NATIONAL HEALTH INSURANCE TUESDAY, MAY 21, 1974 U.S. SENATE, COMMITTEE ON FINANCE, Washington, D.C. The committee met, pursuant to notice, at 10 o'clock a.m., in room 21 Dirksen Senate Office Building, Senator Russell B. Long (chairman) presiding. Present: Senators Long, Hartke, Ribicoff, Harry F. Byrd, Jr., Mondale, Bentsen, Bennett, Curtis, Fannin, Hansen, Dole, Packwood, and Roth, Jr. The CHAIRMAN. The hearing will come to order. This morning the Committee on Finance begins public hearings on various national health insurance proposals pending before the committee. I believe the passage of a national health insurance bill should be the highest priority item in the closing months of this Congress. Just yesterday President Nixon spoke to the Nation on the issue of health insurance and the President said that 1974 can and should be the year in which the Congress passes national health insurance legislation. I for one agree completely with the President in this regard, and I would ask that the text of the President's remarks be included in the hearing record following my remarks.1 The Ways and Means Committee began health insurance hearings last month. The Finance Committee is beginning public hearings today so that we can expedite our work on this issue. During our deliberation we will consider all of the numerous proposals before the committee, including the bill which Senator Ribicoff, Senator Talmadge, and myself introduced last fall. I am pleased to say that 24 cosponsors on that bill include eight members of the Committee on Finance. Our witness today will be the Secretary of Health. Education, and Welfare. Secretary Weinberger. I must say that I am somewhat disappointed to note that the Secretary, in his statement before the Ways and Means Committee last fall, as well as the President in his statement yesterday, failed to understand the Long-Ribicoff bill which not only seeks to meet the needs for catastrophic health insurance, but also speaks to the issue of providing basic health insurance coverage to our low-income citizens, and stimulating the availability of adequate private health insurance coverage to the employed population. 1See p. 12. We received your prepared statement just a few moments ago, Mr. Secretary, and I am pleased to see by your statement this morning that you do understand now that our bill does have more than one part to it. We are very pleased to see that you know it has three parts, and that there is more than just catastrophic coverage. We hope to educate you further about that bill as these hearings go along, and we will, of course, be delighted to hear your suggestions before the committee. It seems to me that as the administration begins to understand the interrelated portions of the bill that some of us have sponsored, it will be clear that the areas of disagreement between the administration's proposal and our proposal are not insurmountable. In fact, both bills meet the three basic principles which the President listed in his definition of an acceptable bill in his address yesterday. He said that an acceptable bill must maintain the patient's freedom to choose his own physician; must build on the capacity and diversity of our existing private system of health care rather than tear it down and seek to erect a costly, Federal dominated structure in its place; must provide all parties-consumers, providers, carriers, and State governments-with a direct stake in making the system work. A few weeks back, Senator Ribicoff and I appeared before the Ways and Means Committee to testify in support of our proposal. We were very pleased with the warm reception our bill received by the members of the Ways and Means Committee. I would like to insert at this point in the hearing a copy of our statements before the Ways and Means Committee. [The statements referred to, the President's remarks referred to previously, and the committee press release announcing these hearings follow. Hearing commences on p. 17.] SENATE FINANCE COMMITTEE TO BEGIN NATIONAL HEALTH INSURANCE HEARINGS Senator Russell B. Long (D. La.), Chairman of the Committee on Finance, announced today that the committee would begin hearings on the various pending National Health Insurance proposals on May 21, 1974 starting at 10:00 A.M., in Room 2221 of the Dirksen Senate Office Building. Senator Long stated, "the purpose of early consideration of National Health Insurance bills is to expedite the work of the Committee and the Senate. The Committee will be facing a heavy workload during this session of the Congress, and it is important that we begin our work in this vital area as soon as possible." The Chairman noted, "During my testimony last week before the Committee on Ways and Means in behalf of the Long-Ribicoff National Health Insurance bill, several Members asked whether the Senate would act expeditiously on any National Health Insurance bill which the House might send over. "This timely initiation of the Finance Committee consideration of National Health Insurance should help allay any fears about the desire of the Senate to move promptly on National Health Insurance." Chairman Long noted that the Committee would be receiving testimony on the various National Health Insurance bills referred to the Committee. These include S. 3 (introduced by Senator Kennedy), S. 444 (Senators Hansen and Hartke), S. 587 (Senator Beall), S. 915 (Senator Javits), S. 1100 (Senator A Committee print outlining the provisions of these bills is available in the Notification of Witnesses.-Parties who have submitted written requests to Consolidated Testimony.