This AMA Obama transcript is abridged and annotated for easier reading. The full video is available at the bottom of the post.

THE WHITE HOUSE

Office of the Press Secretary
For Immediate Release June 15, 2009

REMARKS BY THE PRESIDENT
AT THE ANNUAL CONFERENCE
OF THE AMERICAN MEDICAL ASSOCIATION

Hyatt Regency Chicago
Chicago, Illinois

11:13 A.M. CDT

One essential step on our journey is to control the spiraling cost of health care in America. And in order to do that, we’re going to need the help of the AMA. (Applause.)

Today, we are spending over $2 trillion a year on health care — almost 50 percent more per person than the next most costly nation. And yet, more of our citizens are uninsured, the quality of our care is often lower, and we aren’t any healthier.

Make no mistake: The cost of our health care is a threat to our economy. It’s a ticking time bomb for the federal budget. And it is unsustainable for the United States of America.

To say it as plainly as I can, health care is the single most important thing we can do for America’s long-term fiscal health. (Applause.)

And I want to commend the AMA … just a week ago, you promised to work together to cut national health care spending by $2 trillion over the next decade, relative to what it would have otherwise been. And that will bring down costs; that will bring down premiums. That’s exactly the kind of cooperation we need, and we appreciate that very much. Thank you. (Applause.)

So let me begin by saying this to you and to the American people: If you like your doctor, you will be able to keep your doctor, period. (Applause.) If you like your health care plan, you’ll be able to keep your health care plan, period. (Applause.) No one will take it away, no matter what. Fix what’s broken and build on what works. And that’s what we intend to do.

If we do that, we can build a health care system that:

Upgrading to Electronic Medical Records
First, we need to upgrade our medical records by switching from a paper to an electronic system of record keeping.

It simply doesn’t make sense that patients in the 21st century are still filling out forms with pens on papers that have to be stored away somewhere. You shouldn’t have to tell every new doctor you see about your medical history or what prescriptions you’re taking. You shouldn’t have to repeat costly tests.

All that information should be stored securely in a private medical record so that your information can be tracked from one doctor to another — even if you change jobs, even if you move, even if you have to see a number of different specialists. That’s just common sense. (Applause.)

That will mean less paper-pushing and lower administrative costs … physicians will have an easier time doing their jobs … the doctors [will know] what drugs a patient is taking so you can avoid prescribing a medication that could cause a harmful interaction. It will prevent the wrong dosages from going to a patient. It will reduce medical errors, it’s estimated, that lead to 100,000 lives lost unnecessarily in our hospitals every year.

Investing in More Preventative Care
The second step that we can all agree on is to invest more in preventive care so we can avoid illness and disease in the first place. (Applause.) That starts with each of us taking more responsibility for our health … doctors telling us what risk factors we should avoid … employers rewarding workers for taking better care of their health.

Five of the costliest illnesses and conditions — cancer, cardiovascular disease, diabetes, lung disease, and strokes — can be prevented. Only a fraction of every health care dollar goes to prevention or public health … that’s starting to change with an investment we’re making in prevention and wellness programs … electronic records and preventive care are just preliminary steps.

We spend vast amounts of money on things that aren’t necessarily making our people any healthier… a system that automatically equates more expensive care with better care.

Quantity versus Quality
There are two main reasons for this [compensation and medical information]. The first is a system of incentives where the more tests and services are provided, the more money we pay.

[We] reward the quantity of care rather than the quality of care; that pushes you, the doctor, to see more and more patients even if you can’t spend much time with each, and gives you every incentive to order that extra MRI or EKG, even if it’s not necessary. It’s a model that has taken the pursuit of medicine from a profession — a calling — to a business.

That’s not why you became doctors … You didn’t enter this profession to be bean-counters and paper-pushers. You entered this profession to be healers. (Applause.) And that’s what our health care system should let you be. That’s what this health care system should let you be. (Applause.)

#1: We Need to Reform Compensation
We need to:

We’re making a substantial investment in the National Health Service Corps … medical training more affordable for primary care doctors and nurse practitioners. (Applause.)

