pushers. you entered this profession to be healers. and that's what our health care system should let you be. [applause] >> that's what this health care system should let you be. [applause] >> that starts with reforming the way we compensate our providers. doctors and hospitals. we need to bundled payments so you are paid for every single treatment you offer a payment with a chronic condition like diabetes, but instead paid well for how you treat the overall disease.

we need to create incentives for physicians to team up because we know that when that happens, it results in a healthier patient. we need to give doctors bonuses for good health outcomes. we're not promoting just more treatment but better care. and we need to rethink the cost of a medical education and do more to reward medical students who choose a career as a primary care physician who choose to work in underserved areas and stead of a more lucrative tasks. [applause] >> that's why we are making a substantial investment in the national health service corps that will make medical training more affordable for primary care doctors and nurse practitioners so they are drowning in debt when they enter the workforce. [applause]

>> somebody back there is drowning in debt. [laughter] >> the second structural reform we need to make is to improve the quality of medical information making its way to doctors and patients. we had the best medical schools, the most sophisticated labs, the most advanced training of any nation on the globe. yet we're not doing a very good job harnessing our collective knowledge and experience on behalf of better medicine. less than 1% of our health care spending goes to examining what treatments are most effective. less than 1%. and even when that information finds its way into journals, it can take up to 17 years to find its way to an exam room or operating table. as a result, 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. only half. that means doctors may be doing a bypass operation when placing a stent is equally effective. for placing a stent when adjusting a patient's drug and medical management is equally as effective. all of which drives up costs without improving a patient's health. so one thing we need to do is figure out what works and encourage rapid implementation of what works into your practices. that's why we are making a major investment in research to identify the best treatment for a variety of ailments and conditions. [applause] >> now let me be clear. i just want to clear something up here. identifying what works is not about dictating what kind of care should be provided. [applause] >> it's about providing patients

and doctors with the information they need to make the best of medical decisions. see, i have the assumption that if you have good information about what make sure patients well, that's what you are going to. [applause] >> i have confidence in that. [applause] >> we're not going to need you to force you to do it. we just need to make sure you have the best information available. still, even when we do know what works, we are often not making the most of it. and that's why we need to build on the examples of outstanding medicine in places like the cincinnati children's hospital where the quality of care for cystic fibrosis patients shot up after the hospital began incorporating suggestions from parents. in places like the tallahassee memorial health care where deaths were dramatically reduced with rapid response teams monitored patients conditions and multiply disciplinary brands

with everyone from physicians to pharmacists. in places like geisinger health system in rural pennsylvania, and intermountain health in salt lake city where high quality care is being provided and it costs well below the national average. these are all islands of excellence, and we need to make the standard in our health care system. so replicating best practices, incentivizing excellence, closing costs disparities, any legislation sent to my desk that does not -- does not achieve these goals in my mind is not earned the title of reform. but my signature on a bill is not enough. i need your help, doctors. because to most americans you are the health care system. the fact is americans, and i include myself, michelle and our kids in this, we just do what you tell us to do.

[laughter] >> that's what we do. we listen to you. we trust you. that's why i will listen to you and work with you to pursue reform that works for you. [applause] >> together, if we take all the 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 for doctors alike. and when we align the interests

of patients and doctors, then we're going to be in a good place. now, i recognize that it will be hard to make some of these changes if doctors feel like they are constantly looking over their shoulders for fear of lawsuits. i recognize that. don't get too excited yet. [applause] >> all right. now, i understand some doctors may feel the need to order more tests and treatments to avoid being legally vulnerable. that's a real issue. now, just hold on to your horses. [laughter] >> i want to be honest with you. i am not advocating caps on malpractice.

which i believe, i personally believe can be unfair to people who have been wrongfully harmed here 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 excesses defensive medicine that reinforces our current system and shift to a system where we are providing better care, rather than simply more treatment. so this is going to be a priority for me. and i know, you know, based on your responses it a priority for you. [laughter] >> and i look forward to working with you, and it's going to be difficult. but all of this stuff is going to be difficult. all of it is going to be important. now, i know you said in a long speech, but we have more to do.

