WALLY HERGER

            Thank you for inviting me to speak with you today.  Last year, as ranking Republican on the Trade Subcommittee, I spoke about the challenge of maintaining America's competitiveness in the global economy.  I recently became ranking Republican on the Ways and Means Health Subcommittee, and with health reform promising to be one of the top issues before Congress this year, I'd like to talk about what I see as the right path for Congress to take on this critically important issue. 

There's no question that we're about to see the strongest push for health reform in years.  President Obama campaigned aggressively on the issue, and one of his top priorities is to pass a comprehensive overhaul this year.  Republicans agree that our health care system is in desperate need of reform, with rising costs increasingly threatening families, businesses, providers, and taxpayers.  We must ensure that every American has access to affordable, high-quality health care.  And there is real potential for bipartisan agreement in some areas, like emphasizing prevention and disease management, and paying providers more for high-quality care. 

At the same time, there are some big issues where we have very real philosophical differences.  Already this year, Democrats in Congress have passed an aggressive expansion of government-run health care that will move 2 million children from private health insurance into the SCHIP program, and have taken the first steps toward allowing the federal government to dictate which medical treatments will be available.  If health reform means creating a government-run insurance plan that will force an estimated 120 million Americans out of their current health plan, Republicans will have strong objections.  The number one problem in health care today is out-of-control costs, and government programs have a terrible track record on cost control.  Republicans believe cost-saving innovations in health care will come through individual choice and market competition, just as they do in every other sector of our economy. 

I believe there are four key elements that must be part of any health reform legislation: stability, affordability, accessibility, and accountability.  I'll discuss each of these in turn, beginning with stability.  Approximately 160 million Americans currently get their coverage through an employer-sponsored health plan.  The overwhelming majority of these people want to keep their coverage.  We must not risk the coverage of people who already have good insurance.   

The other side of stability is the impact on the budget.  Today, Medicare and Medicaid have trillions of dollars in unfunded liabilities, threatening catastrophic consequences for our nation's future.  Reforming and preserving federal entitlement programs must be part of any stable health reform solution.  By the same token, we should not make large new funding commitments that we cannot pay for. 

Second, affordability.  As I mentioned earlier, I believe controlling health care costs must be at the heart of reform.  Rising costs are eating away at Americans' paychecks and placing American businesses at a competitive disadvantage.  While expanding coverage is an important goal, we cannot simply add millions more people to a broken system.  Universal access to coverage cannot happen until the cost of coverage comes down, and the cost of coverage won't come down until we find a way to reduce the cost of actual health care services. 

Medical malpractice reform must be part of the solution.  People who are truly injured must have their day in court, but overzealous trial lawyers shouldn't be able to play the medical malpractice lottery and hope for a jackpot.  The system has to become more predictable, by capping noneconomic damages and perhaps by moving toward a system of health courts staffed by judges who are medical experts.   

Another way to promote affordability is to focus on keeping people healthy, rather than waiting till they get sick and need more expensive treatment.  It's common sense that paying for early cancer screenings is more cost-effective than treating cancer when it's too late.  Health reform should prioritize both preventing disease and managing chronic conditions.   

Congress should also make the tax code fairer.  The self-employed get a less generous tax break than those with employer-provided coverage, and those who buy insurance on the individual market get no tax benefit at all.  That's simply unfair, and we should extend a similar tax benefit to everyone.  In this process, I believe we need to take a look at whether we can do a better job of providing more help to those who need it most, rather than encouraging people to buy more coverage than they really need. 

A final point on affordability: Currently, underpayments by Medicare and Medicaid force doctors and hospitals to over-charge those with private insurance, raising the average cost of family coverage by nearly $1,800 a year.  Adding a new government-run health plan, as the Democrats have proposed, would only make this cost-shifting problem worse.  Soon, families and business would find it too expensive to buy and offer private health insurance and would be dumped into a government health program.  That is an outcome we must avoid. 

Accessibility has to go hand in hand with affordability.  In theory, you could provide coverage to everyone at relatively low expense -- just follow the Medicaid model and pay providers far below cost.  The trouble is, coverage isn't worth very much if you can't find a doctor who will accept your coverage.  And as we've already begun to see with the debate over comparative effectiveness research, the government will be tempted to save money by denying coverage for necessary treatments that are deemed "too expensive."  In Britain, the national health system literally requires seniors with vision loss to go blind in one eye before they’ll cover a drug to save the other eye. The American people rightly find such rationing unacceptable. 

Finally, I'll close with accountability.  Reform should reward healthy behavior and recognize that everyone has a personal responsibility to improve his or her health.  In recent years, a number of employers have begun to incorporate prevention and wellness programs in their health plans.  We should encourage these innovations and create similar incentives in public programs. 

Accountability is important for providers as well.  The lack of publicly available information about the quality and cost of health care services is unacceptable.  Health reform must create rigorous standards for transparency, and government programs should be overhauled to reward physicians and hospitals that perform high-quality care.  This will raise the bar and improve health care for all Americans. 

Several weeks ago, I and other members of Congress -- both Democrats and Republicans -- participated in a discussion on health reform at the White House.  While it's encouraging that the President is talking about bipartisanship, health provisions in the SCHIP bill and the stimulus package earlier this year were drafted behind closed doors and rushed through without consultation.  We will soon find out if Democratic leaders in Congress are serious about having an open and transparent process and listening to Republicans' ideas for stable, affordable, accessible, and accountable health care.   

I, and my Republican colleagues, stand ready to work with President Obama and Congressional Democrats to improve our nation’s health care system, but we will not support proposals that threaten to eliminate private insurance and increase government control. 

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Wally Herger represents the 2^nd District of California in the U.S. House of Representatives.  He is the Ranking Republican on the Ways and Means Subcommittee on Health.  He delivered the above address at The Ripon Society’s Bully Pulpit forum on Health Care, which was held on April 2 on Capitol Hill.