#2: We Need to Improve Medical Information

The second structural reform we need to make is to improve the quality of medical information making its way to doctors and patients. Less than one percent of our health care spending goes to examining what treatments are most effective. Too many doctors and patients are making decisions without the benefit of the latest research.

A recent study, for example, found that only half of all cardiac guidelines are based on scientific evidence — half. That means doctors may be doing a bypass operation when placing a stent is equally effective; or placing a stent when adjusting a patient’s drug and medical management is equally effective — all of which drives up costs without improving a patient’s health.

So one thing we need to do is to figure out what works, and encourage rapid implementation of what works into your practices. That’s why we’re making a major investment in research to identify the best treatments for a variety of ailments and conditions. (Applause.)

Replicating best practices, incentivizing excellence, closing cost disparities — any legislation sent to my desk that does not these — does not achieve these goals in my mind does not earn the title of reform.

Together, if we take all these steps, I am convinced we can bring spending down, bring quality up; we can save hundreds of billions of dollars on health care costs while making our health care system work better for patients and doctors alike.

No caps on malpractice awards
I understand some doctors may feel the need to order more tests and treatments to avoid being legally vulnerable. That’s a real issue. (Applause.) Now, just hold on to your horses here, guys. (Laughter.) I want to be honest with you. I’m not advocating caps on malpractice awards — (boos from some in audience) — (laughter) — which I personally believe can be unfair to people who’ve been wrongfully harmed.

But I do think we need to explore a range of ideas about how to put patient safety first; how to let doctors focus on practicing medicine; how to encourage broader use of evidence-based guidelines. I want to work with the AMA so we can scale back the excessive defensive medicine that reinforces our current system, and shift to a system where we are providing better care, simply — rather than simply more treatment.

So this is going to be a priority for me. And I know, based on your responses, it’s a priority for you. (Laughter.) And I look forward to working with you. And it’s going to be difficult. But all this stuff is going to be difficult.

Medicare Payment Advisory Commission
I’m open to expanding the role of the Medicare Payment Advisory Commission. In recent years, this commission proposed roughly $200 billion in savings that never made it into law; these have now been incorporated into our broader reform agenda.

Universal Coverage
We also have to ensure that every American can get coverage they can afford. (Applause.) Each time an uninsured American steps foot into an emergency room with no way to reimburse the hospital for care, the cost is handed over to every American family as a bill of about $1,000 that’s reflected in higher taxes, higher premiums, and higher health care costs. As we insure every young and healthy American, it will spread out risk for insurance companies, further reducing costs for everyone.

We are not a nation that accepts nearly 46 million uninsured men, women and children. (Applause.) We are not a nation that lets hardworking families go without coverage, or turns its back on those in need. We’re a nation that cares for its citizens. We look out for one another. That’s what makes us the United States of America. We need to get this done. (Applause.)

Health Insurance Exchange
Now, if you don’t like your health care coverage or you don’t have any insurance at all, you’ll have a chance to take part in what we’re calling a Health Insurance Exchange to one-stop shop for a health care plan, compare benefits and prices, and choose a plan that’s best for you and your family — the same way that members of Congress do. (Applause.) You will have your choice of a number of plans that offer a few different packages, but every plan would offer an affordable, basic package.

If you like what you’re getting, keep it. Nobody is forcing you to shift. But if you’re not, this gives you some new options. And I believe one of these options needs to be a public option that will give people a broader range of choices — (applause) — and inject competition into the health care market so that force — so that we can force waste out of the system and keep the insurance companies honest. (Applause.)

Reimbursement
I understand that you’re concerned that today’s Medicare rates, which many of you already feel are too low, will be applied broadly in a way that means our cost savings are coming off your backs.

These reforms will ensure that you are being reimbursed in a thoughtful way that’s tied to patient outcomes, instead of relying on yearly negotiations about the Sustainable Growth Rate formula that’s based on politics and the immediate state of the federal budget in any given year. (Applause.)

Let me also address an illegitimate concern that [this] is somehow a Trojan horse for a single-payer system. There are countries where a single-payer system works pretty well. But I believe — and I’ve taken some flak from members of my own party for this belief — that our reform efforts to build on our traditions here in the United States.