the changes that i have already spoken about, all that is going to need to go hand-in-hand with the reforms. because our health care system is so complex, and medicine is always evolving, we need a way to continually evaluate how we can eliminate waste, reduce costs and improve quality. that's why i'm open to expanding the role of a commission created by a republican congress called the medicare payment advisory commission, which happens to include a number of physicians on the commission. in recent years this commission proposed roughly $200 billion in savings that never made it into law. these recommendations have now been incorporated into our broader reform agenda, but we need to fast-track their proposals, the commission's proposals in the future so that we don't miss another opportunity to save billions of dollars. as we gain more information about what works and what

doesn't work in our health care system. and as we seek to contain the cost of health care, we also have to insure that every american can get coverage they can afford. [applause] >> we must do so in part because it's in all of our economic interests. 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 $1000. is reflected in higher taxes, higher premiums and higher health care costs. it's a hidden tax, a hidden bill that will be cut as we insure all americans. and as we insure every young and healthy american, it will spread out risk for insurance companies, further reducing costs for everyone.

but alongside economic arguments, there's another, more powerful one. and it is simply this. we are not a nation that accepts nearly 46 million uninsured men, women and children. we are not a nation that lets hard-working families go without coverage or turns its back on those in need. we are a nation that tears 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] >> so we need to do a few things to provide affordable health insurance to every single american. the first thing we need to do is to protect what's working in our health care system, so just in case you didn't catch it the

first time let me repeat. if you like your health care system and your doctor, the only thing we form will mean to you is your health care will cost less. if anyone says otherwise, they are either trying to mislead you or don't have their facts straight. now, if you don't like your health care coverage or if you don't have any insurance at all, you will have a chance, under what we have proposed, to take part in what we are calling a health insurance exchange. and this exchange will allow you 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, by the way, that federal employees can do. from a postal worker to a member of congress. [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. again, this is for people who aren't happy with their current plan. 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 auction that will give people a broader range of choices and inject competition into the health care markets so that forced -- so that we can force waste out of the system and keep the insurance companies honest. [applause] >> now i know that there is some concern about a public option. even within this organization there is healthy debate about it. in particular, i understand that you are concerned that today's

medicare rates, which many of you are to feel are too low, will be applied broadly in a way that means our cost savings are coming off your backs. and these are legitimate concerns. but they are ones i believe can be overcome. as i stated earlier, the reforms we propose to reimbursement are to report best practices, focus on patient care, not on the current piecework reimbursement. what we seek is more stability in a health care system that is on a sounder financial foot. and the fact is these reforms need to take place regardless of whether there's a public option or not. with reform we will insure 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 the federal government in any given year. [applause] >> and i just want to point out, the alternative to such reform is a world where health care costs grow at an understandable rate. and if you don't think that's going to unde to threaten you reimbursement and the stability of our health care system you haven't been paying attention. so the public option is not your enemy. it is your friend, i believe. let me also say that -- but it also addressed an illegitimate concern that's been put forward by those who are claiming that a public option is somehow a trojan horse for a single-payer

system. i will be honest. 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 it's important for 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 are not telling the truth. what i am trying to do -- [applause] >> what i am trying to do and what a public option will help do is put affordable health care within reach for millions of americans. and to help insure that everyone can afford the cost of a health care option in our exchange, we need to provide assistance to families who need it. that way there will be no reason at all for anyone to remain

uninsured. [applause] >> indeed, it's because i'm confident in our ability to give people the ability to get insurance and affordable rate that i'm open to a system where every american bears responsibility for owning health insurance. so long as we provide a hardship waiver for those who still can't afford it as we move toward the 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. 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. i welcome their willingness to engage constructively in the reform debate. i'm glad they are at the table. but what i refuse to do is simply create a system where insurance companies suddenly have a whole bunch of more customers on uncle sam's dime but still failed to meet their responsibilities. [applause] >> we're not going to do that. [applause] >> let me give you an example of what i'm talking about. we need to end the practice of denying coverage on the basis of pre-existing conditions. [applause]

>> the days of cherry-pick and who to cover and who to deny, those days are over. >> i know you see in your practices and how incredibly painful and frustrating it is, you want to get somebody care and to find out that the insurance guppies are wiggling out of paying. this is personal for me also. i told a story before. i will never forget watching my own mother as she fought cancer in her final days. spending time worrying about whether her and sure with claim her illness was a pre-existing condition so they could get out of providing coverage. changing the current approach to pre-existing conditions is the least we can do for my mother and for every other mother, father, son and daughter who has suffered under this practice, who have been paying premiums and don't get care. we need to put health care within the reach for millions of americans. [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 sent 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. now there are already voices saying the numbers don't add up. they are wrong.

