more money for the purchase of care from the current patchwork of public and private sources of care. In many instances, the intended beneficiaries have been helped very little. The removal of financial barriers alone does not guarantee receipt of or even access to necessary services. And financing schemes which pay out money in ways which do not encourage changes in how care is organized and delivered will only add to the problems we have.

We need a national health program which will pay for care in ways that encourage the provision of effective and appropriate services, and which will include broad federal authority to make possible the provision of technical assistance, start-up funds and continuing subsidies for outreach and support services to nonprofit organizations serving rural and urban health-deprived areas, along the lines outlined in our testimony. Attached herewith is a list of services we have found essential to the provision of good, comprehensive care. (See Appendices 1 and 2).

Question 10: Why invest in improved health services rather than improved health behavior?

Americans could make enormous strides toward better health if they improved their individual health behaviors. As we attempt to make progress on this front, it is important to remember, as Dr. Arden Miller pointed out in his valedictory address as president of the American Public Health Association, "for the vast majority of people in our society the life circumstances leading to poor health are not adopted as a matter of personal choice, but are thrust upon people by the social and economic circumstances into which they are born." But we should not have to sacrifice one objective for the good of the other. As a matter of fact, an efficient and supportive health care system could be the best source of education and advocacy to help people modify their personal health habits. And the fact remains that health care does make a difference and that many people are not receiving the professional attention they need. The rationale that health care won't solve all health problems does not mean that energy into reforming it is useless.

To cite but one example, where the effects of medical care were isolated and measured, 1,125 infants died in New York City in 1968, needlessly-for reasons related primarily to inadequate prenatal care. As Robert Coles observed in his foreword to the report of that study, these children "were not the victims of a profession's intellectual or scientific inadequacies. They were not boys and girls born too soon-because certain fatal diseases have yet to be understood and made responsive to medical treatment. They were boys and girls who, with their mothers, of course, needed only what millions of other received: adequate medical attention. Their deaths were, by and large, utterly avoidable."

When one thinks about those 1,125 families, it becomes difficult to decide not to invest further in improving health services.

Question 15: What evidence of successful intervention in the delivery of health services has emerged from the experiments and demonstration of the 1960's?

The Children's Defense Fund has undertaken a study of publicly supported attempts of the last ten years to improve the delivery of health services, including Children and Youth and Maternal and Infant care programs (Title V of the Social Security Act) and neighborhood health centers (originally supported thru the Economic Opportunity Act.) We have identified three characteristics of health services which seem to result effective care: (1) Comprehensiveness, which eliminates barriers arising from the confusion and discontinuity of fragmented care; (2) Accessibility, which eliminates practical barriers of location, hours of service, or lack of information which impede the consumer's entry into the health system; and (3) Acceptability, which eliminates barriers arising from the inconvenience and insensitivity of many health services.

We also found in our review of existing innovative programs, that the benefits of making care more comprehensive, available, and acceptable are often readily measurable. It is possible to quantify the effect of health services which are designed to be comprehensive, accessible, and acceptable, in terms of preventable death and disease, and the better and more economical use of health services.

Experts agree that if strep throat were detected and treated adequately, rheumatic fever and chronic rheumatic heart disease would be almost non

existent. In Baltimore, Maryland, where four comprehensive care programs were established in and reached out to the most underserved areas of the city, the incidence of rheumatic fever was reduced by 60 percent among children in the census tracts eligible for any of the programs, while in the surrounding areas its incidence increased by 20 percent.

Comparing infant mortality rates by income, area and race in nineteen cities, the spread among cities ranged from 22.3 in Pittsburgh to 2.8 in Denver. Denver had not only the lowest absolute rate in its low-income areas for both whites and nonwhites of the nineteen cities surveyed. Denver, Colorado, has probably come closer than any city in the country to making comprehensive health services available to all its residents through an integrated network of neighborhood health centers and Children and Youth projects.

