NATIONAL HEALTH INSURANCE

Who Should Be Covered?

THURSDAY, FEBRUARY 19, 1976

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON HEALTH AND THE ENVIRONMENT,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D.C.

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

Mr. ROGERS. The subcommittee will come to order, please.

We are continuing hearings on proposals for national health insurance. We have a very distinguished panel today. We welcome them and appreciate them being here. The witnesses are Ms. Lisbeth Bamberger Schorr, consultant, Children's Defense Fund; Dr. Donald A. Cornely, community pediatrics section, School of Public Health, Johns Hopkins University; Ms. Nancy Amidei, research associate, project on Race and Social Policy; and Dr. Arden Miller, professor of the School of Public Health, University of North Carolina.

We welcome all of you to the committee. We are grateful for you being here. Your statements will be made a part of the record without objection.

You may proceed as you desire.

I think it was suggested that we hear first from Miss Amidei. STATEMENTS OF NANCY AMIDEI, WASHINGTON, D.C.; DONALD A. CORNELY, M.D., DEPARTMENT OF MATERNAL AND CHILD HEALTH, SCHOOL OF PUBLIC HEALTH, JOHNS HOPKINS UNIVERSITY; LISBETH BAMBERGER SCHORR, CONSULTANT, CHILDREN'S DEFENSE FUND OF THE WASHINGTON RESEARCH PROJECT; AND C. ARDEN MILLER, M.D., PROFESSOR OF MATERNAL AND CHILD HEALTH, SCHOOL OF PUBLIC HEALTH, UNIVERSITY OF NORTH CAROLINA

Ms. AMIDEI. Thank you, Mr. Chairman, and members of the committee. I am very pleased to be here this afternoon.

Although I am employed by the Project on Racial Policy, I would like the record to show I am not here representing that group or its sponsor, if that is all right.

Mr. ROGERS. Certainly.

Ms. AMIDEI. After some 10 years-some of that time at DHEW, and 4 years of it working for the U.S. Senate, I am a biased witness. My work has tended to put me in touch with those whom the various system, such as they are, have shortchanged: the people without care, or with only poor care; people with pressing health care needs whom the system somehow doesn't define as needy enough, or needy in terms that involve public responsibility. So my bias is that I believe that must be changed, both in our existing programs if we are to operate under them much longer, and in the programs that we plan for the future.

From the outset, I guess I should state my bias a little more specifically. And I believe anything less than universal eligibility, for equal care, will not be good enough. And in turn that means that much of our present experience will have to be used for indications of what not to do rather than what to follow.

There are two aproaches that are widely relied upon to determine eligibility for care, illustrate the kinds of gaps that develop, and how they will remain if we build on similar principles. The example I have taken from the public sector is the means-tested medicaid program-a system that I realize this committee now has jurisdiction. over, and about which it has heard a good deal. From the private sector comes the example of work-related health insurance chiefly because it is an increasingly important element in health care coverage, and an important aspect of several major national health insurance proposals.

First, the mean-tested medicaid system. All of our present welfare programs, including medicaid, and many of the federally supported direct health service programs, rely on means-testing to determine who will be eligible, and for what kind of care.

And medicaid is fundamentally a welfare program. It serves only those who are both poor, and categorically eligible. Poverty is established by means-testing. The process used to determine whether a household has so few "means" that it passes whatever test a State chooses to set for poverty.

Categorical eligibility is established by determining whether a household has the social characteristics that are necessary to qualify for welfare: old age, dependent children, blindness, or disability.

The other side of that requirement for "categorical eligibility" is that large categories of people are automatically ineligible for care, no matter how poor they may be. Two-parent families are ineligible for medicaid in those 26 States which choose not to operate a welfare program for unemployed fathers and few are included in the programs nationwide even where they do operate.

But they are not alone. In some ways medicaid is a very exclusive club. Poor single people without children and under 65 are excluded as are widows whose children are no longer dependent. They get welfare and so cannot use medicaid. Nor can childless married couples who do not happen to be old. There is, for example, no place in our medicaid system for the childless, unemployed man of 55, and no place for his wife-whether or not she works. No matter how hard and faithfully he worked before the recession took away his job, no matter how poor they may be since that happened, medicaid does not recognize their need and won't for another 10 years at least.

Working two-parent families everywhere are excluded from medicaid, as are women with dependent children in 12 States are excluded from medicaid if they have more than $1.50 per person per dayalthough those States have medicaid programs, and poor people in them are theoretically covered.

Some of medicaid's exclusions have serious health implications. Because 30 State welfare programs do not cover the "unborn child," poor women living in them and pregnant for the first time cannot use medicaid for prenatal care. Yet we know that mothers without prenatal care were three times more likely to have low-birth-weight infants than those with care, and last year there were 300,000 infants born to women who had gotten little or no care. The fact that the medicaid program will pick up the predictably higher lifetime costs associated with low-birth-weight does not make it good health policy, I am afraid.

Medicaid is not generally for poor people, it is for the winners of the welfare obstacle course. Poor people whose States count them as poor, whose families happen to match the welfare requirements where they happen to live, and who, if they can find a doctor that is an approved medicaid provider when they have a medical need that is reimbursed in their State can get care.

Even if there were no categories and medicaid were available to all the poor, there would still be problems caused by the simple fact that eligibility depends on something called means-testing. It is that process that dictates whether or not sick people will get care; whether doctors will see patients; whether clinics serving only poor people will be reimbursed for the care they give and be able to stay in business.

The theory is a simple one. It says that there is only so much money to go around, and so the money that is available should be concentrated on those in greatest need-however, the States may choose to define "need." Somehow it has always seemed to me a little bit curious that we deem it economically efficient to set up costly and inefficient systems for screening people out rather than seeking some simple way to assure everyone care.

