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Looking now at cost control, we all admit that the system now has some cost controls. It always had cost controls. In the purest free enterprise system the cost control lies somewhere between the conscience of the doctor and the patient to pay.

When we inject a third party such as an insurance company, there are a variety of different cost mechanisms involved. Generally, as I understand the system, that cost mechanism goes merely as to what the insurance company will pay, not what the doctor or hospital can charge.

Is that not correct?

Mr. THOMPSON. In my own State, sir; no. The payments that we make under 89 percent of our policies would be characterized as payment in full. So there is not an additional charge.

Mr. CORMAN. That is a matter between you and the medical profession. You have no police authority to require them to accept that as full payment.

Mr. THOMPSON. Actually, it is quite unusual, in fact under enabling statutes in our State we do have that power. The extent of the payment level, be it by formula or by fee, once having been voted upon by the board of directors of the corporation and approved by the insurance commissioner, is in fact binding on physicians if there is any payment at all under the policy.

Mr. CORMAN. But it is not true with the doctor, he may wish to practice within your constraints. It is an arm's length negotiation between you and the provider. It is not a matter of the government stepping in and saying that the board work out the fees and the doctors have to accept it. That is a matter of negotiation between the profession and the system. Is that not right?

Mr. THOMPSON. No; that is not quite correct, Congressman. To the extent that a provider in our State, and this is unique to the State of Massachusetts, to the extent that a provider decides he does not wish to participate with us, that decision means that any Blue Shield subscriber in the entire State will not go to him for services because they get no benefits.

So coming back the other way, it is binding.
Mr. ROSTENKOWSKI. Mr. Duncan will inquire.
Mr. DUNCAN. Thank you, Mr. Chairman.

Professor Somers, in the past vou have indicated in talking about National Health Insurance, which we have talked about a lot through the years, that actuallv it slows down the important reforms that are needed in health care delivery.

Is that still your opinion?
Mr. SOMERS. I think the situation has changed.

Mr. Duncan. We talk more during election years than in the off years.

Mr. SOMERS. That is true.

I have said that in the past, yes. I think it was true in the earlier stage when people were really anticipating, for reasons that are a little obscure to me, that you people were about to pass a national health insurance law. I found throughout the industry that hospitals and doctors, whenever some question of innovation or change would arise, they would say, we better not do anything, Congress is about to pass a law; we do not know what it will say and we want to fit in so let's wait.

However, I think that is no longer the case because people, at least sophisticated people, are not expecting that they are going to get a national health insurance this year or next year and that when they do get something, it is more likely to be a phasing-in type of minimal program rather than an ultimate program. So I think we have returned to sort of a normal process, in fact, a little better than normal process.

I think now the view is we better do a good many things to solve our problems whatever the potential NHI law would be.

Mr. Duncan. Do you think our thrust would be better directed toward a piece-meal phase-in, as you describe it?

Mr. SOMERS. Yes; I do.
Mr. DUNCAN. Or take whatever we can get ?
Mr. Somers. I think that phasing-in is a very desirable approach.

First, the point that is made very frequently by opponents of NHI is that available resources in terms of number of physicians, hospital beds, et cetera, are not adequate for the anticipated additional demand. I do not know if that is true or not. At any rate, since it is likely that there would be some increase in the demand, it is better to allow the system to absorb it gradually.

Second, none of us know enough about how such a system should ultimately work that we can affort to go into it full scale at this stage. I think we learn as we go along. So we have to move along experimentally.

Mr. DUNCAN. Yes, sir.

Mr. SOMERS. Third, we have the matter of costs which as has been pointed out, undoubtedly are enormous, it is more acceptable if one approaches that on a gradual basis. So I think phasing-in is desirable so long as that phasing-in is done with a view toward how it would fit into an ultimate scheme so we do not get a complete inconsistency or phase into something that becomes an albatross around our neck.

Mr. Duncan. I read one of your fine articles last night from 1973 and if I remember correctly, you said then that the Kennedy-Griffith bill went too far. It tried too much at one time.

