1 in 6 Americans with Health Insurance Provided by an Employer Lost Coverage
HHS Secretary Kathleen Sebelius today will address the University of Chicago's dialog on health care reform and education and issue a new report on the employer-sponsored insurance market. The new report, Insurance Insecurity: Families Are Losing Employer-Sponsored Insurance Coverage is available at www.HealthReform.gov and highlights problems in the status quo that have left Americans who receive health insurance from an employer at risk of losing their insurance coverage and joining the ranks of the uninsured.
"I share the President's optimism that we can achieve reform this year. Americans have never understood this clearly - our health insurance system is broken - for the insured, for the uninsured, for all of us," said Sebelius. "Now it's time to deliver for the American people."
The new report indicates:
A full one in six Americans with employer-sponsored insurance in 2006 lost that coverage by 2008.
When an employee and his or her family lose employer coverage, the family must seek alternative coverage and frequently turn to the individual market. However, a family that buys insurance on the individual market pays nearly 60 percent more in out-of-pocket costs such as deductibles and co-payments than a family that gets insurance through work
Almost 75 percent of individuals looking for coverage on the individual market never bought a plan, with 61 percent of those who did not purchase the insurance citing premium cost as the primary reason.
The complete report can be read at www.HealthReform.gov
Sebelius' remarks as prepared for delivery are included below:
Thank you for that introduction. It's great to be here today.
I'd like to acknowledge President Zimmer. He's done such a great job leading the University of Chicago. And not every university president thinks helping to solve society's biggest problems is part of their job, so I applaud President Zimmer for putting on today's event.
I'd also like to thank Dr. Whitaker for inviting me to be here today. Dr. Whitaker has been a great leader on health care not just for Chicago, but for the entire country. I'm sure his friend the President would have liked to be here today. But we saw him last night and he seemed pretty busy. So instead he's sending his advisers and Cabinet members.
I hope all of you got a chance to see President Obama last night. Because he made a powerful argument for why we need health insurance reform - and why we need it now.
He talked about the skyrocketing costs that are eating up family savings, making it hard for our businesses to compete, and straining the federal budget.
He talked about the 46 million Americans who don't have coverage.
He talked about a system where insurance companies can pocket your premiums right up until you get sick...and then cut you loose.
But he also talked about how far we'd come. About how four committees had already passed bills and a fifth was poised to...something that's never happened before. About the consensus that was starting to emerge around key principles.
And he talked about our American character. About how we had made bold steps in the past. He talked about "our ability to stand in other people's shoes. A recognition that we are all in this together; that when fortune turns against one of us, others are there to lend a helping hand."
He laid out a plan, and he asked Congress to help him get it done. Silly season is over, he said. Now is the season for action.
I share the President's optimism that we can achieve reform this year. Part of the reason why is that Americans have never understood this clearly - our health insurance system is broken - for the insured, for the uninsured, for all of us.
Most of us get health insurance today through our employers. But it's easier to lose than you think.
Rising costs are forcing more and more employers to stop offering coverage. Less than half of firms with fewer than 10 employees offer insurance today.
Other employees lose their insurance when they get laid off. Or bumped from full-time to part-time. One out of six Americans who had employer-based insurance in 2006 lost it by 2008.
When that happens, Americans get thrown into the individual insurance market, which today is kind of like a frontier town in the Wild West. There are almost no rules about what insurance companies can do.
They can decide not to cover you because they say you have a pre-existing condition...or because you have a dangerous job like being a window cleaner or a volunteer firefighter. They can sell you coverage but then take it away when you get sick if they find an error in your paperwork. In California, there was one company that gave its employees 5 star job ratings for finding ways to cancel sick people's insurance.
Private insurance companies can charge you an exorbitant premium just because you're older or a woman. And even if you're healthy, it can be hard to get a good deal because a single private insurance company controls over half the market in 20 states.
So millions of hard-working Americans end up with no insurance. It sounds like the type of thing that could never happen to you.
But chances are: sometime it will. Today, the Department of Health and Human Services is releasing a report called Insurance Insecurity . I'd encourage all of you to go read it at www.healthreform.gov It shows how our insurance system, which can feel so solid when you have coverage, is actually riddled with holes.
For example, one out of three working age Americans and their families didn't have health insurance for at least a month in 2006 or 2007. Eighty-seven million Americans were uninsured at some point in 2007 or 2008.
Now, if we had a system that was full of holes but we were paying a discount price, we might say, that's fine. We're getting what we pay for. The problem is: Americans spend almost twice as much as any other people in the world.