Evaluations of many maternal and child health programs taking active steps to enroll pregnant women, monitor their health carefully and provide regular infant care have shown remarkable reductions in mortality, prematurity and illness. In Providence, Rhode Island, for instance, the inner city served by the Maternal and Infant Care Project at St. Joseph's Hospital showed a reduction in infant mortality from 47.4 per 1,000 live births in 1966 to 25.2 per 1,000 in 1970, while in more affluent census tracts the rate increased from 20.1 per 1,000 live births in 1966 to 21.4 in 1970.

Neighborhood health centers have been notably successful at extending health services in poor communities. Until recently there was a neighborhood health center in Lowndes County, Alabama, and the infant mortality rate was reduced from 46.9 per 1,000 live births in 1967 to 28.3 in 1971. Over that same period of time, infant mortality rates in neighboring counties changed little. Similarly, in Bolivar County, Mississippi, the infant mortality rate decreased from 48.5 to 31.0 deaths per 1,000 live births during the first four years a neighborhood health center was located there. Among Blacks, who comprised nearly all the patients served at the Bolivar Center, the rate was reduced from 57.2 to 35.7, while the rate for whites increased slightly from 13.5 to 13.7.

In virtually every community where access to comprehensive care was improved, there was a substantial reduction in hospital admissions and in the inappropriate use of hospital emergency rooms.

In Boston, Massachusetts, among families randomly assigned to a comprehensive care program, there was a significant increase in receipt of preventive services and a significant reduction in laboratory costs, prescription medications, hospitalizations, operations and illness visits.

The subcommittee is adjourned until 1:30 on Monday afternoon. [Whereupon, at 4:20 p.m. the subcommittee adjourned, to reconvene at 1:30 p.m. Monday, February 21, 1976.]

NATIONAL HEALTH INSURANCE

How Should Providers and Institutions Be Reimbursed?

MONDAY, FEBRUARY 23, 1976

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON HEALTH AND THE ENVIRONMENT,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D.C. The subcommittee met, pursuant to notice, at 1:30 p.m., in room 2322, Rayburn Office Building, Hon. Paul G. Rogers, chairman, presiding.

Mr. ROGERS. The subcommittee will come to order. We are continuing our hearings on proposals for national health insurance. We are developing information today on how providers and institutions should be reimbursed. We have a very distinguished group of witnesses today. We are asking that the following witnesses come to the table so that we may have a panel as such:

Mr. Joseph V. Terenzio, president of the United Hospital Fund of New York; Dr. Hal Cohen, commissioner of the Health Service Cost Review Commission of Maryland; Mr. James C. Ingram of Ingram, Weitzman & Mertens and Co.; and Dr. Uwe Reinhardt, associate professor of economics of Princeton University.

Gentlemen, we welcome you to the committee.

Mr. SCHEUER. Mr. Chairman, may I especially welcome Mr. Joseph Terenzio, who in addition to being president of the United Hospital Fund of New York, served as a very distinguished commissioner of health for New York City and was part of a great and noble tradition of health commissioners. He is an old friend and valued colleague to all of us who are seeking better means of providing health care for the American people, and it is a special pleasure to welcome him here today.

Mr. ROGERS. I might say the Chair shares the feeling and has known Mr. Terenzio and his outstanding work in New York City. Mr. TERENZIO. Thank you.

Mr. ROGERS. We welcome all of you to the committee. We are grateful you could take the time to give the committee the benefit of your thinking.

Mr. Terenzio, if you would like to begin.

Your statements will be made a part of the record in full, without objection, and you may proceed as you desire.

(1009)

70-411 O 76 pt. 3 13

STATEMENTS OF JOSEPH V. TERENZIO, PRESIDENT, UNITED HOSPITAL FUND OF NEW YORK; JAMES C. INGRAM, INGRAM, WEITZMAN, MERTENS & CO.; HAROLD A. COHEN, EXECUTIVE DIRECTOR, HEALTH SERVICES COST REVIEW COMMISSION, STATE OF MARYLAND; AND UWE E. REINHARDT, PH. D., ASSOCIATE PROFESSOR OF ECONOMICS AND PUBLIC AFFAIRS, WOODROW WILSON SCHOOL OF PUBLIC AND INTERNATIONAL AFFAIRS, DEPARTMENT OF ECONOMICS, PRINCETON UNIVERSITY

Mr. TERENZIO. Thank you, sir. I am Joseph V. Terenzio, president of the United Hospital Fund of New York, the oldest federated charity in the United States which has for almost a century provided leadership, service, and philanthropic support for its 55-member voluntary hospitals in New York City.