-The Chairman also stated that the Committee urges all witnesses who have a common position or with the same general interest to consolidate their testimony and designate a single spokesman to present their common viewpoint orally to the Committee. This procedure will enable the Committee to receive a wider expression of views on the total bill than it might otherwise obtain. The Chairman praised witnesses who in the past have combined their statements in order to conserve the time of the Committee. Panel Groups. Groups with similar viewpoints but who cannot designate a single spokesman will be encouraged to form panels. Each panelist will be required to restrict his or her comments to no longer than a ten minute summation of the principal points of the written statements. The panelists are urged to avoid repetition whenever possible in their presentations. Legislative Reorganization Act.-The Chairman observed that the Legislative Reorganization Act of 1946, as amended, requires all witnesses appearing before the Committees of Congress **** to file in advance written statements of their proposed testimony, and to limit their oral presentations to brief summaries of their argument." The statute also directs the staff of each Committee to prepare digests of all testimony for the use of Committee Members. Chairman Long stated that in light of this statute and in view of the large number of witnesses who desire to appear before the Committee in the limited time available for the hearing, all witnesses who are scheduled to testify must comply with the following rules: (1) All statements must be filed with the Committee at least one day in advance of the day on which the witness is to appear. If a witness is scheduled to testify on a Monday or Tuesday, he must file his written statement with the Committee by the Friday preceding his appearance. (2) All witnesses must include with their written statements a summary of the principal points included in the statement. (3) The written statements must be typed on letter-size paper (not legal size) and at least 100 copies must be submitted to the Committee. (4) Witnesses are not to read their written statements to the Committee, but are to confine their ten-minute oral presentations to a summary of the points included in the statement. (5) Not more than ten minutes will be allowed for the oral summary, Witnesses who fail to comply with these rules will forfeit their privilege to testify. Written Statements.-Witnesses who are not scheduled for oral presentation, and others who desire to present a statement to the Committee, are urged to prepare a written position of their views for submission and inclusion in the record of the hearings. He emphasized that these written statements would also be digested by the staff for presentation to the Committee during its executive sessions, and that they would receive the same careful consideration by the Committee as though they had been delivered orally. These written statements should be submitted to Michael Stern, Staff Director, Committee on Finance, Room 2227, Dirksen Senate Office Building. STATEMENT OF HON. RUSSELL B. LONG BEFORE THE HOUSE WAYS AND Mr. Chairman, Members of the Ways and Means Committee, Senator Ribicoff and I are here today to testify in support of H.R. 14079, the Catastrophic Health Insurance and Medical Assistance Reform Act of 1974, introduced by Congressman Waggonner. The Waggonner bill is the House companion to S. 2513, the bill which Senator Ribicoff and I introduced last October. S. 2513, as you may know, has 24 cosponsors in the Senate, including 8 Members of the Finance Committee. The cosponsorship covers a broad bipartisan range. This morning, I would like to describe briefly the problems which the bill seeks to correct and the major features of H.R. 14079 itself. Then I will outline the reasons why Senator Ribicoff and I, along with the other Senate sponsors, believe that this bill represents the direction the nation should take in the health insurance area. Our bill is a three-part approach—with each part relating to the others. First, Title I of the bill would establish a Catastrophic Health Insurance program which would protect nearly all Americans against the prohibitive costs of a catastrophic illness or accident. Title I benefits would constitute a ceiling of protection beneath which basic coverage would be provided by Medicare for the aged and disabled, the low-income plan established under Title II of the bill and private insurance meeting minimum standards established under Title III of the bill. Catastrophic illnesses or accidents can strike any American family with devastating effect. These catastrophic and uncontrollable events leave not only physical scars, but they all too often ruin the financial future of entire familieswiping out savings and disrupting long-held plans. Under the Catastrophic program in our bill, persons currently or fully insured under Social Security would be eligible for benefits after they had incurred medical expenses of $2,000 per family or after an individual had been hospitalized for 60 days. The types of services covered would be the same as those under Part A and Part B of Medicare except that there would be no upper limits on the number of hospital days. Hospital expenses thus would be covered from the 61st day on. The patient would be responsible for copayments equal to $21 per day, as under Medicare. On the medical side, the patient would pay a copayment of 20 percent. All copayment responsibility for both hospital and medical service would cease when the patient or a family had incurred copayment charges of $1,000 during a year under the Catastrophic Health Plan. The program would be administered by Social Security and would include all of the cost and quality controls and reimbursement mechanisms contained in Medicare. It would be financed by a payroll tax of three-tenths of one percent each on employers and employees and