I had a conversation recently that hammered this point home. Richard Colby, pulled me aside at an event in Columbus. "I'm currently paying over $30,000 a year in family coverage," he told me. "My wife and daughter had cancer. My daughter died. My wife is a survivor. But I pay over $30,000 a year and I don't know how much longer I can afford it."
And by the way, some Americans hear stories like Richard's and say, "that's too bad, but I only pay a few thousand dollars in premiums a year. My employer pays the rest. So rising health costs don't really affect me."
The problem with that theory is that those rising premiums come out of your paycheck. So for example, over the last ten years, the average cost of a family health insurance premium went up $7,000. That's $7,000 that could have gone into Americans' pockets.
Now if Americans saw the $7,000 they're paying to insurance companies on their pay stub next to their Medicare and Social Security taxes, they'd be outraged. If you told them, their insurance tax was going to go up another $9,000 over the next ten years, they'd demand immediate change.
But that's exactly what's happening. And Americans are starting to figure it out.
So this is the health care system President Obama described last night. It's one that doesn't provide the security for people with insurance. It's a system where it's hard to get insurance if you lose it. And it's a system that the people who want the status quo are asking us to pay more and more to support.
So it's not surprising that we've been trying to reform this system for 75 years. But I think you heard last night why this time we're closer than ever before to getting it done.
Here's the plan the President laid out:
If you have insurance, you will get security and stability from new rules on insurance companies that stop them from cutting your coverage and discriminating against you for a pre-existing condition.
If you don't have coverage, there will be an insurance exchange where you'll have quality, affordable options that you can choose from.
It will provide higher quality, more efficient care to slow rising costs for families, businesses, and the government.
As he said last night, reform will be totally paid for.
And by the way, reform will make a huge difference for 65 million Americans who don't have access to a primary care provider because of shortages in their community.
It will expand the National Health Service Corps and create new financial incentives for doctors to go into primary care.
What President Obama has proposed is a common sense and reasonable plan. A plan that builds on the foundation of our current health care system...that allows every American to keep their insurance if they want to...that combines ideas from the left and the right...that would not add a penny to the deficit.
Reform is supported by the American Medical Association and the American Nurses Association. Groups like the pharmaceutical industry, which have traditionally opposed reform, are now running ads supporting it.
President Obama's plan is a universal peace of mind plan. It will give every American the feeling of security that comes with knowing their family will be taken care of if they lose their job, or someone gets sick, or there is an accident.
Understandably, people want to focus on the parts of reform that will increase security. But reform is also a huge opportunity to begin the process of improving the care and value Americans get. And I'd like to give you just a few examples.
As President Obama announced last night, we're going to move forward with an initiative to investigate whether we can improve our malpractice system. This new initiative will give states the chance to apply for grants that would support projects that help reduce lawsuits and promote patient safety.
For example, the demonstration projects could include early disclosure models and certificates of merit, both of which were part of an amendment accepted by the Energy and Commerce Committee when they considered health reform legislation.
Early disclosure programs would encourage doctors to disclose errors earlier rather than later, apologize where appropriate, and turn to mediation, rather than malpractice suits as a solution. Certificate of merit programs would require individuals to obtain an affidavit issued by experts or panels of doctors that states that the case has merit before proceeding in court.
We'll give funding to states to try these reforms. And then we'll study the results so we can learn more about what types of reforms work, and what type of reforms don't.
The President has asked me to work quickly, and we'll have more details regarding the timing of these initiatives in the next month.
Another area where we must do better is Medicare fraud. As baby boomers retire, Medicare's growing. And as Medicare grows, so does Medicare fraud. It costs America's seniors tens of billions of dollars a year. And in some cases, it puts their lives at risk by subjecting them to either inadequate or unnecessary procedures.
For a long time, Medicare fraud was merely contained. But the Obama administration is trying to change that. That's why the president asked the Attorney General and me to work together, in an unprecedented program, to prevent and prosecute the crooks who steal from Medicare and Medicaid. And with $431 billion each year in claims paid, it's no wonder that crooks are enticed. You know the old story about the bank robber Willie Sutton. "Why do you rob banks" someone asked him. "Because that's where the money is," he said.
