Mr. Chairman, the work ahead will be long and difficult but I did want to take this opportunity to place this challenging issue in some perspective before these hearings begin.

Thank you, Mr. Chairman.

STATEMENT OF SENATOR BOB DOLE

Mr. Chairman: Let me express at the outset of these hearings my belief that we in America today are fortunate in having the degree of technological innovation skill and competence demonstrated by our health care system and personnel. I do not believe any other country even remotely approaches our medical system on these points, or on the devotion or selfless concern of the individuals who provide that care.

Unfortunately, it is also true that there are problems which exist. And all Americans do not fully benefit from our great national health care assets. These facts are not hard to understand when we see that an average day in the hospital costs upwards of $110; when the average cost of delivering and caring for a new baby approaches $1,000; and when the cost of care surrounding a major terminal illness, like cancer, exceeds $20,000. And even more regrettably, many Americans do not have adequate or even partial-protection against these costs.

MANY PROPOSALS

Millions of Americans in and out of the health care fields are concerned about health problems in our country. And this rising awareness has led to broad efforts by many individuals and groups to provide answers and solutions for these problems.

Many of these efforts have resulted in legislative proposals within the jurisdiction of the Senate Finance Committee, particularly in the area of national health insurance.

MODERATE APPROACH

In reviewing the problems we now confront and the possible solutions for them, I have said that, faced with the two extreme courses of doing nothing or nationalizing the entire health business, Congress will pick a middle ground for taking positive action to build on the good points of today's system, while seeking to devise solutions for some of its most serious defects. I believe this prediction may come true.

MOMENTUM BUILDING

Beginning last year with the introduction of S. 2513, the catastrophic health insurance and medical assistance reform bill, which I cosponsored, real legislative momentum was established. It gained further impetus this year, when the administration put forward S. 2970, its own revised and expanded comprehensive health insurance plan, and last month when Senator Kennedy, in conjunction with Chairman Mills, of the House Ways and Means Committee, unveiled their new health insurance bill, S. 3286. The effect has been to put health insurance on the front burner in the legislative kitchen where it belongs.

The catastrophic bill, the administration plan, the Kennedy-Mills proposal and most of the others embrace large areas of common ground. This fact coupled with a widespread evidence of willingness by many of the major proponents to enter into constructive discussion of the differences which do exist has greatly increased the prospects for securing passage of a national health insurance law this year.

HEARINGS BEGIN

Perhaps the best indication of this possibility is the start of these Finance Committee hearings. Last month, Ways and Means Committee hearings were inaugurated, and the Finance Committee's unusual step of holding its hearings prior to passage of a House bill clearly signals the spirit of this determination and conscientious effort which is essential for passage of such important and farreaching legislation.

I do not want to be overly optimistic, but I believe that the good will of all sides and a great deal of hard work can realize one of the most important health care goals of America in 1974.

BASIC STANDARDS

I believe we should judge any national health insurance proposal on these criteria:

First, it must be directed toward providing uniform, high quality, equal health care for every citizen in every part of the country-regardless of economic circumstances. And second, it also must be aimed at bringing the cost of this care into manageable bounds for the private citizen and Government alike-through reducing the incentives for expensive hospitalization, and by focusing on the less costly alternatives of outpatient care and preventative services.

With these points in mind, I believe the Comprehensive Health Insurance plan, the Kennedy-Mills bill, and the Catastrophic Health Insurance bill-and several of the other proposals before us-provide a sound basis for compromises and progress toward a goal which knows no political, regional or ideological boundaries-the good health, well-being and economic security of every American.

SUBSTANTIAL SIMILARITIES

I would say that the three plans have a number of substantial similarities. The costs and basic benefits standards under the three proposals are much alike, their levels of catastrophic costs protection lies within a reasonable range of alternatives, and the tie-in to medicare and other Federal programs would be approximately the same under each. These are highly important areas of agreement, and they are a basic reason for my growing optimism about the passage of a Health Insurance bill this year.

But the differences should not be glossed over or ignored. There are major conflicts to be settled. And the ways in which they are resolved will spell the difference between major progress toward meeting our problems and stagnation or possible disaster for the quality of health care in America.

