Well, I think the mantra that you hear is we want affordable, accessible, quality health care. Just to speak to what Dr. Boozman was saying there briefly, if you look at the next 10 years, and you take 400, $500 billion out of the Medicare…
Well, I think the mantra that you hear is we want affordable, accessible, quality health care. Just to speak to what Dr. Boozman was saying there briefly, if you look at the next 10 years, and you take 400, $500 billion out of the Medicare system, and you add 3 to 3\1/2\ million people to the Medicare system, each year, and then in the Baucus bill after year 2 you cut providers by 24 percent, you do the math.
I mean, how can you provide more quality care to 30 million people with $500 billion less money? You do the math, it's impossible.
We have done--there are two plans out there that have had beautiful experiments in the States. That's Tennessee and Massachusetts.
What happened in Tennessee, in the early 1990s, we had managed care come along and the health care costs were escalating. We have a lot of uninsured Tennesseans. It was a noble goal to try to cover as many Tennesseans as we could. So we started a plan with eight different managed care plans to compete for business.
What happened between 1993 and 2004, budget years, 10 budget years, 11 budget cycles, is that the cost on spending, on Medicaid, which is TennCare, our exemption from the Medicaid system, went from 2.5 or $2.6 billion a year to $8.5 billion a year, over triple in cost.
Now, what do we get for that? Well, we got more people covered; and we found in this public option that 45 percent of the people who had the public option dropped private health insurance and went on the government plan. Well, that was fine for the person who got the care at that time.
But what happened, to make your point, is that the Medicaid system in our State pays less than 60 percent of the cost of actually providing the care. Medicare pays somewhere between 80 and 90 percent of the costs, the uninsured somewhere in between, and the rest of it has shifted to private health insurance companies.
I can tell you exactly what happened in our State is that they almost broke the State. The Governor, who is a Democrat and who is doing a fine job, as is the legislature that's Republican, are working together to try to solve this problem.
How did they do it? How did they ration care? What they did was they cut 200,000 people from the rolls because the State could not afford it.
What also is going to happen is our governor, and I have a letter from the governor right here, is extremely worried about the Bachus plan, and he has already scored that because he knows the next governor is going to have to deal with it. What he is looking at is at least $735 million over 5 years. And if this were to happen, if the State were to sue Medicaid, which Washington State and California have done, to freeze the rates so that you couldn't lower the Medicare and Medicaid rates, that could be as much as $1 billion more for the State in an unfunded mandate.
Right now our State has no way to pay for it. We just don't have it in Tennessee. And to show you we don't, the governor and the legislature have had to cut off enrollment in the SCHIP plan, in our State it is called Cover Kids, because we don't have the money for even our matching part right now.
Look, just to get some more time, if you look at this, there is no way on this Earth, and I said when I came here I was worried, very worried, about our children and grandchildren, my grandchildren, how they were going to do in this system. I am now very worried about our seniors, because I am afraid when you decrease the amount of resources, the amount of dollars, and add more people and cut the costs, cut the amount of money you are going to pay to providers, you will decrease access and you will decrease quality. It has to happen. Or, thirdly, our seniors are going to pay a whole lot more money for their health care, which they cannot afford.
In our area where I live in the First District of Tennessee, it is not an affluent area; it is a mountainous area of the State, and so many patients that I saw every year, a lot of widows that I saw lived on a fixed income, a small Social Security check, $500, $600, $700 a month and maybe a $100-a-month pension. They cannot afford any more for their health care right now.
There are millions of Americans, our seniors, who no longer can go out into the workforce. They can't hold a job at Wal-Mart as a greeter or at McDonald's or whatever. They are just physically not able. What are we going to do for those folks?
Well, I appreciate that.
There's no question in our area we've had four different small businesses, including Johnson City, Tennessee, where I was mayor before I came here, that have actually flattened their premium increases by doing exactly what Congressman Murphy was talking about. You change the incentives.
BAE Corporation, Holston Munitions, they make C-4 and plastic explosives and so forth, and that company has 700 or 800 employees. They have not had a premium increase in 5 years in that company. How'd they do that? Well, they changed the incentives. If you were hypertensive and obese and smoked, it would cost you more for your insurance. If you got on their plan, their wellness program, and you stopped smoking, you exercised, and you lost weight, they would reward you financially. And guess what? They have kept their premiums down. Free Will Baptist Ministries, a small 150-person group has done exactly the same thing.
I've had a health savings account, and let me explain that to people out there who are scared away with this. In our practice, we have almost 300 employees who get insurance through our company, through our business, our medical practice, and 84 percent of them have a health savings account.
