our medical system, nonsystem, monstrosity, whatever you opt to call it, and comparing it with any other nations in the world, tell me which nation you would prefer to swap our system for, if any. Mr. FEIN. I will take a crack at that.

In many respects I think Canada.

Mr. PIKE. You would swap our system for Canada?

Mr. FEIN. I am including the whole thing of the delivery and the financing system and of culture and attitudes. If I could really have anything, I would prefer the British system. I think, however that we are so far away from that as a society in terms of our social values and our traditions-that to say the British is to say quite a mouthful. I would note, however, that Canada, is much more like our system on the delivery side as well as having traditions and culture of the people much more like ours. Canada has made a very key decision on the financing side, to say, "Thou shalt be insured without deductibles and without coinsurance." That strikes me as a step which this society coud make without great trauma. Mr. PIKE. Professor Reinhardt?

I would like to go down the panel.

Mr. REINHARDT. I view the Canadian and the American health care delivery systems as being so similar that I cannot make a distinction, between them.

Mr. PIKE. I want to take the totality of it, the delivery and the financing. Whose system would you swap for ours?

Mr. REINHARDT. I think then I would take the Canadian system over ours because of its superior health insurance coverage. I don't think the Canadian system is the finest imaginable system in the world, but I do believe that it is superior to what we now have, and the reason is simply that the average Canadian citizen is free from the enormous uncertainty of the financial impact of illness. Mr. PIKE. What do you think is the finest in the world? You said you did not think the Canadian is the finest in the world. What do you think is the finest in the world?

Mr. REINHARDT. I might even modify that. I could think of ways in which to improve the Canadian system, but I would say probably the Canadian system is the finest now operating in the world.

As to the delivery system, I really cannot discern any substantial difference between the Canadian and American delivery systems. In connection with the European systems, I might tell you that in your alma mater, where I ply my trade, we have a project to study the European health systems. I hate to give any conclusions before I embark upon a study. As a social scientist, I can respond to your question only in a few years from now. As a nonsocial scientist Mr. PIKE. Hopefully that won't be too late.

Mr. REINHARDT. Hopefully not. As a private person, I can tell you subjectively that should I travel in Europe I would hop on the first airplane to North America should I become sick in Europe. So I would vote with my feet. I would certainly pick our American system over those in Europe; given my current income.

Dr. FREYMANN. I would say it is difficult to pick a system. Of one thing I am sure: The usual indicators mean very little. Infant mortality, for instance, because how you judge-

Mr. PIKE. Even lifespan?

Dr. FREYMANN. Lifespan is another one, but there are socioeconomic factors affecting life expectancy which are quite independent of the efficacy of the health care system.

So I think I would go along with Professor Fein in saying that if there was a switch to be made, I would also

Mr. PIKE. The question is should we make the switch, not if there is a switch to be made. Should we make the switch?

Dr. FREYMANN. I will give you the good news and then the bad news. I would say the switch should be made because I quite agree the Canadian citizen has had all the concerns of financing his health care, the direct financing of his health care, removed from his back. That is the good news.

The bad news I say expecting that my economist colleagues may have more up-to-date information. When I last looked at the figures, there was only one nation in the world spending a larger portion of its GNP on health than the United States, and that was Canada. Canada followed Sweden and France in the rate at which its health care costs were escalating and all three nations were way ahead of us. The Canadians are paying for what they are getting.

Mr. FEIN. Could I just comment on the percentage of GNP? This year, though the figures have not been published, it is obvious that as a percentage of the GNP our health care costs will be higher than Canada's but that reflects, gentlemen, the fact that the GNP has not performed very well this year.

Dr. WYNDER. I have not specifically studied the various national health care programs for the different countries excepting as I travel through various parts of the world and hear what the people tell you. I don't think there is a perfect national health care service system anywhere in the world today day, in my view, because the account is always put on the wrong horse, on therapy.

In Germany, for instance, they have gone virtually overboard in providing services for the sick. In Germany today you can go to health spas paid for by the national health service which, I am told, costs Germany 6 billion marks per year.

