State and local elected officials and health program administrators has developed positions to be taken by the coalition of State and local governments within the national debates on specific issues raised. ADMINISTRATION AND FINANCE A. State and local governments should be directly involved in the administration of a national health insurance system consistent with minimum Federal functions and considering State and local governments' historic responsibilities. State administration should be maintained and strengthened. B. Administration and regulation responsibilities which should be retained include: 1. Certification and regulation of providers-under a national health program the Federal Government should set minimum standards which the State and local governments could exceed. States should submit a plan and if it does not meet the minimum Federal requirements, the Federal Government should assume the administration of the program; 2. In determining whether the State and local governments are to retain the administration of capital expenditures controls, their experience under the Health Planning Act should be taken into consideration; 3. States should establish, subject to Federal approval, the rate establishment and reimbursement process. 4. The regulation of health insurance should remain with the State which should be the instrumentality for implementing Federal standards. C. To the extent that a NHI program is financed through tax revenues, those revenues should be derived by the Federal Government. D. While a National Health Insurance program should include a full range of benefits and universal coverage, its full implementation should be provided for in one act with a planned schedule for the phase-in of benefits, coverage, and financing to assure effective administration. E. To the extent that there is a lack of coverage under NHI there may be a necessity for continuation of categorical grants which should be administered by State and local governments. F. It is recognized, apart from personal health and medical services under NHI, that there will be a necessity for continuation of public health grants which should be administered by State and local governments. G. The national health insurance program should not entail the waiver by State or local governments of rights guaranteed under the 11th amedment of the Constitution. COVERAGE AND BENEFITS A national health insurance plan should include universal coverage with incentive for maximum participation. The ultimate goal of such a plan should be comprehensive coverage including preventive, diagnostic, rehabilitation, long-term care, dental and eye care, drugs, corrective devices, and mental health. Such coverage should be achieved through a phasing-in of benefits beginning with personal preventive health services. Legislation should identify services that are suitable for inclusion for appropriate age cohorts. All health care for children 0-6 years of age should be considered preventive care. Emphasis throughout should be on preventing overutilization of care through provision of coverage at less intensive levels of care (preventive and ambulatory) as well as institutional services. A program of catastrophic care as a second phase-in component of NHI needs consideration as to limits of coverage, relationship of coverage to income and character of population to be served. State and local governments should be encouraged to investigate costs of components of comprehensive health care. Congress should initiate experimental programs of assistance to State and local governments precedent to implementation of comprehensive coverage. Background COST CONTROL Medical costs have been increasing at a rapid rate in recent years. Although there is some thought that this rate of increase is flattening out, increases continue to outpace the Consumer Price Index. A number of factors have been implicated in this increase. Inflation of the general economy plus a catch up process following economic stabilization controls are the major factors which are unlikely to be controllable except by general economic conditions. Specific characteristics in the economics of health care accelerate the rise in medical costs. Advancing technology and expanding public expectations from that technology increases the demand for expensive and sophisticated services. Borrowing for capital improvement is often at interest rates higher than capitalization costs in other industries. Underreimbursement by third party payers stimulates providers to recover losses from direct paying consumers. Overstaffing of hospitals, increased liability costs and overspecialization of labor can be added as major factors. Overutilization of the health care system is more correctly termed inappropriate utilization. While one might say patient demand causes inappropriate utilization, it is ultimately the provider who controls utilization. The provider decides how the system will be utilized as he responds to patient demand and the demands of standards established by the courts in liability actions. Statement States should have the authority and responsibility for implementing programs to control costs and assure quality, utilizing those mechanisms they determine to be most appropriate for their individual needs and circumstances. Controls should be applied through a combination of incentive devices-to encourage adoption of low risk lifestyles, use of low-cost health personnel, reduction in hospital stays and administrative expenditures, balanced physician distribution-and mandatory government regulation-utilization review, relicensure and continuing medical education, rate review, prospective hospital reimbursement, peer review and certificate of need. The incentives and regulatory programs should be in operation prior to the implementation of NHI. As a means of