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tute for substance, process is important. One's participation in arriving at a decision is likely to render it much more acceptable to a person who may not approve of the decision.

More important, however, is the threat and burden that a regulatory agency can impose on an organization under its jurisdiction, as illustrated by my own experience as a board member of a Blue Shield plan in New York. There is the further danger I have witnessed that the fiow of financial and statistical information will be blocked unilaterally, thereby limiting empirical analysis and the free debate of issues that such analysis makes possible.

Finally, it is incumbent upon all of us as the trend toward regulalation rises to try to arrest the tendency for so many transactions in the health field to take on the character of adversary legal proceedings.

Thank you very much.
Mr. ROSTENKOWSKI. Thank you very much.
Mr. Cohen ?


Mr. Cohen. Mr. Chairman, it is always a pleasure for me to be back in this room where I have spent a large portion of my life. I would like to state my biases first.

First, I do not favor enactment of any of the health insurance bills now pending before this committee. I feel that the bill that ultimately is to be enacted has not vet been introduced.

While there are various provisions of various bills that have merit, it will be a long and continuing process to find the accommodation between legislative objectives and administrative reality, which has to be achieved to formulate an effective national health insurance bill.

Second, I think that providers and consumers must be fully consulted in the development of a bill and I don't think you can do that solely through the legislative process. I think that must be done in large part by the executive branch and the executive branch is not competent at the present time to do so. Its recent history of handling this subject is one of tragic incompetence, and I think, therefore, you have to wait until at least another secretary has demonstrated his ability to put together the administrative and technical competence by which this accommodation process can be achieved.

I think, therefore, this is not the year in which the Ways and Means Committee ought to enact national health insurance legislation. How long that should be postponed will depend upon a number of factors which I cannot quite foresee, but I think it will be much longer than most people expect.

A comprehensive public information and health education program is vitally necessary to obtain public support for any legislation that rou enact, for an understanding of the key issues and to avoid excessive demands on a medical care system when you inaugurate it. Therefore, in any such program you must provide a public information and health information program substantially before any new, significant benefits begin and no bill pending before your committee does that, and that is a key deficiency of all of them.

Important new benefits, whatever they are, should begin preferably bet ween April and October in order to avoid paying for services during

high morbidity periods which are November through March, which will involve handling a larger volume of claims than during low morbidity months, April through October.

The reason we were so successful in inaugurating the medicare program among the many mistakes we made was we did not start it in November or December. We started it on July 1, just before the July 4 weekend. Physicians take vacations at that time. Hospital occupancy is at the lowest ebb.

We inaugurated the medicare system under the most auspicious conditions. Morbidity rates decline very rapidly when physicians are not at work. Therefore, we were able to start the system without having to regiment anybody, and I would suggest when you start any new benefit, don't start it in December or November when all the sickness conditions exist. Start it at the time when the situation is at the lowest level so you start with the best foot forward.

Benefits under any national health insurance system should be phased into operation by a predetermined schedule in the law. None of the bills that are pending do that. That is another fatal defect.

In determining that schedule you should take into account the progress made under the recently enacted Federal health resources law and any Federal manpower legislation. I will present to you my idea of the sequence of events which should be put into a law for a schedule that will take into account administrative reality.

The Federal administrative authority for the program should be taken away from the Department of Health, Education, and Welfare and be vested in a board of three to five persons similar to the Social Security Board, which developed the original social security program.

The policies and implementation of the program should not be in the hands of a single administrator no matter how competent, no matter what his or her professional background should be. The program of health insurance involves so many sensitive, complex political, emotional, financial aspects that it should be in the hands of a board.

The Federal board should be in operation a number of months before any new major benefits or policies are put into effect.

Å separate health appropriations bill should be processed by the Congress to insure that all health legislation is considered in relation to every aspect of health and medical care. I would not pass a national health insurance bill until Congress has remedied this defect until they have brought together all health programs in one appropriation bill,

You are not going to be able to coordinate the Federal Government's responsibilities until those aspects of the Veterans' Administration, the Defense Department and other departments are brought together in one appropriation bill so Congress exercises its policymaking authority at one point in the legislative process.

