($2.3 billion or 21.4%) of premium income for commercials compared with $700 million or 6.9% of premium income for the Blues.) Following is a breakdown of the above overall statistics into four categories: 1) commercial individual; 2) commercial group; 3) Blue Cross; 4) Blue Shield. 1) Commercial individual plans received $2.6 billion in income and paid out $1.4 billion (52.6%) in benefits. Operating expenses amounted to 47% of premium income. Net underwriting gain of $10 million. 2) Commercial group plans received $8.3 billion in income and paid out $7.8 billion (93.3%) in benefits. Operating expenses amounted to 13.4% of premium income. Net underwriting loss of $600 million. 3) Blue Cross plans received $7.1 billion in income and paid out $6.5 billion (92.0%) in benefits. Operating expenses amounted to 5.2% of premium income. Net underwriting gain of $200 million. 4) Blue Shield plans received $2.9 billion in premium income and paid out $2.5 billion (87.2% in benefits. Operating expenses amounted to 11.3% of premium income. Net underwriting gain of $40 million. NOTE.-The poorer performance of commercials vis-a-vis Blues is mitigated by the following: 1. Commercials pay federal and state taxes which Blues don't have to pay; 2. Commercials sell more individual policies which have high selling costs; 3. Commercials write more major medical and surgical-medical which have a higher operating expense than straight hospital coverage because of lower premium, large number of claims per enrolee, smaller amount per claim and greater complexity in administering. PRIVATE HEALTH INSURANCE PERFORMANCE COMPARISON 1971-72 Premium income for private insurance industry (including Blues) rose 14% in 1972. Claims rose only 10% and operating expenses were stable. Thus, the industry reduced its net underwriting loss from $792 million in 1971 to $300 million in 1972. Appendix: Here is how it breaks down : 1. Blues had 13% increase in premium income in 1972. Claims rose only 10% and operating expenses were stable. Net underwriting gain jumped from less than $3 million in 1971 to $243 million in 1972. 2. Commercials had 14% increase in premium income in 1972. Claims rose only 9% and operating expenses rose only nominally. Net underwriting loss of $775 million in 1971 was reduced to $548 million in 1972. Commercial individual had a 10% rise in premium income and 7% rise in claims. Operating expenses remained the same. Thus the $20 million net underwriting loss in 1971 was turned into a net underwriting gain of $20 million. HEALTH MANPOWER 1972 320,000 active physicians in United States or 156 per 100,000 population. One out of 5 is a graduate of a foreign medical school. While numbers per 100,000 are up, the proportion of physicians in officebased practices providing patient care is down from 109 per 100,000 in 1950 to 95 per 100,000 in 1972. HEALTH CARE INSTITUTIONS-7,000 In 1972, there were 33.3 million admissions, 219 million outpatient visits at a total cost of $32 billion. 38% of hospitals (with 54% of bed capacity) are nonprofit. Hospital expense per day varies from $64 in West Virginia to $130 in Alaska, In Connecticut it is around $100. Average length of stay varies from 5.2 days in Alaska to 9.6 days in New York. Financial position of hospitals is improving. Net income in 1971 was $547 million. [The preceding material is concluded.] 34-500 0-74-2 OFFICE OF THE WHITE HOUSE PRESS SECRETARY, THE WHITE HOUSE TEXT OF A RADIO ADDRESS BY THE PRESIDENT ON THE COMPREHENSIVE HEALTH INSURANCE PLAN This week the Senate Finance Committee will begin hearings on health insurance legislation that could usher in a historic reform of the American health care system. I am gratified to see that serious action on this most vital matter is going forward on both sides of the Capitol and I am confident that the executive and legislative branches of the government in a spirit of statesmanship and compromise, can work together to resolve the problems of providing health insurance legislation which meets the needs of all Americans. While Americans today enjoy the finest health care and medical technology in our history, the cost of that care is constantly increasing. Our present system of health care insurance does not meet the costs of providing adequate care. It must be improved. Twenty-five million Americans have no health care insurance at all, and millions of others have inadequate protection. Less than half of those under 65 have protection against catastrophic health costs, and almost no one over 65 has such protection. Preventive services, mental health care, and outpatient services and medication are often excluded from coverage. Many other essential services are not adequately covered. Finally, to further burden our already inadequate health insurance system, wage price controls have expired and there is no brake on further increases in health costs. The failure of the Congress to adopt my legislative request to continue authority for mandatory cost controls for the health industry has left the country unprotected against the very real possibility of an unbridled increase in these costs. A few facts and figures will give you an idea of the scope of the problem. In the past 2 years, the overall cost of health care has risen by more than 20 percent. The national average cost for a day of hospital care now exceeds $110. It costs an average of close to $1,000 to cover delivery of a baby and postnatal care. The average cost of health care for terminal cancer now exceeds $20,000. And now, in the absence of controls, the country faces a possible annual increase of 22 percent in physicians fees alone. To emphasize the Government's concern over skyrocketing health costs, Secretary Weinberger of the Department of Health, Education and Welfare met with representatives of twenty of the Nation's major health provider groups on May 3rd. He urged them to take every action at their disposal to prevent the rapid escalation of costs, and indicated that if cost increases were not voluntarily controlled, it could lead to drastic, Congressionally-imposed mandatory controls. I strongly share Secretary Weinberger's concern on this matter, and urge the health industry to do everything it can, voluntarily, to keep the brake on rising health care costs. But voluntary restraints will not be enough. We must have legislation to insure that every American has financial access to high quality health care. Nineteen-seventy-four can and should be the year in which we move decisively to protect every American against the rising and often prohibitive costs of health care. Nineteen-seventy-four can and should be the year in which we create