the trauma of the litigation process.

Sometimes, it seems as though the practice of medicine is like the old joke about four surgeons who were discussing their work over a coffee break one day.

The first said, “I think accountants are the easiest to operate on. You open them up and everything inside is numbered.”

The second said, “I think librarians are the easiest to operate on. You open them up and everything inside is in alphabetical order.”

The third said, “I like to operate on electricians. You open them up and everything inside is color-coded.”

The fourth surgeon said, “I like Engineers...they always understand when you have a few parts left over at the end…”

But all physicians are capable of competent, compassionate care. So we’re helping align incentives to prevent medical errors by bringing more accountability to doctors and hospitals for the services they provide.

• CMS, for example, will no longer reimburse for certain events that should never happen.
  • Wrong site surgeries
  • Foreign objects left inside surgical patients
  • Conditions that hospitals should prevent from happening, like bedsores.
• States and insurers are already following suit.
  • Aetna is indicating in hospital contracts up for renewal that they’re not going to pay — or even let patients be billed — for 28 never events.
  • WellPoint is testing a similar policy in Virginia on a series of four never events.
  • Member health plans of Blue Cross Blue Shield — which insure 100 million people — are also no longer going to be pay for never events.

Conclusion

Clearly, we have a lot we plan to accomplish over the next year. But the President’s approaches to Medicare reform, stem cells, health savings accounts, and community health centers worked. We need to apply the same principles to value-driven health care, access to health care, health information technology, junk lawsuits, and all the other issues we have on our plate.

In his state of the union address, President Bush continued to emphasize his commitment to the value of trusting the American people to know what health care is best for themselves.

As he has said, “By trusting the people, our Founders wagered that a great and noble nation could be built on the liberty that resides in the hearts of all men and women. By trusting the people, succeeding generations transformed our fragile young democracy into the most powerful nation on Earth and a beacon of hope for millions. And so long as we continue to trust the people, our nation will prosper.”

This trust means keeping the government’s focus on providing scientific leadership, encouraging cooperation and collaboration among the right people at the right time, and resisting the attempt or desire to micromanage. If we can do that, we will find success in our work to improve health care for all Americans.

Thank you.