Tommy Thompson explains the domino effect, from the economic crisis to the health care crisis.

Question: How is the financial crisis affecting health care and what can we do to save the system?

Tommy Thompson: if you look back over the last several years, there are a lot of indicators that if people would have paid attention and really acted upon them, we probably would not be in the situation we are today.  The fact that, you know, the excess credit, people buying houses without proper foundations and proper credit, as well as Fannie Mae and Freddie Mac, you know, there were a lot of signs there that they were not doing well.  And all of this pointed out that something should be done.  The same thing is happening now in the healthcare field.  When you look at the cost of healthcare $2.4 trillion of which 16% of that is from the Gross National Product, more than what any other country is spending for healthcare.  You can see that Wisconsin or Untied States is in a non-competitive type of situation, and we have to do something about it.  The second thing is Medicare, the system that takes care of sort of the ability to close all the holes and be the place to save individuals that ever got serious problems and elderly and disabled, the safety net, Medicare is, that’s going broke by the year 2012.  I mean, it’s going broke, whether we like it or not.  And then you’ll look at chronic illnesses and that takes up 75% of the cost of healthcare system, and if you want to fix it, you have to go where the money is.  As Willie Sutton was asked why do you rob banks, his answer was that’s where the money is.  So, if you want to fix the healthcare system, we got to know where the money is and that’s where where it is, it’s in chronic illnesses and chronic things.  And in order to fix it, there are things that you have to do such as we have to go to a wellness type of system.  We’re in a disease system right now.  We wait ‘till people get sick.  And then we spend thousands of dollars to get you well.  It doesn’t make much sense to me.  Why don’t we, why don’t we be smart in America and take care of people upfront, before they get sick, keep them well, you know.  Once you pay for insurance and we keep you well, you know, instead of paying for insurance, they get sick before you can collect.  It just doesn’t make much sense to me.  And the second thing is we got to make sure that people that do have chronic illnesses of which 133 million Americans do have one or more chronic illnesses, we have to be able to have a program so that they’re able to see their doctor on a regular basis.  Most individuals, Glaxo-Smith Kline just had a survey of 75,000 people and they found out that 70% of people with diabetes thought they were in good shape physically and thought they were controlling their diabetes, and when they looked at it, they found that their blood sugar count was very high and that they were actually deteriorating.  People with asthma, 1/3 of individuals with asthma were not taking care of themselves and the same survey by Glaxo-Smith Kline pointed that out.  And so, why don’t we do something about that?  Why don’t we manage those individuals with chronic illnesses and try to get them well, because if you improve their quality of health, you improve their quality of life, very simple.  And the third thing is we’ve got to make sure that the market place is available and accessible for new tools, new medicines, new therapies, new opportunities, you know, to cure chronic illnesses and that’s education, it’s research, and its development.  All of these things are important for the new healthcare system.

Topic: Tommy Thompson on the Health Care Crisis

Tommy Thompson: Well, it means several things, but it means basically that Medicare bills would not be paid. How many people, you know, Medicare is the largest insurance company in the world. It’s like AGI, you know, it needed, AGI needed an influx of money from the federal government to keep going. Medicare is money from the federal government and it is much bigger than AGI, it covers 42 million Americans. It’s the largest health insurance company in the world, and its going broke. I mean, in 2012, there’s no longer any surplus money, it’s going to cost more to go in. And by 2018, it’s bankrupt. I mean, it’s bankrupt; it can’t pay its bills. And so, that right now is 18% of the healthcare system and I don’t know if any of the, any of the financial houses that went down was 18% of the economic system, but you can see the problems we’re in right now. Can you imagine where the 18% of the healthcare system collapsing and bankruptcy in 2018 unless we do something about it to fix it. And about 40% of the insurance claims are based upon the reimbursement formula set forth by Medicare, so it has a really cascading impact on all of healthcare. And then, you’ll look at the fact that we are no longer competitive in America, if we allow the healthcare system to keep going up at 7 or 8% a year. Right now, General Motors, for instance, used to be this giant corporation few years ago. Its market cap today is at 1950’s levels. The loss has been, you know, their market cap goes back in 1950s where General Motors is today. And what is their biggest expense? Their biggest expense is healthcare [dollars]. $5.5 billion of General Motors use this for their operation goes for healthcare more than what they pay for steel, more than they pay for plastic, more than any other component of the car goes for healthcare for their current employees and their retirees and their dependents. And what is General Motors? General Motors is no longer competitive, and we’re losing market share, and the same thing will happen not only to the other automotive companies which is already happening, but other companies that compete internationally where other counties are not paying that high a cost for healthcare. So, we have to go around and we have to change our direction if we’re really going to have a healthcare system survive. And I believe our health system is worth fighting for and worth doing everything we possibly can so that it can survive.

Recorded On: 10/30/08