Tommy Thompson: America's Health Care System Will Collapse by 2013

Day one of GTC week began with the "C-Level Summit" at a downtown Sacramento hotel. State CIO Clark Kelso set the tone by outlining a few "global population demographics and their approaching impact on government and society," while preparing the audience for the keynote by former U.S. Secretary of Health and Human Services Tommy G. Thompson.

We are growing older as a population, Said Kelso, and that trend will continue through the 21st Century. "The number of people over 65 will more than double by mid century, and the number of those over 85 will quadruple." As a result, he said, society and government will focus more on aging, healthcare, transportation and mobility. And just as IT remade financial services, healthcare is poised for a similar transformation.

Tommy Thompson
Thompson -- four-term governor of Wisconsin and former federal secretary of Health and Human Services -- is now chairman of the Deloitte Center for Health Solutions and a partner at the law firm of Akin, Gump, Strauss, Hauer & Feld.

The Secretary of Health and Human Services is a huge responsibility, began Thompson. Its budget of $600 billion is larger than Defense -- 23 cents out of every dollar goes to HHS vs. 18 cents to Defense. However, he said, the federal government is paralyzed with the status quo, and if health care is to be solved, states will need to be involved.

As governor of Wisconsin, said Thompson, he would wake up with good ideas, and had some chance of implementing them. In Washington, ideas had to be vetted through thousands of people. "And then OMB turns you down nine time out of ten just to show you who is boss." After that the idea goes to more people, to the president and then to Congress.

Even though American health care is the best in the world, said Thompson, he predicts the health care system will collapse about 2013. "The first reason is that we spend about 16 percent of our GDP on health care, while other countries spend from four to 11 percent. Japan spends 7 percent. We spend a lot more than any other country." And, he said, by 2013 we'll double the expenditures; from $2 trillion to $4 trillion -- from 16 percent of GDP to 20 percent of GDP.

General Motors has the largest private health care system in the world, said Thompson. "For every car they sell, they put $1,525 into their health care system for employees -- more than the cost of the steel in their automobiles." In comparison, said Thompson, Toyota spends $225 per car for health care. And GM's share of the auto market has slipped from 52 percent down to below 25 percent.

The second problem with health care, he said, is that companies of 50 or fewer employees are getting out of the health care business, which shifts the burden to state and other private-pay employees.

And Medicare will deplete its surplus by 2013 and start going broke, said Thompson.

Thompson went into some detail as to where health care funds go, and what can be done about it. Seventy-five percent of the $2 trillion goes for chronic illnesses, and 125 million people have one or more chronic illnesses, some of which are preventable. Nearly half a million Americans are afflicted with tobacco-related illnesses, for example, and a smoker's lifespan is reduced 14.5 years on average.

Thompson advocates a $1 tax on every pack of cigarettes sold, to be put into a fund for smokers to quit smoking.

Twenty-one million Americans have diabetes and another 14 million are pre diabetic, said Thompson. A five-10 percent loss of excess weight can reduce certain types of diabetes by up to 40 percent. "There's no law in America that says you have to eat everything on your plate," said Thompson to