I was

proach. I started following that program at that time. Later on, one of the Wagner-Murray-Dingell-Pepper bill advocates and sponsors.

We have never been able to make the progress in the Congress that we have wanted to make; but, on the other hand, we have always tried to hold up the goal toward which we were working and around which we could rally our forces.

This hearing will produce valuable information for the guidance of the Ways and Means Committee in the formulation and in the forwarding of this legislation.

So, meanwhile, of course, we know we have to do whatever else we can until we can get medicare and national health insurance to make the best possible medical care available to all of the people of this country.

So, Chairman Rangel and Mr. Heftel, we are very grateful to you for making this further approach of progress toward the provision of decent health care for the people of this country by coming here and giving our people a chance to be heard.

Mr. RANGEL. Thank you, Senator Pepper.

Mr. Heftel comes from the great State of Hawaii, and he is with us so that he will not be intimidated by your good weather.

Seriously, coming from an island State, certainly the unique problems of delivering health care to large numbers of people is a subject matter that he has had a deep interest in. They have unique experiences in Hawaii and it is a pleasure for us to bring that type of expertise to Dade County so that we can share experiences and try to mold a more effective national policy.

Thank you, Cecil, for being with us.

Mr. PEPPER. I would like to say the Hawaiian sunshine is the only thing of which we are a little jealous.

Mr. HEFTEL. I feel privileged to be here today with our chairman, Charlie Rangel, and with your esteemed Senator, Claude Pepper.

I want to share some thoughts with you as our hearings proceed. First, one of my initial experiences in Congress was the problem of being 6,000 miles away from Hawaii, and having a speech to give there and no way to do it. I finally conceived of the concept of using long distance telephone. It so happened that the group to whom I was speaking was a national conference of retired citizens. I prevailed upon Claude Pepper to participate with me, and the only way we could do it, as it turned out, was to go into a telephone booth.

If you can imagine Claude Pepper and myself in a small telephone booth, speaking long distance and giving speeches to Hawaii, you have an insight into my first speech back home from Washington.

Claude was a friend and resource and a very concerned human being, which is what makes him a very great Congressman.

Our chairman has suggested perhaps I have some expertise to bring to you today. It isn't that I have any expertise to bring, but I do want to share with you what has occurred in Hawaii, so that you will have some frame of reference for either my thoughts or questions as we proceed this morning.

In Hawaii, we have HMSA, which is the counterpart or equivalent of Blue Cross/Blue Shield. We have a 69 percent membership of the people of Hawaii in that one plan.

We have another 15 percent in an HMO, the Kaiser plan, and that is 84 percent. Medicare and medicaid take up about, it is estimated, another 14 percent. Then there is about a 2-percent factor that unfortunately is not covered at all as far as we know.

One of the reasons that our Kaiser plan and our HMSA Blue Cross/ Blue Shield plans have been so successful, we think, is that early on in the 1960's there was a fight between the medical profession and HMSA over setting fee schedules. HMSA does not permit more than a small 15- or 20-percent participation of doctors on the board, and they have controlled fee schedules through lay personnel rather than the medical profession.

think that background can tell us something and I hope we will all learn something today.

I am just delighted to have the opportunity to hear what you have to say about the concept of better delivery of health services to the people of Florida and to the Nation.

Thank you, Mr. Chairman.

Mr. RANGEL. Thank you, Mr. Heftel.

Mr. Pepper, please convey to the Dade County officials the gratitude of the committee members and the House for the graciousness in which they have helped us in putting together this hearing, and the use of their facilities. The staff has informed me that there are many people who want to testify that won't have time to do it today, but I do hope you will be able to submit testimony or any suggestions as to how this can be done to Ms. Lehnhard, who is here.

Mr. PEPPER. Please allow me just 1 minute.

For 4 years I was chairman of the Crime Committee of the House, and one of the most valued members of that committee was the distinguished chairman of this subcommittee, Mr. Rangel. I won't recount all of the instances where he has been a friend of our district, but our district hasn't a better friend outside of its own Representative than we have in our chairman.

