Bill Clinton: “There are two ways, even in a State with heavily regulated hospital costs, there are two or three ways that I think it…”

“There are two ways, even in a State with heavily regulated hospital costs, there are two or three ways that I think it will come down. First of all, one of the things that we've learned is: In a system, if you just regulate the price of something but you don't manage the system, what happens is that people, in order to avoid having their incomes go down, increase the supply. If you lower the price, you increase the supply, you get the same income. That's a serious problem with Medicare and Medicaid all across the country. Secondly, New York, for example, has been the beneficiary of a program called the disproportionate share. We give back to the hospitals that have very high percentages of low income people, because we have so many people who are charity cases who have to be given some care for which there is no reimbursement. The hospitals basically shift and the insurance companies shift those costs to people who are paying higher hospital bills or higher insurance premiums. If you stop the cost shifting, and the only way to do that is to have universal coverage, then for a lot of the people who have--I'll give you an example. The best example I can think of is a big company, let's say General Motors or IBM. They may have very high insurance premiums with very good benefits, but their insurance premiums are higher than they otherwise would be because they're paying for the cost shifting. And then a small operation like this lady's operation, her insurance premiums are very high in part because she's taken out insurance, so even she or even this family with their $8,000 premium, a portion of their premium is going to pay for people who get uncompensated care. Everybody in this country gets some care sometime. If you get real sick, you show up at the emergency room. It's more expensive, it costs enormously, and then they have to recover the costs. So that will happen. Another thing is that even in New York or New Jersey, States that have very good cost controls, or Maryland, the State with probably the best cost controls, even in those States if you look at what's happened to the manpower, health care is always going to be very labor-intensive. But in the last 12 years almost--not almost all but 80 percent of the new hires in health care have been to push paper, have been to deal with regulation, have been to deal with--the average hospital of any size will have 300 different insurers and hundreds and hundreds of different forms. And under our system if you go to one form for insurers, one form for the doctor basically, a standard care form, one form for the consumers, you will drastically cut the time and money allocated to the administrative costs of medicine. The average doctor--let me just give you one figure; this is a stunning thing--in 1980, the average doctor took home 75 cents of every dollar that came into a medical clinic. In 1990 the average doctor took home 52 cents of every dollar that came into a medical clinic; 23 cents, boom. Where did it go? A couple of cents went to malpractice; over 90 percent of it plus went to increasing costs of administering the system. And again, you may say this is impossible to believe. The New England Journal of Medicine did a profile of two hospitals in the last couple of years--same size hospitals, same occupancy rate, one in Canada, one in the U.S., exact same size. In the U.S. there were 220 people in the billing department; in Canada there were 6. And most of them were working to fill out American insurance forms. I mean, that's a lot--there is an enormous amount of money. One other thing: You find within States, even with all the price controls, you find from State to State there are massive differences in the cost of caring for people on Medicare and Medicaid with the same conditions. And within States that don't have specific unit controls, there are massive differences. You know, the Pennsylvania example I cited the other night on television said that open heart surgery varied in cost between $21,000 and $84,000 with ex- actly the same outcomes on the study. So those are the things we're going to work through. The money has to be going somewhere. If we're spending 14.5 percent of our income on health care--Canada's at 10, Germany and Japan are under 9, nobody else is over 9 but Canada--the nickel on the dollar is somewhere. And it's not all in higher quality health care. An enormous amount of it is in a system that is wrongly organized with too much cost shifting and a dime on the dollar, I will say again, a dime on the dollar in administrative costs no other comprehensive system in the world has. [At this point, a participant complained about the inadequacy of Medicaid coverage.]”