Is that still your opinion of that bill? Mr. Somers. Oh, yes, I entirely agree with what Mr. Stark said in his earlier remarks, that the national health insurance bill should be concerned with financing and access. The attempt to put into one package the reform of delivery systems with the financing would, I think: one, obviously hold back our getting national health insurance at all or in reasonable time. The more things you put in, obviously the more resistance you create.

And, two, the matters are very different. Financing is relatively a simple problem as compared to changing the delivery system. The delivery system ought to be dealt with very cautiously. Insofar as Congress may wish to manipulate the delivery system, it obviously can do so in other packages, but it olight not to be the same package.

Mr. Duncan. Dr. England, you stated in your statement that in legislating medicare-medicaid Congress failed to control costs, and I think you said this resulted in inevitable damage to the patientphysician relationship and to the economy. Granting that to be true, how would you resolve the problem of controlling cost and weeding out the unscrupulous among your profession, and also at the time in

sure access to medical care for all who might need it,

regardless of how poor they might be?

Outside of doing nothing, how would you approach that? How would you handle the situation if we were to do something?

Dr. ENGLAND. I either misstated or was misunderstood, Congressman. I did not say that Congress failed to try to control costs. I think that would be irresponsible in the extreme, frankly.

What I did was say that there is no way to predict the cost because the demand cannot be predicted. That is what I said. At least that is what I meant to say.

Mr. DUNCAN. You think that

Dr. ENGLAND. There have been additional cost control things since that time, yes.

Mr. DUNCAN. Mr. Cathles, you indicated in your statement I think that, in going down one of the important problems in utilizing private insurance carriers was the difficulty that the carriers have in exerting evective control on the provider charges, and I think that is true, but what mechanism coul you suggest that might be incorporated in the national health insurance program to minimize such difficulties?

Mr. Cathles. I think one of the problems right now is the inability of the insurance mechanism and the providers—I should say physicians—to work closely enough together. I think that you could get an effective cost control mechanism if you had a complete cooperation between the insurers and the doctors. Insurers cannot do it by themselves. I do not think the doctors can either.

I think insurers have a lot to offer. They have some understanding of medical treatment, they have actuarial and statistical expertise and they have extensive computer facilities. If you could encourage through legislation the cooperative effort of those two bodies, you would have the most effective control of physicians' charges that you could have. Nobody wants to put a straitjacket on doctors. Everybody wants to see that they are compensated fairly for the services but, you know, with doctors like lawyers, like insurance people, there are always a few that need to be policed a little bit. Those two are the most knowledgeable entities to cope with the problem.

Mr. DUNCAN. Does any member of the panel disagree with Professor Somers that we should phase in the program of national health insurance, not try it all in one full burst?

Mr. Catules. I would support that statement very much.
Dr. ENGLAND. I must say, I have to make an objection. [Laughter.]

Mr. DUNCAN. If we are going to have any, Dr. England, do you think it should be phased in?

Dr. ENGLAND. I want to point out-
Mr. Duncan. I am sure you do not want any.

Dr. ENGLAND. I just want to point out from a historical point of view what the example is we are using.

In England the drive for socialized medicine was conceived in the mind of a group of people who were identified in England as the Fabian Socialists. They contended as a first item they wanted to socialize England. They picked upon the medical profession as that area to begin. Medical care. They described their method which goes under the euphemism of the inevitability of Fabianism and it is exactly the method that is being described now, the gradual phasing in.

When do you phase out? Is there going to be a free economy at all? Are we going to go the rest of the way?

Mr. ÞUNCAN. What about you, Nr. Thompson, would you care to comment?

Mr. THOMPSON. I would agree with Mr. Somers.

As an aside on the last comment, I believe the figure is up to 22 percent of the English population now who purchase independent private health insurance.

Mr. Duncan. They are moving away from the other?
Mr. THOMPSON. By voluntary choice.

Mr. STARK. I certainly do not disagree, but I hope when we talk about phasing in we do not mean backing in. I think that is what has been happening. We have been doing this in a very fragmented way without a plan and I am afraid we may run into the same kind of chaos that we find our whole system in from time to time when we try to get availability and accessibility of care for more of our people.