Now, you could imagine what would happen in this country if every coronary patient could be sent 4 weeks to Palm Springs or to some other nice community. Yet even in Germany they are still debating whether or not the health service system should pay for preventive services as it relates to coronary prevention.

At this moment the system only pays after you already have a heart attack. It does not pay if you have high risk factors. At present the National Heart and Lung Institute has a $12 million per year study going on to determine whether the risk of middle-aged Americans, at high risk for coronary disease could be reduced if we would reduce the risk factors.

Obviously, reducing risk factors for a coronary is a great deal cheaper than open heart surgery.

You may be surprised to learn that in this country, with the kind of health service we have, 50 percent of all Americans never have had their blood pressure taken and of those where it was taken and it was found high, only about a quarter are adequately treated.

So before we talk about health service involving open heart surgery or heart transplant, I would like to see us have a system that treats

the simple things first. They are not very costly and we do know that effective treatment of hypertension will reduce stroke rate by 30 percent at low cost. Certainly such treatment is far more cost effective than to try to treat stroke victims.

I always come back to prevention, because I want you to recognize that many of the diseases from which we suffer today are man-made. We require your wisdom to bring our country into preventive medicine. One reason that all of the health services in Europe that I have seen are not doing any better is because they are virtually as bad as ours in terms of meaningful preventive services.

Mr. ROSTENKOWSKI. Thank you, Mr. Pike.

I would like to pose this question, and I don't mean by it that members of the subcommittee should run out and buy any airline tickets. But what countries would this panel suggest that our committee visit in order to get a viewpoint on which direction we should move on national health insurance?

I think that it would be most educational, but I was just wondering whether the panel could make a suggestion or suggestions.

Dr. FREYMANN. I would say first and foremost Canada. You can go to other countries, for instance Sweden. Everyone talks a great deal about the wonders of the Swedish system, but I hope that you will ask Dr. Vincente Navarro, who has just written a book on it, to testify before you go to Sweden.

Sweden and Britain are places that everyone thinks of. The reason I pick Canada, is that we have to work with what we have. That was the whole thrust of my presentation. No matter what you see in Sweden and England, it is not applicable to this country, simply because the systems are so different. The Canadian delivery system is so similar to ours that I think it is quite applicable.

Mr. REINHARDT. I would also suggest Canada. In fact, I know that some of your staff-Bill Fullerton, for example-have already begun to study that system. The reason is that Canadian society and the Canadian delivery system are culturally rather close to ours, and we can see what changes can be made in a short time with a system and the impact of those changes in the short run.

The countries in Europe that I would suggest as interesting are France and Germany, where in some instances one can see what has been tried, what has succeeded, and what has failed.

There are some important lessons to be learned. In some respects the West German financing system is akin to what we once called the medical foundation. The German insurance system is literally 1,800 independent small insurance funds that are financed through employer and employee contributions and pension funds. The funds pool their resources at the state level and turn over a lump sum to a physicians' association once a year, and the physicians' association in receipt of this lump sum obligates itself to deliver all contracted services under the insurance policies to the insured.

For example, the physicians' association is responsible for the regional distribution of physicians. The physicians distribute this pot of money among themselves, generally on a fee-for-services basis, and it is they who control health service utilization. Dr. Fein mentioned that it is important to control the behavior of physicians. In West Germany the physicians' associations, play what is known among op

erations research people as a zero-sum-game. Other things being equal, if one physician bills more, another physician loses. Therefore, the physicians themselves control overbilling. And they use fee schedules to redistribute physicians into areas where there is a shortage of physicians.

I think it would be interesting to see how these utilization controls work, and how the West Germans control drug prices. In West Germany drugs are fully covered by health insurance. There are many reforms we may want to introduce here which the French and Germans have already tried. We can get relevant cost figures there. We can obtain clues on how to administer certain programs or even on how not to. It is for these reasons that I see the French and German systems as interesting case studies from our perspective.

Dr. WYNDER. I would also like to gain more knowledge from the German experience. I read a few months ago that they estimate that unless more controls are exercised over expenditures that by the end of the century the cost for health care will equal that to the entire German budget today. In other words, we can learn from some of these countries to what extent an undisciplined health care system, an undisciplined population, will bring the health care costs to such levels that it cannot be afforded by any society.