In practice this business of means-testing has always been a very complicated business indeed. It means that health care is less dependable for welfare mothers who work part time, who take fulltime work for short periods when they can get it, or whose child support payments come in spurts-because any of those factors will cause them to have varying incomes that may leave them medicaid eligible one month, but not the next.

One-quarter or more of AFDC mothers lose eligibility once or more in a year. For the individual doctors it means filling out the forms each time again, and filing the new information. For clinics and large health maintenance systems it becomes a herculean task. The health insurance plan in New York City estimates that some months there is a 25-percent turnover in its medicaid patient load, as old participants become eligible once more, and current patients lose their eligibility. Each time all of the participating hospitals and clinics must be notified that a former patient is eligible again, or that a current patient's bills will no longer be honored. The paper

work is staggering. Just a few weeks ago I heard Beverlee Myers testify here that it costs the State of New York $60 million each year just to certify and recertify medicaid users who are not at the same time getting welfare. And health maintenance organizations that want to serve poor patients find that it is virtually impossible to make plans and build a sound financial base on a patient population that might not be eligible from one day to the next.

What the medicaid program is reflecting is just one central fact of life for people at the economic bottom. Their incomes are not stable. The people who do the low-paying, menial jobs for our society have the least income security. Their incomes vary with the weather and the season, and the whims of their employers. Whether they get health care depends not on whether or not they are sick and in need of care, but whether the month before was one in which they earned the few extra dollars that put them over the magic eligibility line.

Families of four with only $250 or $350 per month are just not able to afford the $60 to $100 per month that private family health insurance would cost. Those families get left out.

How many poor people in need of health care are locked out of the present medicaid system is hard to judge. One estimate puts the number at 7 to 8 million, but that may be low. Since the incomes of the poor do fluctuate so much, the official poverty count that is taken once each year is only going to include those people who happen to be poor in March when the count is made.

The HEW-supported study called "5,000 Families," the 10-year study of New York City welfare caseload dynamics, and the BSSR study of food stamp eligibility, all tell the same story. The number of people who are poor during the course of a year is probably 11⁄2 to 3 times as many as those who are counted poor at any single point in time. In those terms, the need for medical care by those who cannot afford it may be many times greater than we had thought.

The simple point of all this is that typing eligibility for health care to poverty status or current income is bound to leave poor people out. Means-tested medicine is by definition unreliable medicine. And for the months or weeks or whenever, that income eligibility is some few dollars beyond the poor, it is simply not a realistic notion to assume that these families can afford private insurance or private

care.

Which brings me to the second point I want to make today. Making medical care depend on employment status does not carry with it the same problems as means-testing, but the problems are no less troublesome or less real. Using employment status as the key to care will also leave some groups out, or pose substantial and costly problems for those included. It will not avoid the problems of poverty. More than half the families in poverty are in households headed by a worker. Three groups deserve special attention: marginal workers of any kind, women, and minorities.

Just last week, I had an opportunity to look at health care clinics in rural Mississippi, and among the things that came up were the problems that these rural, mostly farm-laboring families face in establishing their eligibility for means-tested programs. They work when there is work, and the weather is right. Otherwise they don't work, and then they don't have incomes.

Their eligibility for food stamps, for example, is directly and adversely affected. But how will they be judged eligible for health care? By the poverty incomes that are so hard to verify? Or can we assume that these farm laborers would be considered workers in a system of health care that depended on arrangements between employer and employee? How would the share of each be calculated? On the basis of the laborer's family needs for medical care? On the basis of how many days of work they had from one farmer or another?

Would their payments-and their medical care benefits-be pro rated according to days of sunshine? How would their very marginal incomes, which vary with the weeks and are rarely more than a few thousand dollars each year, absorb deductible or copayments? The roughly $975 involved in the AMA's medicredit plan? Or the 6 to 9 percent of low incomes assumed by CHIP? How would costs like these be taken out of the wages not just of those Mississippi farmworkers, but of handyman and household cleaning women? Of the earning of day laborers in the urban centers? Or the seasonal workers in fishing, lumber, farming, and a host of other occupations?

What happens to all those men and women now earning just the minimum wage, or a little less? To older workers locked into marginal jobs? Should we assume that their employers will willingly pay another $700 per year in insurance premiums? And that the employees can afford the nearly $300 that their 35 percent of premiums would cost under some plans? At family incomes of even $6,000 or $7,000 those are not academic or easy questions to answer.

Even relying on the social security payroll tax would work hardships on some of these, and saying that the question is solved by assuming that those families could "spend down" to medicaid eligibility levels brings us squarely back to the condition of having their right to medical care dependent on the myriad applications of the means test.

Private insurance is now clearly out of the reach of many. Some 23 million people lived in families with incomes between $5,000 and $10,000 in 1974, many of who would find it hard to buy even $500 worth of health insurance. For the present, they are too rich for medicaid and too poor for the private system. If the future eligibility for health care is to be tied to employment status, it must be done in ways that deliberately take into account the special problems of marginal and other disadvantaged workers. But system that try to account for every condition, and which must change with every variation in income or work status, are bound to be cumbersome, timeconsuming, and unfair to many.

Two additional groups might be disproportionately affected if their particular situations are not taken into account: women and minorities. These are precisely the kinds of people most often working in low-paying, low-security, part-time, or otherwise marginal jobs. Some, even when they are heads of families, earn only about 40 percent of men in sales, and 60 percent of what men earn overall, and the median family income of black families is still only about 58 percent of white. Unemployment rates continue to be twice as high for blacks as for whites nationally, and three or more times as high