So when you hear the naysayers claim that I’m trying to bring about government-run health care, know this: They’re not telling the truth. (Applause.)

Indeed, I’m open to a system where every American bears responsibility for owning health insurance — (applause) — so long as we provide a hardship waiver for those who still can’t afford it as we move towards this system.

The same is true for employers. While I believe every business has a responsibility to provide health insurance for its workers, small businesses that can’t afford it should receive an exemption. And small business workers and their families will be able to seek coverage in the exchange if their employer is not able to provide it.

Now, here’s some good news. Insurance companies have expressed support for the idea of covering the uninsured and they certainly are in favor of a mandate. But I refuse to simply create a system where insurance companies suddenly have a whole bunch of more customers on Uncle Sam’s dime, but still fail to meet their responsibilities. We’re not going to do that. (Applause.)

We need to end the practice of denying coverage on the basis of preexisting conditions. The days of cherry-picking who to cover and who to deny, those days are over. (Applause.)

Now, even if we accept all of the economic and moral reasons for providing affordable coverage to all Americans, there is no denying that expanding coverage will come at a cost, at least in the short run. But it is a cost that will not — I repeat — will not add to our deficits. I’ve set down a rule for my staff, for my team — and I’ve said this to Congress — health care reform must be, and will be, deficit-neutral in the next decade.

The Price Tag
Making health care affordable for all Americans will cost somewhere on the order of $1 trillion over the next 10 years. That’s real money, even in Washington. (Laughter.)

Let me explain how we will cover the price tag. First, the budget already put aside $635 billion over 10 years in a Health Reserve Fund. More than $300 billion will come from raising revenue by doing things like modestly limiting tax deductions the wealthiest Americans can take. Some are concerned this will dramatically reduce charitable giving, for example, but statistics show that’s not true.

We’re also going to have to make spending cuts, in part by examining inefficiencies in our current Medicare program. Here’s where I think these cuts should be made.

First, we should end overpayments to Medicare Advantage.

Today, we’re paying Medicare Advantage plans much more than we pay for traditional Medicare services. We need to introduce competitive bidding into the Medicare Advantage program, a program under which private insurance companies are offering Medicare coverage. That alone will save $177 billion over the next decade, just that one step. (Applause.)

Second, we need to use Medicare reimbursements to reduce preventable hospital readmissions.

Almost 20 percent of Medicare patients discharged from hospitals are readmitted within a month, often because they’re not getting the comprehensive care that they need. By changing how Medicare reimburses hospitals, we can discourage them from acting in a way that boosts profits but drives up costs for everyone else. That will save us $25 billion over the next decade.

Third, we need to introduce generic biologic drugs into the marketplace.

These are drugs used to treat illnesses like anemia. But right now, there is no pathway at the FDA for approving generic versions of these drugs. Creating such a pathway will save us billions of dollars. We can save another roughly $30 billion by getting a better deal for our poorer seniors while asking our well-off seniors to pay a little more for their drugs.

So that’s the bulk of what’s in the Health Reserve Fund.

Other proposals
I’ve also proposed saving another $313 billion in Medicare and Medicaid spending in several other ways.

Conclusion
Let me be clear: I’m committed to making these cuts in a way that protects our senior citizens. In fact, these proposals will actually extend the life of the Medicare Trust Fund by seven years, and reduce premiums for Medicare beneficiaries by roughly $43 billion over the next 10 years. And I’m working with AARP to uphold that commitment.

Now, for those of you who took out your pencil and paper — (laughter) — altogether, these savings mean that we’ve put about $950 billion on the table — and that doesn’t count some of the long-term savings that we think will come about from reform — from medical IT, for example, or increased investment in prevention.

In the weeks and months ahead, I look forward to working with Congress to make up the difference so that health care reform is fully paid for — in a real, accountable way. And let me add that this does not count longer-term savings. I just want to repeat that. By insisting that the reforms that we’re introducing are deficit-neutral over the next decade, and by making the reforms that will help slow the growth rate of health care costs over the coming decades — bending the curve — we can look forward to faster economic growth, higher living standards, and falling, instead of rising, budget deficits.

Thank you very much, AMA. Appreciate it, thank you. (Applause.)

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