new incentives to make the health care system of the United States even better and more efficient than it is. And nineteen-seventy-four can and should be the year in which firm, fair steps are taken to hold down the rate of inflation that has continuously driven the cost of medical care higher and higher during the past twenty years. Never has the need been greater, or the national climate more favorable for the development of a sound consensus on a comprehensive program of health insurance than today. In order to best serve the American people, such a program must include three basic principles: It must maintain the patients freedom to choose his own physician. It 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. And it must provide all parties consumers, providers, carriers and State governments-with a direct stake in making the system work. The Comprehensive Health Insurance Plan which I have proposed meets these criteria. It is the only one of the major proposals now before Congress, to do so. It is the only major plan that offers extensive, uniform health coverage without raising your taxes; without severely damaging the effective private health insurance industry that has helped to make this generation of Americans the healthiest, best cared-for in our history; and, without establishing an enormous new Federal Bureaucracy. Most important of all, under the Comprehensive Health Insurance Plan your doctor would continue to work for you, and not for the Federal Government. These basic objectives must not be sacrificed or compromised. While I believe the plan I have submitted is sound in its basic objectives, we are not ruling out compromise where compromise does not violate the basic principles of our proposals. I welcome the development of the new plan sponsored by Senator Kennedy and Congressman Mills, which includes many of the same features as the Administration proposal, and I believe that the proposal sponsored by Senators Long and Ribicoff focuses well deserved attention on the problem of catastrophic illnesses. Members of the House and Senate have made constructive proposals which deserve consideration. However, major differences remain. The Kennedy-Mills proposal would be administered almost totally by the Federal Government and would be paid for by increasing your Federal payroll taxes. It would be a compulsory plan, forcing the participation of those who do not need or want coverage as well as those who do. The Long-Ribicoff alternative proposal would also be directly administered by the Federal Government, but in most cases it would only offer coverage for catastrophic illnesses and leave participants unprotected against many other substantial health costs covered by the Comprehensive Health Insurance Plan which I have proposed. The Administration plan would offer every American broad and balanced health protection through one of three major programs: Employee Health Insurance would cover most Americans and be available through their jobs. The cost would be shared by employers and employees on a fair basis. An improved Medicare Plan would cover those 65 and over and would include additional medical costs and benefits not included under the current Medicare system. Assisted Health Insurance would cover low-income Americans, and persons who would be ineligible for the other two programs, with the Federal and State governments paying those costs which are beyond the means of the individual insured. The medical care offered by these three plans would be identical for all Americans, regardless of age or income. Benefits would be provided for hospital care; physicians' care in and out of the hospital; prescription and life-saving drugs; laboratory tests and X-rays; medical devices; ambulance services; and many other forms of health care. There would be no exclusions from coverage based on the nature of the illness-a person with heart disease for example, would qualify for benefits just as would a person with kidney disease. In addition, the Comprehensive Health Insurance Plan would cover treatment for mental illness, alcoholism and drug addiction, in or out of the hospital. Certain nursing home services and other convalescent services would also be included. Home health services, for instance, would be covered so that long and costly stays in nursing homes could be averted when possible. To no group is proper health care more important than to our children. Many conditions, if detected in childhood, can be prevented from causing lifelong disability and learning handicaps. For this reason, children receive special attention under the Comprehensive Health Insurance Plan. Services for children would include preventive care up to age six, and would provide for eye examinations, hearing examinations, and regular dental care up to age 13. There has been a great deal of debate in recent years about health insurance legislation. There are, naturally, divergent points of view on the question of how to provide the highest possible quality of health care for all Americans. Some believe that we should socialize our system of health care. This might make health care available to all, but it would diminish the quality of care available, and destroy the incentive for excellence which motivates those who provide our health care. Others believe we should do nothing. This would mean that fewer and fewer Americans would have access to the kind of care which we are capable of providing. Neither course of action, or inaction, is acceptable. What we must have is a creative relationship between Government and our private health care system which provides the best possible care for all at a price that all can afford. Sometimes the best way to measure what we can accomplish in the future is to look at what we have achieved in the past. A generation ago, polio was a deadly crippling disease striking down rich and poor alike. The man who served longest as President of the United States spent most of his adult life as a cripple because, at that time, there was no known way to prevent or cure polio. In my own family, two of my brothers, one older and one younger, died of tuberculosis because, in the nineteen twenties and thirties, tuberculosis was still an uncontrolled killer distase. Today, both of these once dreaded diseases are no longer a threat to the American people. In the same way, if we work together-the people, the President, the Congress and with other nations as well-we can make dramatic progress against other dreaded diseases such as cancer and heart diseases. Equally important, we can make the best possible medical care accessible to all of our citizens, young and