House Majority Policy Committee

House Majority Policy Committee Hearing

Testimony of Anne Baum, Chairman of Greater Lehigh Valley Chamber of Commerce

March 28, 2007

Good morning, Members of the Majority Policy Committee, Pennsylvania business and community members, my name is Anne Baum.  I am the Founder and President of Vision Accomplished.  I am testifying before you today in the capacity I serve as the Chairman of the Greater Lehigh Valley Chamber of Commerce-the 2^nd largest chamber in the Commonwealth of Pennsylvania, and one of the fastest growing in the nation.  Our mission is to deliver value to our members through superior programs and services; to advocate for and to advance business interests.

On behalf of our 4,800 members who employ more than 140,000 individuals, thank you for this opportunity to specifically address covering the costs of healthcare.

Let me begin by telling you --unequivocally --that the number one issue for Greater Lehigh Valley Chamber of Commerce members is controlling the costs of healthcare to maintain a healthy bottom line as well as a healthy workforce.  Four months ago, the Greater Lehigh Valley Chamber of Commerce Healthcare Committee hosted their annual policy forum that was entitled "Can you or your employees afford to get sick? Health Care: How to shop and how to save?"  

The title was inspired by a Reader's Digest poll that found two-thirds of adults 21 and older said they feel they "can't afford to be sick."  About half of the respondents said they had put off or refused medical treatment for a serious condition or delayed taking or renewing prescription drugs.  46% said they had postponed routine annual physicals and 27% said they avoided surgery.  And, 25% of the respondents said they had overdue medical bills with close to half of them using credit cards to meet their health care costs.  We began our Chamber forum by announcing the results of an informal survey of our members throughout the Lehigh Valley.  More than half of the responding business people said they were satisfied with their healthcare plan.  But, there was a very different answer to the question about costs.  Almost all of the respondents said they were unhappy with what they pay for healthcare and they put the most blame on healthcare providers and insurers.

I understand that the purpose of today's hearing is not to focus on Governor Rendell's Prescription for PA plan, but I would like to share one of the statistics he gave during a January presentation to our Chamber Board of Governor's.  Between 2000 and 2006, family health insurance premiums increased 75.6%.  During that same time, the increase in median wages was only 13.3%. The Kaiser Family Foundation and the Health Research and Education Trust released a survey six months ago.  The results showed health insurance premiums rose 7.7% in 2006.  Although that is less than the 9.2% rise in '05, costs still outpaced a 3.8% gain in wages to pay those premiums.  In fact, we in USA spend more money than any other developed nation on healthcare costs.  The Bureau of Labor Statistics calculated that America's health care costs have risen at two-times the rate of inflation since 1970.  It is clear that healthcare is taking a bigger piece of our family income pie and there is less money to allocate to other things.  That fact --along with the statistic I shared previously regarding the high number of people racking up credit to pay their bills, is a problem we cannot ignore.

One of our forum panelists represented the Lehigh Valley division of the Society for Human Resource Management (SHRM).  He detailed SHRM's fall survey on Lehigh Valley business practices in healthcare comparing them to national practices.  Even though LV employees tell us they aren't happy with what they are spending on health care, they are paying less toward their own coverage than their national counterparts.  And, the average Lehigh Valley health plan has substantially lower deductibles and virtually no additional out of pocket expenses compared to the average national plan.

It is clear that our current health care system requires major changes.  It is also clear that each and every one of us needs to play a role in that change and education of the consumer is the key.  I'd like to share with you four key cost drivers that the Greater Lehigh Valley Chamber of Commerce Healthcare Committee is working with our physicians, hospitals, insurance providers and brokers, and the community-at-large to make an impact on costs.

Personal Accountability:  One way to impact the cost of healthcare is to improve the health of the population.  According to the SHRM survey, about 1 in 5 employers will ask its employees to take more responsibility for their overall health. They will offer wellness and disease Management programs to help healthy employees stay healthy, while reaching out to at risk employees to help them make the necessary lifestyle, or medical, choices to become as well as they can be.  Because large employers have greater resources they are much more likely to put wellness Plans in place than smaller employers.  The Chamber's Healthcare and Member Benefits Committees stepped up to the plate and formed a subcommittee, led by Mary Ellyn Voden, Crayola, focused on identifying opportunities to have an impact on the health of our entire community. The committee has established a vision to be selected as one of the healthiest places to live in the United States and is pleased to announce its first initiative in partnership with Capital Blue Cross and Caruso Benefits: "The Lehigh Valley Wellness Experience"  Kicking off on  May 22nd, in conjunction with the evening Mayfair mixer, we will begin our Valley wide wellness initiative with a corporate walking competition and attendees will be able to purchase pedometers at a discounted rate as well as receive a body composition analysis including weight, body mass index, basil metabolic rate and body fat % at no charge.  Prizes of all sorts will be given as incentives for Chamber members to participate.  Then, on July 13^th, at the Chamber's Annual Clambake, we will host the first annual Chamber Health Fair in Bethlehem.  Focused on bringing big company wellness initiatives to small business and on making our community healthier, the wellness subcommittee is pleased to bring these programs to our members.