would cost about $3.6 billion. As I have noted, this Catastrophic program is designed to mesh with and complement existing private basic health insurance coverage for the general working population. It would be expected that the average citizen would obtain basic private health insurance coverage against the first 60 days of hospital care and the first $2,000 of medical bills. This is not unrealistic. Most Blue Cross plans, for example, cover at least 60 days of hospital care. Title II of the bill would replace Medicaid with a reformed and expanded program covering the low-income population for the first 60 days of hospitalization and the first $2,000 of medical bills. The current Medicaid program, as you know, in general covers only those poor people who are aged, blind and disabled, or in broken families. It is available primarily to people on welfare. Even for those on welfare, however, the present State-run Medicaid programs vary from State to State in random fashion with different benefits and varying eligibility levels. In one State an aged couple with an income of $2,600, for example, might be eligible for benefits while in another State they might not. Similarly, they may be eligible for 15 days of hospitalization in one State and 60 days in another. We need a program which erases these inequities and which would extend benefits to intact families of the working poor also-families who are earning a living but who are too poor to afford the increasing costs of obtaining private health insurance against basic health care costs. Migrant workers and their families are one low-income group who would be reached by Title II of our bill. Under Title II all low-income individuals and families, regardless of whether they were on welfare, and without the red tape and inequities of an assets test, would be eligible for benefits. The income limits would be set at $2,400 for an individual, $3,600 for a couple, $4,200 for a three-person family and $4.800 for a family of four. The income limits would rise by $400 for each additional family member. The program would contain a "spend down" feature. Families with incomes above the eligibility level could thus become eligible when their incurred medical expenses brought their incomes to the eligibility levels. For example, a family of four with an income of $5,000 would be eligible for benefits after they had incurred $200 of health expenses. The program would cover 60 days of hospital care and all necessary skilled nursing facility care, intermediate care and home health services. Additionally, the plan would cover all medically-necessary physicians' services and other health services such as laboratory and X-ray services. It should be pointed out that the benefits of the low-income plan are residual; that is, the plan would pay only after payment by any private health insurance which the individual or family might have. This program would also be administered by Social Security and it would also include Medicare's cost controls and reimbursement mechanisms. It would be financed out of general revenues and is estimated to cost $5.3 billion per year above present Federal-State Medicaid expenditures. States would continue to pay a fixed yearly sum related to their Medicaid expenditure levels in the year before the new program started, as well as 50 percent of the estimated amount of non-Federally matched funds spent by State and local governments for people and types of care now covered under the new program. General assistance health care costs is an example of this type of expense. That fixed dollar contribution would not be increased in subsequent years. Each State, thus, would realize substantial immediate savings under the program. These two parts of the bill-Catastrophic and Low Income-combined with Medicare for the aged and disabled, would assure that those who generally have the most difficulty in obtaining adequate health insurance coverage-the aged, the disabled, the poor and those with catastrophic illnesses-will receive health insurance protection with Federal assistance. The vast majority of the population, those who are not in these special risk groups, should be enabled to obtain adequate private insurance against their basic health care costs where they do not or cannot do so today. Private health insurance has demonstrated that it can do a reasonably adequate job in providing basic health protection to the bulk of the working populaiton. However, I would be the last to say that the protection has been complete. Too many private health insurance policies sold today—particularly individual policies— contain inadequate benefits or unreasonable restrictions. Rather than virtually abandoning the present private health insurance system and replacing it with a large Federal health insurance program, we should instead try first to find ways to improve present health insurance coverage for the average working man. The third part of our bill addresses this problem. It would establish a voluntary certification program under which private health insurance companies could have their health insurance policies certified by the Federal Government, if those policies met certain standards. For example, benefits would have to include payment for at least 60 days of hospital care and the first $2,000 of medical bills so that private basic health Coverage would mesh with the Catastrophic program. Other criteria would ban exclusions such as coverage of newborns-and waiting periods in group policies, and for individual policies limit exclusions only to preexsting pregnancies, with waiting periods for other conditions limited to not more than 90 days. A further criterion would be that the premiums charged be reasonable in relation to benefits paid. Individual policies |