So we are very grateful to have you here.

Mr. RANGEL. As long as you are holding my brother-in-law hostage down here, you can't have a greater friend.

Ms. Lehnhard will be working with us, and Diana Jost and Joyce Johnson and Harvey Pies and Mike Holloman. So, if there are organizations that have testimony they would like to submit, or to stay in touch with our subcommittee, you can contact one of our staff people. We also have some young people, students from the academic achievement program of Miami's Northwestern High School, who are here with the assistant county manager and the committee members would like to thank those young people for their interest in government and, more specifically, in providing help. We hope that by the time you are adults we will have resolved a problem we have been wrestling with since Senator Wagner started.

We will start with our formal list of witnesses, and I had the pleasure of meeting him earlier. The committee will have the pleasure of hearing testimony of the Honorable Jack D. Gordon, chairman of the Committee on Wavs and Means in the Florida State Senate. Thank you, Senator, for being with us.

STATEMENT OF JACK D. GORDON, STATE SENATOR, FLORIDA LEGISLATURE, CHAIRMAN OF THE COMMITTEE ON WAYS AND MEANS OF THE FLORIDA SENATE

Mr. GORDON. Thank you for the opportunity to testify, and I add my welcome to that of Congressman Pepper to Mr. Heftel.

I would like to point out to you that the Ways and Means Committee in the Florida Senate is the committee that has jurisdiction not only over tax matters but also over appropriations as well. We have come to the conclusion if you want to spend the money, you have to find out where it is going to come from, and the burden is on us.

So all of the items that impinge on the budget obviously come before the committee, and the question of health care costs and medicaid have certainly been in the forefront of concerns as we try to deal with a State budget.

Our 2-year budget is about $15 billion.

The legislature itself has been a very significant arena for those who have been looking at ways to change the delivery of human services. We changed our umbrella human service agency to decentralize it into districts around the State, and to provide all of the services in one setting, and try to treat people rather than put them in a particular category so that the various programs for aging and retarded or delinquent or mental health or children's medical services or the whole welfare syndrome are all dealt with in the same agency.

The people are dealt with and referred to that part of the agency or those parts of the agency which they can best be served by.

It is a different thing than any other State. We feel very proud of our pioneering and while we have had some problems that the Congressman and I have been talking about with your colleague, Mr. Brademas, our desire is to keep vocational rehabilitation as one of those services to be dealt with broadly.

We are still going to press ahead because we think that our way of dealing with human services makes a lot more sense than trying to have 10 different agencies sending people all over the county to get a piece of service here and a piece there.

One of the things one has to know about Florida is that we have the highest percentage in the country of residents over age 65, about 18 percent of the State is over 65, and we anticipate that within the next 20 years or so, about 25 percent of the State is going to be over age 65. In some parts of this area, in my district, there are three or four census tracts in the south end of Miami Beach that have the largest concentration of people over 75 in the country. We have very many people that we are dealing with in their eighties and nineties. Since the country is aging and the average age of the population is increasing, and the average number of over 65 persons is increasing, one of the things about Florida-and it is particularly true of south Florida on the east and west coasts-is that there is sort of the forerunner of what the composition of the country is going to be.

This is one of the places where we are really trying to work out problems that the rest of the country is going to face in 10, 15, or 20 years as the age composition of the rest of the country becomes pretty much the same as we are now.

We have been trying for some different things, and I just want to point out to you today some of those matters that we have looked at in the question of incentives in health care. There are no incentives for noninstitutional care in medicare and medicaid programs because reimbursement systems are based on charges rather than on cost.

Florida has tried for the past 5 years to initiate a program of medicaid reimbursement for health maintenance organizations, services either through federally certified HMO's or primary care public health clinics. All State statutory barriers to this innovative program have been removed by the legislature and funding has been earmarked for this purpose, but we have been unable to secure the necessary waivers of Federal requirements to demonstrate the potential for this type of program.