controlling consumer utilization, copayments are not really effective. Much consumer copayment is hidden in charges. The provider still makes the utilization decision and the consumer has little real control. Exceptions might exist in the drug and repeat office visit sectors. Nevertheless, copayments are valid as a revenue generating mechanism. The use of means tests to exempt certain eligibles from copayment requirements would probably be counter productive as far as reducing excessive utilization is concerned. Income level exemption tends to confuse NHI with income maintenance. If deductibles or copayment requirements are high enough they could affect accessibility to health care, but in the face of real need will not deter patients from seeking service. There are many other social variables that affect access. Advertising of services and prices is not likely to reduce the cost of services. Price publications might lower costs in the case of drugs and supplies. Cost control programs in States would probably be more effective than those at the Federal level but the cost to State government of these programs must include Federal assistance. Some States are not likely to act without Federal encouragement. State operated NHI programs would present problems because of population mobility unless they were set up as an indemnification plan for residents without the cost, quality and service controls envisioned for NHI. Federal quality standards probably would not work because of vast geographic variables. Very minimum standards could be applied at best. Cost variables are also so wide as to defy controls except in reference to previous costs with very elastic parameters. MANPOWER AND QUALITY CONTROL To insure an adequate supply of providers to meet the increased demand for various health and medical services, a national health manpower policy must be a prerequisite to a phased-in national health insurance plan. The Manpower Task Force unanimously agreed to support, in principle, the tenets enumerated in the Senate health manpower bill. "The Health Professions' Education Assistance Act" (S. 3239). The task force is in agreement with the bills' efforts to remedy three fundamental problems: (1) The poor distribution of health professionals in rural and inner city areas; (2) The overabundance of surgeons and the shortage of primary care physicians; and (3) The increased reliance on foreign medical graduates (FMG's) to resolve both the geographic and specialty maldistribution problems. Although we support the Senate bill, it should not preclude state initiatives. States must identify their own health manpower problems and actively pursue solutions. States should take the lead in developing innovative programs to ease manpower shortages in medically underserved areas. It is suggested that states explore the possibility of requiring that certain standards be met by medical schools and other health professions schools receiving state monies, such as the development of remote site training centers. Before the enactment of a National Health Insurance plan, there must be efforts to improve the capability of assessing the quality of medical care. There should be appropriate State procedures for renewal of licenses and for continuing education programs for health professionals and institutions. Efforts to expand the use of allied health personnel should be undertaken, and studies should be conducted to explore the appropriatness of licensure, certification, or the establishment of performance standards for such personnel. Medicaid reimbursement should be made on the basis of the service rendered and not on the basis of the provider. To insure chronology of care, the task force recommends the development of a uniform patient record system which could be incrementally developed beginning with immunization histories. Senator TALMADGE. Our next witness is Mr. Frank Francois, vice president of the National Association of Counties. STATEMENT OF FRANK FRANCOIS, VICE PRESIDENT, NATIONAL ASSOCIATION OF COUNTIES, COUNCILMAN, PRINCE GEORGES COUNTY, MD. Mr. FRANCOIS. Thank you, Mr. Chairman. I am Frank Francois, councilman, Prince Georges County, Md. I am also fourth vice president of the National Association of Counties on whose behalf I am appearing today. I am accompanied by Mr. Mike Gemmell to my left who is a NACo legislative representative. As you well know, Mr. Chairman, county government provides medical care to those who cannot obtain it elsewhere. When no one else can or will, local government provides that care. Similarly, counties are responsible for assuring services in several areas not generally addressed by existing public (medicare and medicaid) or private insurance programs-problems such as alcoholism, drug abuse, mental health, emergency care, and preventive and health promotive services. The purpose of my statement is twofold. First, I wish to put NACO on record as supporting in general the goals and objectives of S. 3205 and second, I wish to make Congress and the members of this subcommittee aware of the problems and opportunities facing counties as a result of the medicaid program. We wish to commend the chairman and members of the subcommittee for proceeding with hearings on medicaid and medicare reform. We are submitting for the record a survey of health expenditures in 15 States that we believe provides representative examples of the role counties play in providing medical care through medicaid. The results of this survey clearly show the magniture of the financial commitment counties have made to health care. We are also submitting for the record a resolution passed by the NACO membership during our recent annual convention. 