here's why. 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] >> but remember, that's less than we are projecting to have spent on the war in iraq, and also remember, failing to reform our health care system in a way that genuinely reduces cost growth will cost us trillions of dollars more in lost economic growth and lower wages. that said, let me explain how we will cover the price tag. first, as part of the budget that was passed a few months ago, we put aside 635 note under a billion dollars over 10 years

and what we are calling a health reserve fund. over half of that amount, more than 300 million, will come from raising revenue by doing things like modestly limiting the tax deductionsthe wealthiest americans can take to the same level that it was at the end of the reagan years. the same level it was under ronald reagan. some are concerned that this will dramatically reduce charitable giving, for example. but statistics show that's not true. and the best thing for our charities is the stronger economy that we will build with health care reform. but we can't just raise revenues. we are also going to have to make spending cuts in part by examining inefficiencies in our current medicare program. there are going to be robust debate about where the sketch should be made. i welcome that debate. but here's what i think these cuts should be made. first, we should hand over payments to medicare advantage. [applause]

>> today we are paying medicare advantage plans much more than we pay for traditional medicare services. this is a great deal for insurance companies. it's a subsidy to insurance companies. it's not a good deal for you. it's not a good deal for the american people. and by the way it doesn't follow free market principles for those who are always talking about free market principles. that's why 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. right now almost 20% of medicare patients discharged from hospitals are readmitted within a month. often because they are not getting the comprehensive care that they need. this puts people at risk. it drives up costs. by changing how medicare reimburses hospitals, we can discourage them from acting in a way that boosts profits but drives up cost for everybody else. that will save us $25 billion over the next decade. third, we need to introduce generic biologic drugs into the marketplace. [applause] >> these are drugs used to treat illnesses like in emea, 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 poorest seniors

while asking our well-off seniors to pay a little more for their drugs. so that's the bolt of what's in the health reserve fund. i've also proposed saving another $313 billion in medicare and medicaid spending in several other ways. one way is by adjusting medicare payments to reflect new events is and productivity gains in our economy. right now medicare payments are rising each year by more than they should. these adjustments will create incentives for providers to deliver care more efficiently and save us roughly $109 million in the process. another way we can achieve savings is by reducing payments to hospitals for treating uninsured people. i know hospitals rely on these payments now, legitimately because of the large number of uninsured patients that they treat. but if we put in a system where people have coverage and the number of uninsured people goes

down with our reforms, the amount we pay hospitals to treat uninsured people should go down as well. reducing these payments gradually as more and more people have coverage will save us over $106 billion. we will make sure the difference goes to the hospitals that need it most. we can also save about $75 billion through more efficient purchasing of prescription drugs. [applause] >> and we can save about $1 billion more by rooting out ways to reduce fraud throughout our health care system that no one is charging more for a service than its worth or charging a dime for a service that they don't provide. 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 am working

with aarp to uphold that commitment. now, for those of you who took out your pencil and paper, altogether the 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. so that stuff and congressional jargon is not scornful. the congressional budget office won't count that as savings. so we're saying that a psychic we think that is going to come, but even separate and apart from that we put $950 billion on the table. taking is almost all the way to covering the full cost of health care reform. 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 any 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 are introducing our 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 decade, bending the curve we can look forward to faster economic growth, higher living standards, and falling instead of rising budget deficits. balletic just wrap up by saying that. i know people are cynical whether we can do this or not. i know there will be disagreements about how to proceed in the days ahead. there's probably healthy debate within the ama. that's good. i also know this, we can't let this moment pass us by. the other day a friend of mine, congressman earl bloom and handed me a magazine with a special issue titled the crisis

in american medicine. one article notes soren charges another warns about the point of utilization of services. another asks if we can find a better way to eat the service for paying for medical services. it speaks to many of the challenges we face today. the thing is the special issue was published by harper's magazine in october of 1960. [laughter] >> before i was born. members of the american medical association, and my fellow americans, i'm here today because i don't want our children and their children to still be speaking of the crisis in american medicine 50 years from now. i don't want him to still be suffering from spiraling costs that we did not stem or sicknesses that we did not do or. i do want him to be burd