Through this instrumentality, the fund has developed into a major center of accountability for millions of those who look to the voluntary sector for their health care.

Although I appear today on behalf of the united hosiptal fund, I feel that my experience as commissioner of hospitals of the city of New York from 1966 to 1970 may be particularly valuable since I was responsible for the operation of the largest non-Federal hospital system in the United States with an operating budget of $575 million. This, coupled with my experience as chief executive officer of several large teaching hospitals in the voluntary sector, furnishes me with a good perspective on the delivery of health care by urban institutions and, in particular, the delivery of primary ambulatory care by public and voluntary hospitals which are in the "front line" in the provision of basic medical care services to urban populations.

Although you have asked me to discuss the considerations related to the delivery of ambulatory care and its attendant financing considerations, I realize that this is but one component in your concentrated attention to the many facets that must be considered prior to the enactment of a broadly based program of national health insurance for our people. I believe however, that primary care delivery is an especially important consideration in relation to the nearly 70 percent of the Nation's population who now reside in urban centersareas which contain vast numbers of minority and socioeconomically deprived people.

It is a fact that low-income wage groups, which have traditionally received less than an equitable share of high-quality medical care, are unable to utilize effectively our existing fragmented delivery system.

As our system now stands, the promise of equal access to primary health care services is yet unfulfilled. This is the challenge which must be met by any program of national health insurance finally enacted by the Congress.

The delivery of primary care has been a major concern of health care planners since it is essentially concerned with general, firstcontact health care. Primary care delivery is a particularly acute problem in large cities because of the lack of physicians who are

willing to practice medicine in those areas of our urban centers where the low-income working poor populations are found.

Primary care consists of a variety of elements including care in physicians' officers, group practices, freestanding centers, and hospital-based units. It is on the latter that I will focus. In order to provide primary care in the most effective manner in any hospital outpatient department, the program must be designed to treat to the fullest extent possible the entire medical needs of each person and the members of his or her family unit. This requires continuity and coordination of high quality professional care, emphasizing primary physicians and other full-time members of the health care team. House staff members should not be considered as primary physicians. Mr. CARTER. Excuse me. Did you say health officers or interns? Mr. TERENZIO. I said house staff members.

Mr. CARTER. Interns and residents?

Mr. TERENZIO. I am talking about interns and residents, interns, particularly, of which there aren't very many left.

Furthermore, primary care should be designed not only to make preventive and general medical care available but to insure through a system of coordination the supervision and monitoring of the care of an individual from his initial visit through whatever level of secondary or tertiary care may be necessary during the episode of illness.

Although a considerable number of health manpower studies have focused on economic and other incentives to induce the deployment of young physicians in urban areas, the results have been limited. For the most part, the net gain in the number of primary care physicians serving low-income populations can be attributed largely to greater employment of salaried and part-time physicians in hospital-based settings. Even with the emphasis on developing comprehensive family health care centers under the aegis of ÔEŎ and the HEW 314(e) programs, the process of establishing these new networks of community-oriented primary health care services has been slow, laborious, and costly. It has required new intrastructures which in some cases have been competitive with existing hospital facilities, and in many cases it has resulted in a duplication of high-cost support services.

Notwithstanding these new delivery mechanisms, the fact remains— using New York City as an example-that as the economically deprived population has increased in urban centers and as practicing physicians have moved out of these areas, the task of delivering primary care services has fallen largely on hospital-based outpatient and emergency departments. Since 1967-the first full year of medicare and medicaid operation-the incidence of ambulatory and emergency service utilization has increased by 1 million annual visits in the New York City voluntary hospitals alone. This is a 25-percent increase. This increased volume, combined with the traditional "open door" policy followed by voluntary hospitals in New York City, has placed a larger and larger financial drain on these hospitals. This pressure on New York City voluntary hospitals to deliver more primary care services is increasing because the "working poor"-I am describing them as that segment of the population that is above the