I can tell you this is an almost insuperable thing I am asking you to do. But if you don't put your own house in order, Mr. Chairman, you cannot then complain that nobody else in society in the health care is putting its house in order.

The Health Insurance Benefits Advisory Council should make a report with any recommendations each year on the operation of the plan. I believe that the operation of the Health Insurance Benefits Advisory Council, which has been downgraded by the present admin

istration, has been a great mistake. The successful implementation of the medicare program in the earlier years was done because of the close coordination we had with the Health Insurance Benefits Advisory Council.

At no stage did we implement any regulation without consultation with key providers and consumers. The playing down of the Health Insurance Benefits Advisory Council in the past 8 years has been a tragic mistake and you should not implement a new health insurance problem without broadening that Council, giving it key importance and asking it to play a significant role in the implementation of policy.

Mr. Chairman, if you will turn to my testimony, I would like to go over with you my conception of the problems that are involved in implementing any national health insurance law.

I should like to start with table No. 1 first, Mr. Chairman, if you would like to handle that first.

[The table follows:] TABLE 1.–Schedule of possible congressional consideration of comprehensive national health insurance legislation

Months 1. Beginning of House subcommittee consideration of specific legislation. 2. Report of House subcommittee

2 3. Action by full House committee

4 4. Action by Rules Committee----

5 5. Action by Ilouse of Representatives--6. Hearings by Senate Finance Committee_

7 7. Action by Senate Finance Committee

8 8. Action by Senate --

9 9. Conference committee action-

10 10. Presidential action ---

10 Mr. COHEN. Based upon my experience with this committee, I estimate, first, that it will take you at least 10 months from the time your subcommittee considers or reports out any health insurance legislation to Presidential enactment.

I think there has been a failure on the part of many people throughout the country to recognize past experience about the period of time it takes for proper legislative consideration. I am sure many may

well disagree with me, Mr. Chairman, and members of the committee, but I have outlined here a table which gives my idea of the time a major national health insurance bill would require for processing by the Congress and while you may be able to shorten it up, I don't think you will be able to shorten it much. After your subcommittee has reported it out, I have assumed the full action of the House committee would take about a couple of months and another month for the Rules Committee. Action by the House of Representatives would be somewhat in the nature of 5 to 6 months after you have reported it out, and then at least 2 to 3 months by the Senate Finance Committee, the Senate, a month or so by the conference committee, and even if you reported a bill out today by this subcommittee, it would be somewhere between 6 and 10 months before that bill would be signed by the President.

Let me say this: The longer you take, the better.

National health insurance is such a monumental undertaking that unless you allow a lot of time for the potential administrators, the country, the providers, and the consumers to take into account what


the new relationship is going to be, you will be making a very tragic mistake in the ultimate implementation.

Let me turn now to table 2. [The table follows:]

TABLE 2.-Outline of a possible step-by-step development of major provisions

of national health insurance legislation with due regard to administrative feasibility

Number of

months from Provision

enactment Congressional deliberations from time of reporting bill out by the House committee

-10 1. Enactment of the national health insurance law-

0 2. Selection and appointment of members of the National Health Insurance Board, Senate hearings, confirmation --

1-3 3. New board members assume office; appropriation requests, congres

sional hearings, and action on appropriations--4. Broaden membership on Health Insurance Benefits Advisory Council ; consultation with it on major policy matters..

5-8 5. Broaden medicare coverage; use of State or regional fee schedules for

payments to physicians; prospective reimbursement for institutional
providers; and strengthening of State agencies for a more effec-

tive role.---
6. Begin health education program.-

7 7. Extension of home health services and outpatient services to entire population.--

9 8. Coverage of major maintenance-prescription drugs for medicare; reduce medicare age to 60--

12 9. First annual report to Congress; congressional review.