old, rich and poor. The Comprehensive Health Insurance Plan which I have proposed can accomplish this. I hope that the Congress will continue to move promptly on this problem, so that, in the future, we will be able to look back on 1974 as the year in which America, long the wealthiest nation in the world, acted decisively to become the healthiest nation as well. Thank you and good afternoon. The CHAIRMAN. Senator Dole has prepared a statement for this hearing which I will place in the record at this point. I also have one from Senator Fannin. [The statements referred to follow:] STATEMENT OF SENATOR PAUL FANNIN Mr. Chairman: Early in the 92d Congress this Committee held 3 days of hearings on proposals to establish a program of national health insurance. Those hearings were designed, as these are, to take testimony from interested individuals and groups in anticipation that action in the House of Representatives would be forthcoming on the challenging issue of health care. As it turned out, the hearings in 1971 were slightly premature as the House did not take action on the proposals it was considering and consequently very little progress occurred on national health insurance legislation. Today, 3 years later, as we begin another series of hearings on national health insurance, we are assuming that the conditions for enacting a national health insurance program have changed to the point that approval of a bill in the House is considered possible. These hearings, therefore, anticipate legislative progress in the enactment of a national health insurance program. If the predictions are correct that national health insurance is an idea whose time is come then perhaps there is a chance for reaching agreement on such a program this year. But, as I see it, there are still numerous issues to be resolved and it will be my objective in these hearings to explore those issues and hopefully to determine whether or not sufficient agreement exists concerning the particulars of national health insurance to enable us to draft an agreeable bill. Mr. Chairman, the issues which confront the development of national health insurance legislation are not insignificant. They are basic issues and how we respond to them in terms of legislative resolution will have a profound impact not only on the costs of health care, but on the health care system itself. Among these basic issues which I intend to explore in these hearings are the following: First, with coverage under private health insurance programs being expanded and extended, including catastrophic illness, what is the justification for a national health insurance program? Second, if a national health insurance program is justified, shall government dominate that program or act in partnership with the private sector? Third, if partnership with the private sector is acceptable, what shall be the respective roles of government; both state and federal, and the private health insurance programs in the administration of a national health insurance program? In addition to these very broad issues, there are a number of specific issues which need to be considered. Among these are: First, what would be the inflationary effect of a national health insurance program? Second, what governmental policies are best suited to regulate health care costs without seriously damaging the capacity of the health care system to do its job? Third, how will a national health insurance program affect other components of the health care system; such as manpower, and the delivery of services? Fourth, in financing a national health insurance program, what level of costs should employers and employees assume in the payment of health care services? And. Fifth, what would be the effect of comprehensive benefit packages on the existing capacity of the health care system to provide such services? There is a basic theme that runs throughout these basic issues; the role of government, the effect of government in the private sector, the capacity of the existing health care system to effectively handle a national health insurance program, and finally, the costs of such a program and how they are financed. How each of the numerous national health insurance proposals respond to these issues will determine whether or not legislation will be approved this year. In addition to these issues there are three other factors which must be taken into consideration in legislating health care programs. In brief, they are credibility, fairness, and acceptability. If a national health insurance program, whatever form it takes, is not easily understood by our citizens and especially health care providers, then the chances for successful implementation will be difficult to achieve. In this connection, how services are to be paid for is most critical in terms of full and complete understanding. If a national health insurance program is enacted with a complicated cost provision and payment mechanism then I can assure this Committee that Congress will find itself embroiled in a protracted conflict. Fairness must accompany credibility if national health insurance is to succeed. If the American citizen perceives any element of unfairness in coverage, in administration, or in the costs for participation, then it will fail for want to support. Finally, acceptability in a national health insurance program must exist if it is to succeed. Obviously, if our citizens do not accept such a program it will fail, but more importantly, if our health care providers, and in particular our physicians, do not accept national health insurance, it will surely fail. I have watched with dismay the increasing attacks on the motives and practices of many of our doctors. This hostility has too often taken the form of legislative proposals and governmental regulations. It seems to me, however, that if national health insurance is to achieve its objectives then such a program must be developed in the spirit of cooperation so that its contents will achieve acceptance. We can legislate a national health care program, but without the elements of credibility, fairness, and acceptance, our endeavors will amount to nothing. Mr. Chairman, there is no question that we are once again embarked on an historic mission as we were when the Congress undertook its work on Medicare and Medicaid nearly ten years ago. Our experience with the costs and administration of the Medicare and the Medicaid program should caution all of us in pursuing the establishment of a national health insurance program. We dare not commit the same errors for the stakes are considerably greater in developing a program the magnitude of a national health insurance program. |