Opening Address

Honorable John E. Porter (R-IL), J.D.

U.S. House of Representatives

Let me begin by congratulating the Institute on 25 years of service to our country and to the world. The subject of this symposium is health in the 21st century. I am not a futurist; I am an appropriator. We tend to think in terms of one year at a time, sometimes seven years at a time, but no longer. Looking ahead to the year 2020 seriously challenges my ability to envision the future, but I will try.

I thought I would focus on four major elements of the issue: first, the structure of the health care system and who pays for it; second, the demographics that will place demands on it; third, health care personnel demand and supply; and last, the biomedical science knowledge base on which the health system operates.

I expect to highlight issues and raise questions rather than offer prescriptions. My focus is principally on the biomedical research enterprise and how it fits into the health care system of the future.

As many of you know, the health of the National Institutes of Health (NIH) has been one of my principal concerns in Congress. In addition, I feel I must include in my remarks a brief discussion of the larger budgetary environment in which we are currently operating, beginning with some observations about the health care system that we pay for.

The history of the health care system has been characterized by periodic cycles of momentous change. It seems that we can identify important events every 15 years or so: The enactment of the Medicare system in 1965, the movement toward the diagnosis-related group (DRG) payment system in the 1980s, and now the transformation of Medicare and Medicaid that is being considered in the Balanced Budget Act.

There is no reason to think that this trend will not continue. So I suspect that by the year 2020, we will already have seen at least one additional round



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2020 Vision: Health in the 21st Century Opening Address Honorable John E. Porter (R-IL), J.D. U.S. House of Representatives Let me begin by congratulating the Institute on 25 years of service to our country and to the world. The subject of this symposium is health in the 21st century. I am not a futurist; I am an appropriator. We tend to think in terms of one year at a time, sometimes seven years at a time, but no longer. Looking ahead to the year 2020 seriously challenges my ability to envision the future, but I will try. I thought I would focus on four major elements of the issue: first, the structure of the health care system and who pays for it; second, the demographics that will place demands on it; third, health care personnel demand and supply; and last, the biomedical science knowledge base on which the health system operates. I expect to highlight issues and raise questions rather than offer prescriptions. My focus is principally on the biomedical research enterprise and how it fits into the health care system of the future. As many of you know, the health of the National Institutes of Health (NIH) has been one of my principal concerns in Congress. In addition, I feel I must include in my remarks a brief discussion of the larger budgetary environment in which we are currently operating, beginning with some observations about the health care system that we pay for. The history of the health care system has been characterized by periodic cycles of momentous change. It seems that we can identify important events every 15 years or so: The enactment of the Medicare system in 1965, the movement toward the diagnosis-related group (DRG) payment system in the 1980s, and now the transformation of Medicare and Medicaid that is being considered in the Balanced Budget Act. There is no reason to think that this trend will not continue. So I suspect that by the year 2020, we will already have seen at least one additional round

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2020 Vision: Health in the 21st Century of changes that will lead to fundamental differences in the division and financing of health care. One trend I would highlight is the movement toward increasing consumer choice and competition in health care, which I expect to accelerate. It is a common thread running through much of the economic restructuring occurring in the U.S. economy and across the world. It has taken place in technology-based industries such as telephone, television, and personal communications, and it was seen earlier in the service industries such as air, rail, and truck transportation. The movement toward choice and competition is influencing private-sector health care. Sooner or later, publicly financed programs will feel its effect as well. This competition will lead to an increased emphasis on trying to determine what works in health care in a cost-effective way—the kind of information provided by the Agency for Health Care Policy and Research (AHCPR) and others who are interested in outcomes and comparative analysis. Increased competition may even change the solutions to health care problems that are developed by the biomedical community. Will researchers be as quick to find expensive technological fixes if they know that their application depends on a finding of cost-effectiveness as well as of efficacy? I am also convinced that the information revolution is bound to come to health care sooner or later. Up until now, it seems that health care has lagged behind in its adaptation of information systems technology, but its possibilities for reducing costs through this technology are easy to envision—from standardization of medical claims payments, to automated patient records, to telemedicine. All of these will soon be with us. The question of who pays for health care is likely to change as well. We see fewer people with the protection of retirement programs that support health care. Solvency problems with Medicare dictate increasing constraints on that system's ability to shoulder costs. The decreasing willingness on the part of policymakers to have Medicare reimburse the direct and indirect expenses of graduate medical education is one example of this. Whatever the outcome of the current budget debate, Medicaid is sure to see constraints on its future growth as well, with no obvious solutions to the problem of uncompensated care. We have also seen private industry lead the federal government in its efforts to contain medical costs for its employees and to cut back on benefits. As a by-product of constrained resources, we will continue to see rationing of health care. The development of medical technology is outstripping the resources needed to provide medical services. This rationing is most often conflicted and based on economics—benefits go to those who can pay for them. Sometimes the rationing is done by policymakers and is explicit, as in the case of Oregon's health care plan for low-income people. This potentially troubling picture of financing health care in the future is not brightened by looking at the second area I will discuss—demographics. I confront this area regularly in my work with the Foreign Operations Appropriations Subcommittee. The demographic trends worldwide present acute