We're already getting results. Last week I was at a press conference celebrating a record $2.3 billion fraud settlement from the drug company Pfizer. Earlier this year, that new anti-fraud initiative that I co-chair with Attorney General Eric Holder led to the arrest of doctors and executives who had cheated Medicare out of $16 million. You can learn more about these efforts at www.stopmedicarefraud.gov
But we can only put a small dent in Medicare by doing more to prosecute crimes. If we really want to reduce fraud, we need to step up our efforts to prevent it from happening in the first place. Reform will boost these efforts and move us closer to a health care system where no Medicare dollars go to waste.
One way to give Americans more value is to lower costs. Another is to deliver better care. And we have some exciting opportunities in this area too.
Many of you in this audience know of exciting work being done in Chicago and around the country: to coordinate care, to incorporate the best medical evidence, and to deliver lower cost, high quality care. Unfortunately it is a hit and miss situation across the country. And more dollars do not mean more quality!
So the President's reform agenda includes some very aggressive measures involving quality care. One example is what we're doing to reduce infections people get in the hospital.
Last month, I got a letter from a woman in Maine. Late in 2008, her 83-year-old father went to the hospital with a fractured ankle and a mild urinary tract infection. A day and a half after he came home, he collapsed and he never walked again.
While he was in the hospital, he had been infected with what they call MRSA pneumonia. He lost fifty pounds and got so weak he couldn't sip water through a straw. This January, he died.
Stories like this one are common. Health care associated infections are one of the 10 leading causes of death in the United States. They drive up the cost of health care by nearly $28 to $33 billion per year.
But in Michigan, they used a simple technology to reduce infections by 66 percent, saving over 1,500 lives and $200 million in just 18 months. That technology was a checklist that reminded doctors to do things like wash their hands and clean the patient's skin with disinfectant.
There's no reason Americans should die because their hospital didn't have a checklist. We're investing $50 million to work with hospital systems and state governments to reduce these infections as part of the Recovery Act.
But health insurance reform will speed these efforts along by specifically requiring hospitals to report their infection rates, so that patients can be empowered with that information when they choose which hospital to trust their care to.
Some Americans die because a doctor or nurse didn't wash their hands. Others die because the person administering treatment couldn't read the doctor's handwriting.
It's incredible that in a country where getting money from a bank takes a swipe of a card and few punches of a keypad, doctor's offices still have entire rooms devoted to storing their paper records. It doesn't make sense. We give our doctors seven years of top-notch training so that they can spend three hours a week dealing with insurance companies.
Electronic health records would reduce paperwork, administrative costs, and medical errors. In other words, they will make health care more convenient, more affordable, and higher quality. And health insurance reform will help these technologies spread.
And in system after system, where electronic records are used, doctors tell me that they are better physicians; they would never go back to the old system. But we have a long way to go. Currently, only 10 percent of hospitals and about 20 percent of doctors use electronic records. The President's goal is to provide an electronic medical record for every American by 2013 - an ambitious plan that will help to transform the delivery of medical care in America.
But the part of our health care system that makes the least sense is the way we pay our doctors. Right now, they get paid for quantity, not quality.
America's doctors want to deliver the best quality care and support their families. We need to start changing the incentives so those goals aren't in conflict.
One of the ways to do that is to change the way Medicare reimburses providers. By linking payments between hospitals and other care facilities, health insurance reform will promote coordinated care after patients leave the hospital. And it will also encourage investments in hospital discharge planning and transitional care to prevent avoidable readmissions.
These are the first steps towards a more sensible payment system that rewards doctors for working together to get better outcomes...instead of doing as many procedures as they can individually.
Last night, we heard from President Obama about why we need health insurance reform. "I still believe we can do great things and meet history's test," he said. I agree. It's easy to say, "we'll pass and let the next generation fix this problem," but that's not the American way.
What I hope doesn't get lost in the discussion is that health insurance reform is also a huge opportunity to take a step towards the 21st century health care system of the future.
We know that change isn't easy. I can guarantee that there will be at least a couple moments in the next few weeks when it looks like the momentum has shifted. But there is a story from American history that gives me confidence.
My father was in Congress when Medicare was passed. And it was a nasty debate. People called it socialized medicine. They said it would lead to rationing. Even though more than 40 percent of elderly Americans didn't have any kind of health insurance, it still only passed at first by 45 votes.
But today most Americans see it as one of our country's greatest successes. Seniors went from being one of our most vulnerable groups to one of our least vulnerable. If you took a vote on Medicare today, it would pass overwhelmingly.
So the fact that this has been a tough debate doesn't mean that it won't produce incredible results for the American people. We're closer to health insurance reform than ever before. We've had the debate. Now it's time to deliver for the American people.