75-502-76- -6 Mr. Chairman, in that respect I would note in your statement released today on this bill you refer to the National Association of Counties as calling for immediate wage controls of hospitals. That position has been changed as of June. We are now in a posture, as you will note from the resolution, of encouraging incentives to hold down costs. Senator TALMADGE. I am delighted to hear that because I think a freeze is too rigid. Mr. FRANCOIS. Our membership after a rather intensive debate on the floor reached the same answer, sir. As an example of the impact S. 3205 will have on counties, we urge you to take into consideration the amendments suggested by Los Angeles County. NACO stands ready to support S. 3205 with the suggested amendments. We are specifically concerned about the potential negative fiscal impact of sections 4, 10, and 11 of the bill. Of course, those are the same ones that the Los Angeles County addressed themselves to. These sections propose desirable administrative objectives. Enacting them into law, however, will result in increased administrative costs to counties. We understand that the subcommittee staff is aware of the problems inherent in these sections. We believe S. 3205 will help eliminate overlap, duplication and redtape now in existence in the medicaid program. We believe it will also reduce high error rates. Why are we supporting S. 3205? The attached survey clearly shows that the commitment of county governments to the medicaid program is substantial. As health care costs increase counties are being forced to rely on an already burdened property tax to support the health care of a small segment of their population. While dedicated to the provision and availability of health care for all citizens, counties face the dilemma of sacrificing other necessary and mandated services responsibilities to the burgeoning fiscal requirements of the medicaid program. Cutbacks in services and/or eligible population provide no relief for counties, which are traditionally the providers of last resort. Persons whose major health problems fall into special categorical problem areas. and others whose life styles disqualify them for protection under Federal health programs (including disabled but working persons, intact families, childless couples, single persons between 21 and 65 years old, the working poor, nonresident aliens, prisoners and migrants) must turn to local government for help. However, our Nation's approach to the medically indigent through medicaid is uneven and highly inequitable. Inadequate benefits in some States create classes of medically needy which do not even exist in other States. These medically indigent persons also become the burden of local government. Since counties cannot, by themselves, be expected to control costs and since we are always left to pick up the tab for all those who are not covered by a State or Federal program or private insurance, NACO has the following recommendations: First, completely overhaul the eligibility process. This process is far too complex. In most States at least four categories of eligibility are in use. The costs of administration are far too high. Eligibility errors are numerous-little effort has been expended to analyze the demographic characteristics of the eligible population, patterns of their residence or patterns in the use of covered services. Millions of dollars are being expended to process eligibles-yet there is considerable indication that the high costs of eligibility succeeds merely in determining which level of government-Federal, State or local-must pay for the care of the medically indigent. There is a need to standardize and simplify the eligibility process. The costs of weeding out a small percentage of people who are marginally ineligible probably far exceeds the cost of provisions of care to them. The diversion of financial resources from fruitless, expensive, repetitive processing could augment money needed to provide essential services. Second, the revision of cost-sharing approach to funding of medicaid. The existing system of Federal, State, local sharing under medicaid is both unreasonable and inequitable, we believe. People in need of medical services who cannot afford to pay for them must either do without or have their care subsidized in whole or in part by local government. Failure to cover preventive and early diagnostic care and treatment in the long run boosts the cost of medical care which becomes the cost of neglect. Nationally millions of administrative dollars are being spent under medicaid simply to determine what portion of costs will be borne by Federal, State and county governments. We argue for federalization of the medicaid program. We urge that consideration be given to eliminating the regressive, rigid property tax as a source of revenue for financing medicaid. If we seek equity of access to adequate care, we cannot depend on the property tax to provide that equity. We are willing to work with the subcommittee staff, Mr. Chairman, which has been most cooperative in responding to our concerns, at your direction. We thank you for allowing us this opportunity to testify today. I would like to put one more item into the record if I could. I always like to go to the people who operate these programs and get their viewpoints. Senator TALMADGE. Without objection, it will be inserted in the record, sir. Mr. FRANCOIS. I did that in my own county. I have a health officer's two-page memorandum outlining our view on the bill in Prince Georges County. Senator TALMADGE. Delighted to have it as part of the record. [The material follows:] PRINCE GEORGE'S COUNTY HEALTH DEPARTMENT JUNE 3, 1976. Re U.S. Senate Bill 3205: Medicare Medicaid Reform Act-Senator Talmadge. This is one of the finest Bills I've seen proposed in relation to Medicare and Medicaid since its advent in 1965. The advocating Senate Subcommittee seems to be a unique exception in that it is taking a very broad overview of the problems |