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2020 Vision: Health in the 21st Century challenges, and we cannot be complacent in thinking that the United States is immune from these same problems. The one obvious example is aging and the increasing proportion of the population that will be over 65 in the years to come. You need only look at projections of the incidence of Alzheimer's disease, and the consequent long-term-care costs, to understand that demographics may be destiny as far as the health care system is concerned. Problems with the income and educational levels of the population are also bound to affect the provision of health care and access to it, people's knowledge base about healthy life styles, and other issues. Another vital component of the health care system of the future, and the third area I would like to address, is personnel supply and demand. The perceived glut of medical specialists and shortage of primary care providers has been a hot topic recently. In addition, recent reports like that from the Pew Health Professions Commission, among others, raise the more general supply issue—that we simply have too many doctors. If this perceived imbalance is corrected, either through reimbursement policies or through the laws of supply and demand, it may have the beneficial effect of reducing health care costs. It could be a significant problem, however, in generating the skilled personnel needed for biomedical research and for the environment of teaching hospitals in which some of this research is conducted. In addition, the issue of whether the Ph.D. training system should undergo changes has been raised. Recommendations have been made to modify the content of training programs. There is also the overall supply issue: Much contested, but at least legitimate, questions have been raised as to whether the unemployment and underemployment of Ph.D.s suggests that the supply of Ph.D. students should also be adjusted. My fourth principal area of discussion is the health knowledge base supported through biomedical research. The basic funding structure of biomedical research has not changed substantially since the post-World War II period. It remains a closely knit coalition of academia, industry, and government funders, although the participation of private sector biotechnology and pharmaceutical firms has obviously increased over the past decade. It is possible that this web of interdependent partners will be reexamined in terms of its structure and financing, spurred in large part by changes in health care and health personnel. Questions may be raised about whether the distribution of public resources among the various actors in this partnership matches national priorities. The economic benefits accruing to the various partners—in the form of licenses, patents, product sales, and the like—may be examined as part of the scrutiny of the allocation of public resources. The structure of the biomedical coalition, which leaves the federal government the responsibility for funding basic research and leaves the principal responsibility for funding applied research to others, may also be reexamined. Although it is a question I am reluctant to raise, others may ask if the nation will have enough resources to maintain the current model of NIH, one that

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2020 Vision: Health in the 21st Century spreads money widely for basic research, with the assumption that a few successes will finance or justify the general investment, or whether funding constraints will force the system into a more directed approach to research, with funding allocated only for particular purposes. Will funding pressures cause a shift toward financing a smaller community of researchers rather than supporting the research infrastructure of 200 separate universities? Will there be a rethinking of the size of intramural research at NIH and throughout government, with the determination either (a) that in a period of constraint, it fulfills a mission that cannot be supported as efficiently outside or (b) that it is no longer needed, given the maturation of the extramural community? Will NIH, either on its own or at the urging of others, develop new mechanisms for funding research? I see the NIH model of distributing research funding through peer review of innovative ideas submitted by investigators around the country as one that should be adopted more widely throughout the government. However, the demands of the 21st century may dictate new mechanisms to enhance this successful system. Finally, I cannot conclude without some comment on the nation's budgetary situation and its impact on the health programs in which I have a deep interest. As an appropriator, I have a special concern about the financial burden that health care entitlements will place on federal revenues and the resulting squeeze on funding available for important discretionary health programs—among them, NIH; the Centers for Disease Control and Prevention; health services programs such as family planning, community health centers, and Ryan White AIDS services; and veterans' health care. I hope you are as concerned as I am by the long-term budgetary situation we face. By 2012, 17 years from now, unless substantial changes are made now, entitlements and interest on the public debt will consume the entire federal budget. By 2030, 35 years from now, Medicare, Medicaid, Social Security, and federal employee retirement programs alone will consume all of the tax revenues collected by the federal government. This means that without significant changes in the growth of entitlements, there will be no money at all to support discretionary spending of any sort. Although the current budget negotiations are an important effort in reining in the cost of entitlements, we need to remember that previous budget balancing efforts have tended to be quite ephemeral. If you recall, we went through major budget balancing exercises in 1981, 1982, 1986, 1988, 1990, and 1993. We were assured by the Congressional Budget Office in every case that the budget would be in balance in a matter of years. It never has been. This is not in any way intended to denigrate our current efforts, the success of which I feel is absolutely essential, but it is intended to serve as a context for what I view as the single overriding concern facing discretionary health accounts—an absolute drying up of resources necessary to sustain them. Unless we take legislative action that will actually work to reduce the cost of entitlement programs, the discretionary health accounts will face increasingly bitter competition for resources that grow more scarce each year. As resources for

