Jeff Bingaman United States Senator from New Mexico

Mr. President, I would like to spend a few minutes discussing why the health reform bill is so important to all Americans and, in particular, the people of my home state of New Mexico.

First, I'd like to discuss the context for this health reform bill –the very serious problems that we currently face and the significant cost to the nation if we, as a Congress, fail to act.

As this chart demonstrates, the cost of healthcare continues to escalate at an unsustainable rate.  Currently, America spends more on healthcare than any other nation.  According to projections from the U.S. Census Bureau, the U.S. is spending over $2.5 trillion annually on healthcare, more than 16 percent of our Gross Domestic Product.  This threatens the fiscal health of the U.S. government, American families, and American businesses.

As this chart demonstrates, according to the Congressional Budget Office if Congress does not act to change current law, federal spending on Medicare and Medicaid combined will grow from roughly 5 percent of GDP today to almost 10 percent by 2035. By 2080, the government would be spending almost as much, as a share of the economy, on just its two major health care programs as it has spent on all of its programs and services in recent years.

As this next chart demonstrates, most of this increase is not the result of our aging population, but instead is categorized as excess cost growth.  Such spending is unsustainable and has led CBO to say that "slowing the growth rate of outlays for Medicare and Medicaid is the central long-term challenge for fiscal policy."

Moreover, across the country premiums continue to increase and are becoming more and more unaffordable for individuals and businesses.  According to an August report by the Commonwealth Fund, nationally, family premiums for employer-sponsored health insurance increased 119 percent between 1999 and 2008, and -- if cost growth continues on its current course -- could increase another 94 percent to an average $23,842 per family by 2020.

Nowhere is the unsustainable growth felt more acutely than in my home state of New Mexico.  Without health reform, my state is expected to experience the greatest increase in health insurance premiums in the nation.  For example, the average employer sponsored insurance premium for a family in New Mexico was about $6,000 in 2000.  By 2006, this rate had almost doubled to over $11,000.  By 2016 this amount is expected to rise to an astonishing $28,000.  In addition, health insurance premiums in New Mexico make up a larger percentage of New Mexican's income than almost all other states, 31.18 percent, and this is expected to grow to an astounding 56.64 percent by 2016.

It's important to highlight that higher spending on health care in the United States does not necessarily prolong lives.  As this chart illustrates, in 2000 the United States spent more on health care than any other country in the world: an average of $ 4,500 per person. Switzerland was second highest, at $3,300 or 71% of the US.  Nevertheless, average US life expectancy ranks 27th in the world, at 77 years. Many countries achieve higher life expectancy rates with significantly lower spending.

Data from the McKinsey Global Institute clearly indicates that there is a considerable level of waste in the current system.  McKinsey estimates that the U.S. spends nearly a half a trillion dollars annually in excess of other similarly situated nations.  Of this, approximately $224 billion in excess costs are found in hospital care and $178 billion in outpatient care.  Together, these account for more than 80 percent of US spending above the levels of other nations.

Not surprisingly, as cost and inefficiencies continue to build, access to healthcare is becoming more and more difficult for middle and lower-income Americans.  As this chart indicates, the rate of uninsurance through the country has significantly increased since 2000.  My home state of New Mexico continues to struggle with the second highest rate of uninsurance in the nation.  It also has the lowest rate of employer sponsored insurance in the nation and the highest rate of uninsurance among employed individuals.

It is clear that the U.S. healthcare system is failing many Americans and situation is becoming more and more urgent.  According to a study published by Harvard Medical School in August, medical costs have led to almost two-thirds of the bankruptcies in the country, more than 62 percent.  The study found that most medical debtors were well educated, owned homes, and had middle-class occupations.  Shockingly, three quarters had health insurance.  And unfortunately, for many individuals, the very high cost of medical care leads them to delay or avoid receiving medical care all together.  The Urban Institute reports that 137,000 people died from 2000 through 2006 because they lacked health insurance, including 22,000 people in 2006.  Clearly, the need for national health reform has never been so great.

The Patient Protection and Affordable Care Act -- introduced by Senator Reid and others a few weeks ago, includes key reforms aimed at addressing these very serious problems while protecting the aspects of our healthcare system that work.  First, it includes long-overdue reforms to increase the efficiency and quality of the U.S. healthcare system while reducing overall costs.  For example, the legislation includes payment reforms that I have championed to shift from a fee-for-service payment system to a bundled payment system.  This will reshape our healthcare reimbursement system to reward better care and not simply more care, as it currently does.

Second, it includes a broad new framework to ensure that all Americans have access to quality, affordable health insurance.  This includes the creation of new health insurance exchanges, which will provide Americans a centralized source of meaningful private insurance as well refundable tax credits to ensure that coverage is affordable.  Finally, these new health insurance exchanges will help improve choices by allowing families and businesses to easily compare insurance plans, prices and performance. This puts families - not insurance or government bureaucrats - in charge of health care and helps people decide which quality affordable insurance option is right for them.

The non-partisan Congressional Budget Office forecasts the legislation would not add to the federal deficit – in fact, it would reduce the deficit by $130 billion by 2019 and by more than $400 billion by 2029.  On the subject of premium cost, CBO has also found that in the individual market, the amount that subsidized enrollees would pay for non coverage would be roughly 56 percent to 59 percent lower, on average, than the premiums charged in the individual market under current law.  Among enrollees in the individual market who would not receive new subsidies, average premiums would increase by less than 10 to 13 percent.  The legislation would have smaller effects on premiums for employment-based coverage.  Its greatest impact would be on smaller employers qualifying for new health insurance tax credits.  For these businesses and their employees, CBO predicts premiums would decrease by about 8 percent to 11 percent compared with their costs under current law.

This is consistent with estimates of the impact in my home state of New Mexico, where average families may see a decrease in premiums of as much as 60 percent.  In addition, about two-thirds of New Mexicans could potentially qualify for subsidies or Medicaid and nearly a quarter would qualify for near full subsidies or Medicaid.

An overall decrease in premium costs also is consistent with the experience in Massachusetts where there has been an enormous reduction in the cost of non-group insurance in the state after they enacted similar reform to what we are considering now in the Senate.  After reform the average individual premium in Massachusetts fell from $8537 at the end of 2006 to $5143 in mid-2009, a 40% reduction while the rest of the nation was seeing a 14% increase.

Finally, much of the debate on health care reform has focused on insurance coverage but it is important to recognize that as we expand coverage to include more Americans, the demand for health care services will also increase.  A strong health care workforce is therefore essential for successful health reform.  Within the United States, approximately 25% of counties are designated Health Professions Shortage Areas—a measure indicating that there is insufficient medical staff to properly serve that geographic area.  The problem is even more apparent in rural states such as New Mexico.  For example, 32 out of 33 counties in my state has this shortage designation.  As a result, New Mexico ranks last compared to all other states with regard to both access to health care and utilization of preventative medicine.

The Patient Protection and Affordable Care Act we are debating contains key provisions to improve access and delivery of health care services throughout the nation.  These provisions include increasing the supply of physicians, nurses, and other health care providers; enhancing workforce education and training; and providing support to the existing workforce.

I applaud Senators Reid, Baucus, Dodd, Harkin, and many other colleagues who have worked so hard on this bill.  This legislation represents true healthcare reform.  It's time for the Senate to put partisanship aside and enact this critical and long overdue legislation.