There are many questions related to personal accountability, is it the key to controlling costs?  What does wellness really mean?  The term "disease management" is being used over and over again -how do we incorporate it into our lives?  Are we facing a crisis if we don't change our habits?  Where do our nation's children rate on health charts?  How important is it for us to be role models?  How do you find time to live "well" in this fast-paced world of ours?  Can you eat fast food healthy?  Can we change the focus of our current system from acute care/ high tech intervention to one that is geared to health and wellness?  Are employers the key to our solution by providing insurance rate incentives?  We believe our wellness program is the first step in answering some of those questions.

Health Care Transparency: The US Department of Health and Human Services defines transparency as a broad-scale initiative enabling consumers to compare the quality and price of health care services, so they can make informed choices among doctors and hospitals.  The Partnership for Value-driven Health Care, a consortium of U.S. business groups, is working with partners across the USA to ensure consumers to know the quality and cost of their health care. Health care transparency provides consumers with the information necessary, and the incentive, to choose health care providers based on value.  Providing reliable cost and quality information empowers consumer choice. Consumer choice creates incentives at all levels, and motivates the entire system to provide better care for less money. Improvements will come as providers can see how their practice compares to others.  Of course technology is the key and already has created a world of opportunity in providing quality health care, but it is not cheap.  We need to continue discussing new techniques and the necessity of providers keeping pace with technology while we provide an understanding of the real costs.  HIT (Health Information Technology) at the federal, state and local levels is a paperless approach that will reduce administrative costs if combined with efficiency of care, consumer education, and transparency. Sharing information requires interoperability which is compared to you using your bank card in ATMs virtually around the world. It will give patients the same kind of access to their own medical histories.  Achieving interoperability means setting standards, so one system can talk to another, exchanging data accurately, efficiently, and securely. And connecting providers and payers across the nation will provide the reservoir of data necessary to dependably measure cost and quality.

Tort Reform:  We need to continue to reform Pennsylvania's costly legal system.  The high legal costs paid by Pennsylvania employers stunt the Commonwealth's economic growth and job creation. We need to inject fairness, common sense and personal responsibility into our courts by continuing to reform our antiquated legal system.  According to a Pacific Research Institute Survey just released, America's legal system imposes a staggering economic cost of over $865 billion every year.  This figure is 27 times more than the federal government spends on homeland security; 30 times what the National Institutes for Health dedicate to finding cures for deadly diseases, and 13 times the amount the Department of Education spends to help educate America's children.  We know this cost is rising but how does it affect health care costs?  Are we losing doctors in PA?  Are we forcing potential medical students, our brightest stars, to steer clear of the field?  Insurance is not the only cost, what role does defensive medicine play? How do we alleviate our litigious society?  How does PA's situation stack up to other states?  Can mediation help us to create a solution not based on the court system we know today, but will compensate patients and keep doctors accountable?  These are the questions we need to continue addressing.

Consumer Driven Costs:  Health care savings accounts are one way consumers can take control of their costs, why are they still unpopular?  How do high deductible plans help control costs?  How should insurance brokers be of assistance? The majority of local employers offer PPO plans, with managed care HMO/POS plans being offered by the balance. According to the SHRM survey, employers that offer Consumer Driven Health Plans (CDHPs), meaning a high deductible health plan in conjunction with an HSA or HRA, more than doubled in the last year. Although less than 10% of all employers currently offer CDHPs, estimates are that more than 50% of employers will implement these plans by 2010.  Almost all employers have asked, and will continue to ask, employees to pick up more of the costs through higher payroll deductions as well as costs for medical services in the form of higher copays, deductibles, and coinsurance. Surprisingly, only 1 in 4 employers plan to offer tax-favored tools, like HRAs and HSAs, in the next year, to help employees manage their additional financial responsibilities.  We need to question what the true costs are of services provided, that has a low benefit/cost ratio, but is still delivered because patients request them of their doctors.  Where do prescription drugs fit in on consumer driven costs?  Sixty percent of the chamber members surveyed said they take prescription medications.  Is direct advertising to patients by pharmaceuticals educating the public or is it creating an unnecessary cost to consumers who tell their doctors they need the products?  Is there a strong bias by physicians to give patients what they want?  Shouldn't we trust our doctors to know what their patients need, not TV commercials?  Again, these questions need to be addressed for us to find relief in this complicated issue.

On behalf of the members of the Greater Lehigh Valley Chamber of Commerce, we look forward to working very closely with you, your legislative colleagues and the Administration to establish tort reform, health care transparency, create greater personal accountability among citizens of the Commonwealth and identify solutions for consumer driven costs.  Thank you for the opportunity to present to you today.