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2020 Vision: Health in the 21st Century services and biomedical research decline, this will have tremendously negative consequences for the health of the American people. DISCUSSION* DR. SHINE: What is your view of the future of AHCPR? REPRESENTATIVE PORTER: It is probably instructive to examine what happens when an agency has the courage to look at subjects honestly and give its views. In reference to AHCPR, it is clear to me that the agency offended a group in the medical community that then asked its members of Congress to cut AHCPR's budget. I am a great fan of AHCPR, but I realized that a very strong effort was being made to cut its budget and I thought I might be able to head this off by making some cuts of my own. In the mark-up we made a fairly large cut—given the importance of AHCPR's endeavors—to the point that we decreased discretionary spending in my subcommittee by $9 billion, out of $70 billion in discretionary funds. I thought that would head off further cuts; it did not. Further cuts occurred both in the subcommittee mark-up and on the floor of the House of Representatives. The budget as it stands in the House bill has been cut drastically—I think about in half. I do not expect this to be the final result if we can get an overall agreement by Congress and the White House on spending. Until recently, I had been fairly sanguine that we would get that agreement, but I am becoming increasingly less sanguine that that will happen. I said from the very beginning that the best scenario for NIH and other health care funding is to reach agreements early between the White House and Congress to keep high priorities for areas in which our country leads the world and cannot afford to reduce spending—indeed, must increase it. Unfortunately, that has not occurred. In the current budgetary context we may see a continuing resolution for a year's funding for the Departments of Labor, Health and Human Services, and Education, perhaps at 75 or 80 percent of last year's level, laid on the president's desk while Congress adjourns. That would be an absolute disaster. I am doing everything possible to influence the leaders of Congress to place a high priority on health care financing. This is all being done among a few people at the very top—our budgetary chairmen, Representative John Kasich and Senator Pete Domenici. Both budgets cut NIH and other health care matters very heavily, and I am worried about where we are and about the lack of progress or the lack of forthcomingness on the part of the White House to find some common ground and get our budgetary situation finalized. PARTICIPANT: How will we obtain more appropriate levels of funding for research? *   Because of technical difficulties, the participants' questions had to be reconstructed; therefore, they are not verbatim.

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2020 Vision: Health in the 21st Century REPRESENTATIVE PORTER: There needs to be a much stronger message from medical organizations such as the Institute of Medicine that send policymakers in a direction in which they are perhaps reluctant to go. I do not say this in any way as a criticism. I say simply that I think you have far more credibility than you realize, and if you can mount an effort to bring issues like this not before the Congress but before the American people, and get the attention of the media—which, in today's world, is everything—the chances of changing policy are great. I have said to Harold Varmus, who is doing a magnificent job at NIH, that he has to become the Carl Sagan of biomedical research and popularize all of the wonderful things that NIH is funding and that are occurring in biomedical research because people are intuitively supportive. They need to understand what is happening, and how exciting it is, and the possibilities for its development. The same kinds of things must happen with respect to policy issues. We have to raise the consciousness of the whole country about the meaning of what we are doing or not doing and capture people's understanding a bit better. We talk about this among ourselves, but we must realize that, in a big society such as ours, decisions are really made broadly, and if we cannot get broad interest in things, it is very difficult to break through and achieve change. PARTICIPANT: I am concerned that ideology has compromised support of international health and family planning. Is this not short sighted? REPRESENTATIVE PORTER: I share your concern. First, across this land there is a feeling that we in the federal government spend huge amounts of our resources overseas. Even in districts that are as educated and well informed as mine, you will find that people believe that we spend anywhere from 5 to 15 percent of our federal resources on foreign aid of one type or another. The fact is that all types of foreign aid—economic and military, bilateral and multilateral—amount to less than 1 percent of the federal budget, and this figure is decreasing: It has gone down about 40 percent over the last 5 or 6 years. That function of government has contributed more to deficit reduction than any other. This year, foreign aid has decreased $2 billion. Very frankly, I worry greatly that we are withdrawing our resources at a time when the United States is in the best position to influence the future of life on this planet and to emphasize the value of freedom, democracy, and family planning in international health. I believe that there is clearly an attempt in this Congress, based on the abortion issue, to undermine all money for family planning. A large group in the House of Representatives is simply opposed to family planning. Its members will say that they are opposed to abortion, the fact is that the attack is on family planning itself, not just on abortion. I worry that the United States is going to pull back on family planning and send a message to others who are interested in this area that they do not need to commit resources either.