What that is is this: You manage the first dollars. The first dollars may be $3,000. Mine was $5,000. So I paid the first dollar for any health care, but it made me a great consumer. It also incentivized me to stay healthy, exercise, eat right. If you don't spend that money, guess what happens? You get to keep it, roll it over into next year like an IRA, and you can spend that on your health care the next year. And if you're healthy over a number of years, then you're able to keep this money and buy long-term care with it or whatever you want to spend it on health care-wise. If anything over $5,000, I had a catastrophic policy, so if I had a cancer or a car accident or some severe illness, it covered 100 percent. So basically what I was doing was I'm the insurance company. I'm managing my own care and my own dollars. It works extremely well. Under this plan, it does not work.
And before I stop, I wanted to pass along something that I found very fascinating in Massachusetts. In Massachusetts, they've done a great job of trying to cover their citizens there. They have about 97 percent covered, but they're running into the same issue that we did in Tennessee. From 2006 until now, State spending on health care is up 70 percent. And in that State, you cannot be denied coverage and you have a mandate to buy insurance as an individual. So you have to purchase this insurance.
Harvard Pilgrim Health Care, from 2008 until 2009, found this out, that 40 percent of their new enrollees were enrolled for less than 5 months, and during that 5-month period of time, they averaged spending $2,400 a month on those folks. For the folks like the rest of us that just go out and pay our premiums, it was $350 a month. So what these people were doing is they were waiting till they got sick, then they bought the health insurance, and when they got well, they dropped it. So they paid the fee or the tax. Look, people will do what's in their own best interest. They're smart, and they'll figure out what to do. So I don't know how you make people or force people to do it.
Guess what happened in Massachusetts? The rest of us, the rest of the folks up there who got insurance subsidized those people greatly. So I think you have to put the onus back on, and we have several plans out there that can do that, that incentivize people to look after their own health care. I mean, some very simple things to do.
Tort reform. Very simple. You can save billions of dollars. Take away State lines. Allow co-ops or association health plans to be formed. Subsidize State high-risk pools. So if a patient of mine who came in and said, Dr. Roe, I was diagnosed with breast cancer 5 years ago and I'm uninsurable, make sure that patient, that woman can get affordable health insurance. Those are simple things we can do that everybody in this Chamber ought to be able to agree on.
Dr. Cassidy, you know this, that if I had a patient that was a pregnant diabetic and she came to me, I can tell her what to do, but unless she's empowered to take care of her own blood sugar calculations, she's not going to have a successful outcome. So we absolutely have to engage our patients in solving these problems. There's no doubt about it.
Well, there's no question that the American people are the greatest shoppers in the world. I mean, how many of us haven't driven over five lanes of interstate to get gas 2 cents a gallon cheaper. I mean, we've all done that. Admit it. We are good shoppers and consumers, and health care ought to be the same way.
Would the gentleman yield?
When I go in, and I had a procedure done on myself a couple of years ago. I take this card right here, which is my health savings account, and it's a debit card. And that day they get paid. I said, I want your best price. I want the lowest price you can give me right here when I pay you because you get your money, no insurance company involved, no anything. I'm paying today cash out of my health savings account.
Thank you. Let me just give you a little historical trip.
These crises, legal crises have occurred throughout various States in the Union, and it occurred in Tennessee in the mid seventies. All the companies who provided malpractice insurance left the State. So the doctors got together and formed a mutual insurance company, State Volunteer Mutual Insurance Company, where what we don't pay out in premiums--I mean in charges and costs. We keep and it comes back as lower. When I got my first malpractice premium in the seventies, it was $4,000 a year. The young physician who replaced me was $74,000.
Yes. And I spoke to a neurosurgeon just yesterday who is over $100,000 a year just in Tennessee. What happened in our State was the following: since the inception of that company, since the mid-seventies until now, that's 35 years, over half the premium dollars we've paid have gone to attorneys, less than 40 cents have gone to the injured party, and 10 cents go back for reserves and running the company.
What we have in America is a terrible system to actually pay for injured parties. If we have injured someone in a medical malpractice event, we have no good way except through the legal system, in which most of the money goes to the attorneys, both defense and plaintiff attorneys. We can't actually pay for the injured party.
That is what's wrong. And I would suggest that the attorneys have to come and help us get a system that better helps the injured party, to compensate them. If we hurt someone, let's compensate that person. Right now in
our State we have a terrible system to do that.
Yes.