We have an innovative health department in Palm Beach County, a very fine delivery of primary care through their various clinics. The Palm Beach County Health Department said,

Let us collect all of the medicaid money in our area and just take it on a capitation basis, averaging the costs, and we will provide all of the services that these people need, and we will make arrangement for hospitalization

I guess with the county hospital

and we will provide the preventive components of our County Health Department so that we can hold down the number of persons coming to us for treatment; but we have salaried physicians and we want to take care of them.

We have been trying to get a waiver. We can't get a waiver out of medicaid in order to do that. We can't get a waiver to let an HMO

contract.

It seems to me that if we believe in the value of preventive care, which is really the fundamental reason why an HMO or a public health clinic is going to work, we ought to have the financial incentives to let them do it. It just doesn't seem to me there should be any reason that something like that ought not to be tried.

I think one of the problems of trying to administer a Federal program over 50 States, a diverse as our 50 States-and even parts of the States are very diverse from other parts of the same State-we need some more flexibility and we need some more ability to get a waiver and see whether something like that will actually provide better care and whether it can be done within the cost parameters that we have. In addition, you may wish to consider some other cost containment measures passed last year by the Florida Legislature: (1) An appropriation for a financial incentive for State employees who join a prepaid health care plan; (2) medicaid reimbursement to nurse practitioners and nurse midwives; and (3) a hospital cost containment act which provides for public review of rates charged by hospitals.

Your committee might also wish to consider mandatory assignment of medicare benefits, which means the physician agrees to accept the reasonable charge established for that service as total payment. This is currently being done on a voluntary basis under medicare, but only about 50 percent of the participating physicians accept assignment nationwide. This percentage is much lower in Florida.

Provider and consumer awareness of the cost of care is another concept of cost containment which needs more attention. If both patient and physician receive an itemized bill immediately after a pa

tient is discharged from costly hospital care, it is possible unnecessary tests and lengths of stay could be eliminated.

Additionally, medical schools, schools of hospital administration, and other health provider education programs should have required courses in cost containment measures.

Another approach would be to require that whenever a service obtained in a hospital could have been purchased cheaper outside of the hospital, reimbursement for that service would be limited to the cost of the service outside the hospital.

Additionally, an incentive should be created for hospitals which give hospital privileges only to physicians who accept hospital salary payment rather than billing a patient separately on a fee-for-service basis, particularly in the areas of pathology, radiology, and surgery. I would urge you to give positive support to Congressman Pepper's proposal of medicaid reimbursement for programs which keep the elderly out of long-term care institutions to the extent possible. This has been recently introduced as the "Medicaid Community Care Act of 1980."

This proposal includes requirements for preadmission screening and reimbursement of noninstitutional care up to 75 percent of the cost of nursing home care. These programs have been effectively demonstrated in Virginia and New York, respectively.

No health care program, including programs for the elderly, can be complete without a planned program of health education for lifestyle change and risk reduction through self health maintenance efforts such as screening, counseling, good nutrition, exercise, stress management, and nonsmoking. Such programs have a great potential for keeping people well, lowering health care costs, and reducing work days lost through illness.

In 1978 the Florida Legislature passed legislation and funding for demonstration projects in health education, risk factor detection and intervention, nutrition counseling, and coordination of community health education efforts.

Currently, four such projects are funded throughout the State, including one for State employees which will demonstrate the effectiveness of such a program in the work setting.

State employees get a larger percentage of participation by the State in their group insurance if they join an HMO than if they simply buy, I guess, primarily Blue Cross or Aetna or whoever the carrier happens to be. That might be a way to promote HMO's with Federal employees or in some other places where those alternatives might be available.

We have permitted medicaid reimbursement to nurse practitioners and nurse midwives so that nurses can bill directly and so that they can be compensated directly, and this means that in many cases you are using certainly as good, and sometimes, I think, better health care, because nurses will spend more time and are more caring in terms of their training than physicians; and you wind up spending less money and giving people more care.

We passed a hospital cost containment act which provides for public review of rates. That was 5-year battle of the legislature. I started years ago and we finally got the bill passed. We have a pretty good