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2020 Vision: Health in the 21st Century PARTICIPANT: How do you think the physician oversupply will affect the job market? REPRESENTATIVE PORTER: When you have a free society and people can go into different professions or businesses, you may find that in a health care system in which some competition seems to be developing, the overall attractiveness from an economic standpoint of being a physician decreases and the willingness of people who are trained as physicians to dedicate themselves and spend inordinate amounts of time helping others may also decrease. You may see people going into other professions. There also may be greater opportunities for women in health than in a lot of other areas, when they run up against ''glass ceilings'' and have nowhere to go with their talent, health may be the area to which they can turn. PARTICIPANT: Isn't it important to clarify what we actually mean by reductions in Medicare spending? I don't think we're talking about actual reductions but reduced projected spending. REPRESENTATIVE PORTER: Neither do I, and neither does anybody else who has looked at it. In fact, under the Republican budget, spending per Medicare beneficiary will rise from $4,800 currently to $7,100 by the year 2002. We are not spending less on Medicare. We are spending substantially more, but we are not spending at the historic rate of about 10 or 10.5 percent. This is very interesting, because the president himself has made a proposal to restrain the rate of growth in Medicare. Hillary Clinton said this at the time she offered her program. The difference between our proposal and the president's is very small, about $130 per year per beneficiary. I guess you are asking me to make a political comment, which I am willing to make on the president's proposal. I think it is totally irresponsible. No one who looks at the federal budget and understands what is happening with entitlements—and Medicare is the largest one, while medicaid is becoming the next largest—can fail to understand that we have to restrain the rate of increase in these programs or we are simply going to lose everything in terms of discretionary spending. NIH—in all that it does, including public health—is at risk if we do not gain control over entitlement spending. We have to do it; nobody in this country who understands anything about the federal budget doubts that for a minute; yet the president is playing games with it. It is time for him to sit down at the table and come to an agreement; otherwise, our future is going to be very, very bleak. PARTICIPANT: It seems that the support for children is evaporating in this country. What do you see as the short- and long-term consequences of Congress' actions? REPRESENTATIVE PORTER: Well, I certainly agree with the premise that although we have largely solved senior poverty in our country, children are the people most at risk. Obviously, they do not have political clout, as

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2020 Vision: Health in the 21st Century the seniors do. They do not vote at all. Even the youngest who are eligible do not vote in any great numbers, so they do not get the weight they should receive in our deliberations; and you are right about that. On the other hand, if we do not gain control over federal spending, we are destroying their opportunity for any kind of an economic life in our society. I will repeat something that I have said for the last 13 years, and the numbers have gotten worse rather than better: If you are a young person entering the work force in America today, you are being handed a bill by your government for about $187,000 of extra taxes that is your share of the interest on our current national debt. even if we bring the budget into balance, this will increase by $1.2 trillion more, so your costs will be still higher. That is just the interest for an average young child. For the children and grandchildren of people in this room, the bill will be $10,000 a year, perhaps higher. We have got to put an end to this and get control over federal spending. By the way, we should not be cutting taxes at such a time. That is nonsense, and I have been against it from the very beginning. We must look at what we are doing to our children. Are we providing them with a sound education? Is the Chicago public school system acceptable? No. Is the Medicare/Medicaid system acceptable for people in poverty? No. Maybe the idea of letting the states take primary responsibility—they already administer the Medicaid program—is not a good idea. Maybe that is something we should not do. Clearly here, as well, with costs increasing at a rate of about 10 percent per year, we must restrain the rate of increasing costs. We have to put into place plans that the states can develop to emphasize cost-effectiveness and have resources spent wisely for needed health care reform. Some states will do a terrible job. Others will do a magnificent job—better than they could do with all of the federal constraints. Perhaps out of that, if it is tried, we will see the best way to provide health care services. Clearly here, as well as in the private sector and in my judgment, in Medicare, we are going to have to have more elements of competition to control costs, which obviously includes managed care.

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