17-22 10. Coverage of physicians services for entire population; no coinsurance or deductibles for maternity and children --

18 11. Coverage of hospital services for entire population..

21 12. Implementation of experimental arrangements for long-term care, in

cluding skilled nursing care, intermediate care, and family home

27 13. Second annual report to Congress; congressional review--

29-34 14. Conversion of medicaid to a federally administered low-income

program 1.5. Coverage of dental care for children under age 6_-

32 16. Extension of major maintenance-prescription drugs to entire population

36 17. Revision of long-term care programs with adoption of new approaches_ 40 18. Third annual report to Congress; congressional review-

41-16 19. Coverage of dental care for children under age 18_.

42 20. Coverage of dental care for adults----

48 Mr. COHEN. On the date of enactment of the national health insurance law, we will call that the zero date. That is the date when the President has signed the bill.

The next step is the selection and appointment of members of the National Health Insurance Board, the Senate hearings, and confirmation. I have assumed that would take 1 to 3 months—for the new members to take office and make the necessary appropriation requests, have the appropriation of congressional hearings, and on action appropriations, 4 months. I think that is overoptimistic. My experience with Congress has been it just does not act that fast on appropriations. I am not being critical. I think that is good. I think Congress should exercise its scrutiny over the appropriations but to assume on the date of the enactment of the act you can get going within 4 or 5 months is, in my opinion, extremely optimistic.

My fourth step is broaden the membership on the Health Insurance Benefits Advisory Council and let them meet and constantly consult


with the new Board for about 2 to 3 months before


action is taken on the implementation of any benefits in the new health insurance law.

Then, Mr. Chairman and members of the committee, I would not proceed to implement the benefits all at once. That can only bring great tragedy and catastrophe to the whole health delivery system of our country. I suggest, therefore, that you take a step-by-step broadening of the program which builds upon tried and tested experience and not some preconceived notion of what is the best benefit that ought to be provided. You have to take reality into account. Human fallibility is involved in making a benefit program apply to 220 million people in .50 States and 3,000 counties and 50 wards in the city of Chicago.

So, I would say, let's take a look now at how we can make this system successful, taking into account administrative reality.

My first step would be, broaden the medicare coverage. This is a tried and tested system. It is working. You have administrators who are responsible for that; broaden the medicare coverage first to cover all of the scope of benefits that we have been talking about for the aged, include hearing aids, eyeglasses, examinations, any of the items that you think are meritorious that you are going to include in the general system. Broaden the medicare coverage first. Start out on something that is going to be successful. Don't start on something that is the hardest, most difficult, untried part of the program.

At the same time, I would begin to use State or regional fee schedules for payment to physicians. You know if you have a general system you a re going to have to change the reasonable and customary cost formula in the present law. My suggestion, which others may differ with, is to go to fee schedules, negotiated fee schedules on a State or regional basis. That is going to take you time. You are going to have to negotiate with the medical profession in 50 States or 3,000 counties. You cannot do that in a week. You can't do it in a month. It will take at least 3 to 6 months to do it. The longer you take the better, because what you want to get is agreement between the administrators and the providers on a satisfactory formula. You are going to have to do some collective bargaining, you are going to have to have some arbitrators, some necrotiator's.

The second aspect to put into effect is prospective reimbursement for institutional providers; that is, to get to a budgetary system of handling the payments to hospitals and to nursing homes as against the reasonable cost concept which is imbedded in the present law. To make that work is going to take at least a year or a year and a half. You can't do it overnight. It is too big a job. There are some 7,000 hospitals in the United States, with boards of people in the various communities. They want to know how it is going to be applied. It will take a little time to get it into operation so it is successful. And so will the strengthening of the State agencies for a more effective role which is now being carried out under the health resources planning program.

Then, Mr. Chairman, I would begin a comprehensive health education program before I did any other thing. I would enlist the total community into those kinds of problems about benefits in the health system which were overused or underutilized.

Following up the statements made by the previous two witnesses I would identify in every locality those health benefits which were in short supply and over supply. I would enlist the people in the com

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