I think one thing we can learn from the Germans, and perhaps the Swedish and British experiences, is to what extent costs have spiraled to a level that society can no longer tolerate them.

Mr. ROSTENKOWSKI. Professor Fein.

Mr. FEIN. I would want you to visit Canada in order to at the very minimum listen to individuals who are very much like us who do not have the emotional baggage that we seem to have about the importance of cost sharing and who have had experience in some of their provinces with deductibles and coinsurance and without deductibles and coinsurance and have concluded that which sounds heretical in the United States, that it does not make sense to have coinsurance and deductibles. It think that is a very important lesson.

I would want you to visit Britain, not because I am so pessimistic as to believe that the United States will be in the near future as poor as Britain, but because I think that there one would see the, A, need for central budget decisionmaking, particularly in a poor country but in any country over long periods of time; B, the difficulty that is involved in negotiating with the medical profession; but, C, the opportunities that exist in a society in which there is a rational discourse for negotiation with the medical profession.

I think that I would want you to visit West Germany for reasons in many cases to see how not to do certain things in terms of administrative components, mandating pots of money, and additionally, to see what happens when there is a defined pot of money that society has said represents its priority judgment about the field and how resources can and cannot be allocated.

I think that those three countries would give one a measure of confidence about various critical elements.

I would also urge that you visit, as all of you do, the United States, because there are some lessons to be learned here about what can be done when we try and do things even within the very difficult constraints that are now faced because of the multiple sources of funding and because of the economic situation.

Dr. WYNDER. In case you don't want to travel, I suggest a book written by the Health Minister of Canada. Perhaps your staff could get it for you. It is an impressive kind of account by a health minister as to how he believes medicine should be practiced tomorrow.

It is a booklet that is available from the Canadian Health Services. Mr. ROSTENKOWSKI. My staff informs me we already have that. Are there any Communist countries that you feel we should visit? Mr. VANIK. Socialist.

Dr. WYNDER. One of my colleagues recently returned from China. Of course, in a society like China, if you would really like to wipe out a given disease, you can make the people do that.

He mentioned one particular example which I would like to call to your attention.

There are certain areas in China where the incidence of cancer of the esophagus is very high. The Chinese working cadre will bring populations together and ask them to swallow a tube with an inflatable ballon at its tip. Then as you draw it up, you pull up some cells from the esophagus on which you may make an early diagnosis of cancer of the esophagus.

He tells me that hundreds of people will stand and be asked to swallow this tube, and they will do so. I don't know whether we could get anyone in America to practice that kind of preventive medicine. So in areas where you can make population do things, you certainly can

do that.

An interesting question that I asked my friend, was "What is China doing on smoking?"

"Well," he said, "nothing."

In all the time he was in China not one person told him anything about smoking. The probable answers to this may be that Chairman Mao is a heavy smoker and perhaps more importantly that China is a sizable exporter of tobacco.

Dr. FREYMANN. I think China is of particular interest. I am not suggesting that the committee should necessarily go there, but I think it is of particular interest because it is the only nation I know of which has really changed its health care system.

I said before that no nation that has instituted national health insurance has changed its system with health insurance. It has done quite the reverse, it has frozen the system it had.

The National Health Service did not create the British system. That system existed and the National Health Service was superimposed on it, ditto for Sweden and Germany and for all of the Communist nations of Eastern Europe and Russia.

China is an exception. The Chinese really did change their system, and they did it in a very simple way. A highly trained specialist who was a graduate of Peking Union Medical College and did not see the wisdom of becoming a family practitioner in a commune was sent off to a camp to think things over. Amazingly enough, it was not very long before the whole system was changed.

I submit that China is the one nation which has changed its health care system, but no other nation has. There is a lesson in this for us. Mr. ROSTENKOWSKI. Mr. Duncan will inquire.

Mr. DUNCAN. Thank you, Mr. Chairman.

I want to thank the panel. You have been very helpful. The reason I mentioned at the beginning that we should have some practicing