I would—the thought occurred to me as we were talking about one other matter, and I wanted to respond to it. Now I have forgotten what it is though.

Mr. Duncan. I have that problem myself.

Dr. ENGLAND. I have something I have not forgotten in respect to something you were saying before.

Mr. DUNCAN. My time is really about up. Perhaps when the chairman

Mr. Stark. Oh, yes, I remember. It had to do with medicare. As was Professor Somers, I was concerned with the initial Health Insurance Benefits Advisory Committee. I think the intent of Congress was not to control anything and they did a very good job of not controlling it. In fact, in the act it specifically says nothing shall be done to change the practice of medicine as it was being practiced prior to the law going into effect.

I can tell that, that any number of times where the committee, HIBAC Committee attempted to put some regulation into controlling costs, we were told that this is not the intent of Congress and, therefore, you cannot do so.

Mr. DUNCAN. Dr. England, I have 1 minute left. If you would like to take that up with your comment, you may proceed.

Dr. ENGLAND. It was not clear to me when you talked about complications of insurance forms and all that, and people in buying what they need and all, whether you were talking about a matter of education of the public or fraud on the part of the insurance companies. Maybe the chairman was talking about that.

Mr. Duncan. Maybe it was.

Dr. England. Which was it? People do not understand what they are buying, or the insurance companies are trying to defraud ?

Mr. DUNCAN. I think what I was talking about was all the health providers.

Thank you, Mr. Chairman.

Mr. ROSTEN KOWSKI. Dr. England, as you may know, the American Surgical Association of the American College of Physicians undertook in 1970 an in-depth study of surgery in the United States. The results of this study are just now being released. The study on surgical services for the United States is what it is. One of the conclusions

seems to be that about a third of all surgery is performed by physicians who are not fully trained; that is, those who are not board-certificated in surgery.

One of the conclusions seems to be that the surgery performed by non-board-certificated surgeons is of lower quality than that performed by board-certificated surgeons. Would

you

like to comment on that? Dr. ENGLAND. I do not believe that there is anything with regard to board certification that guarantees quality. I have seen this thing work both ways.

The American College of Surgeons and the American Board of Surgery seems to be having an economic problem really. This is done under the guise of uplifting the quality of surgery done.

In an article that I saw a short time ago, the heading said something about increasingly stringent rules for surgery. The idea was that a lot of surgery is done unnecessarily. As you read the article you understand they have found too many trained surgeons without a place to go. They are more interested at this point in time in controlling competition than anything else, frankly.

Mr. ROSTENKOWSKI. Would any other panelists like to comment on that?

Mr. Thompson !
Mr. Somers?

Mr. Somers. There is a question of quality as well as quantity. The two are related. Unnecessary surgery I think could be called bad quality, even if it is done very well.

There are hearings being held, I understand, this morning on this very subject elsewhere, but the issue, of course, is if there is a surplus of surgeons, as Dr. England has implied, being worried about competition,

the inevitable consequence is that you will have more surgery. The only way the surgeon makes a living is to do surgery.

It is impossible to say by any objective definition how much is unnecessary, but we do perform per capita more surgery than almost any other country known, roughly about 50 percent more, for example, than Great Britain. Of course, some people might say they do not do enough. I do not know how you measure that. But the fact is we have twice as many surgeons per capita. This would have to be called, if an excess does occur, a form of poor quality, dangerously poor quality.

In the profession I am told that unnecessary tonsillectomies and hysterectomies have become colloquially known as remunerectomies. This probably explains a good deal.

Mr. ROSTENKOWSKI. Mr. Thompson?

Mr. THOMPSON. Professor Somers' comment in regard to comparisons between this country and England as to the number of surgeons and incidents of surgery, I am not going to make the point but I would suggest some people would say that is the access we are trying to provide people, which is reflected in the dilemma we all have in trying to know what is the right amount that has to be put into the system.

To comment on an earlier question, I think it is troublesome to distinguish the qualitative talents of a particular individual as to whether he is or is not board certificated. Certainly the profession can speak more definitely on that point than I can, but in our experi

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