The hearings we begin today are extremely important. They offer a great opportunity, and they provide a major challenge to the legislation process. I look forward to learning the views of the witnesses who will appear before us and to participate in the committee's deliberations on this most important area of concern to the American people.

The CHAIRMAN. Now, while it is obvious that at the outset some of us support one proposal or another, all of us should gain from these hearings information providing the basis for constructive changes as we seek workable answers to the health care financing needs of the Nation. The issue, after all, is not who is right, but what is right.

In that spirit, Mr. Secretary, we look forward to hearing your testimony here this morning.

STATEMENT OF HON. CASPAR W. WEINBERGER, SECRETARY, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, ACCOMPANIED BY STEPHEN KURZMAN, ASSISTANT SECRETARY FOR LEGISLATION; DR. CHARLES EDWARDS, ASSISTANT SECRETARY FOR HEALTH; WILLIAM MORRILL, ASSISTANT SECRETARY FOR PLANNING AND EVALUATION; JAMES B. CARDWELL, COMMISSIONER, SOCIAL SECURITY ADMINISTRATION; AND HOWARD NEWMAN, COMMISSIONER, MEDICAL SERVICES ADMINISTRATION

Secretary WEINBERGER. Thank you very much, Mr. Chairman, and members of the committee. We are very honored indeed to have the opportunity to be with you and to have hearings on this important measure this early in the year.

I am accompanied by Stephen Kurzman, who is our Assistant Secretary for Legislation; Dr. Charles Edwards, who is the Assistant Secretary for Health; William Morrill, who is the Assistant Secretary for Planning and Evaluation; Bruce Cardwell, who is the Commissioner for Social Security; and Howard Newman, who is the Commissioner for Medical Services Administration.

We have all of these gentlemen here to emphasize to the committee the importance that we attach to this proposal and to be of maximum assistance to the committee in the very likely event that a I will not be able to answer all of your questions.

But we are also very pleased to have the opportunity to be the first witness in your 1974 consideration of proposals to improve health insurance available to the American People.

Mr. Chairman and members of the committee, my statement is long. I am going to try to paraphrase it, and will indicate where I am leaving out portions in the interest of getting on to your questions as soon as possible.

Obviously if any of the members want to have me go over and read all of it, I will be glad to do that. I would also like to have permission to have the entire statement included in the record.

The CHAIRMAN. Mr. Secretary, we will print the entire statement exactly as you would like to have it presented for the record.

I would prefer that in your presentation that you skip over some things rather than read as rapidly as you are capable of reading, because I would like to follow it carefully, everything you say here. You are one of those who is capable of reading so rapidly, even aloud, that some of us have difficulty keeping up with you.

Secretary WEINBERGER. Well, I particularly want you to keep up this morning, Mr. Chairman, so I will try to slow down. I appreciate it. We feel that inadequate health insurance can severely limit the life span of a person who cannot afford vital health services when they are needed, and there are many such in this country, and we think inadequate health insurance can severely limit the life potential of people who could not afford preventive or corrective health measures, and inadequate health insurance, in its most virulent form, can, of course, as you have pointed out, wipe out financially even an affluent family.

So we believe that we are discussing a matter which affects everyone, and we believe that nothing should deter us from adding this year comprehensive health insurance protection to the basic security guarantees that America offers.

Because this issue is so basic and so complex, affecting every citizen and scores of vital interests and establishments, the Congress understandably turns to it in depth only once every decade or so. And this year, 1974, is one of those times, one of those moments that can and should be converted into historic social progress.

So, I urge at the outset, Mr. Chairman, that we do not let this opportunity pass without taking action, and as I am sure you know, I am urging particularly that we should firmly reject the views of those few who are now counseling that no action be taken until some vague future time when they believe that the plan that they personally favor could be enacted without change.

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I do not think such a time will ever actually arrive, and I feel certain that you, Mr. Chairman and members of this committee, have shown by the scheduling of this hearing and by your comments that such a misguided delay will not be permitted to occur. And we are delighted to have that.

Right now, as we meet, some 25 million Americans have no health care insurance at all, and millions more have clearly inadequate health care protection, protection that may become further eroded hat by inflation as we move into a period in which we have no statutory health care cost controls for the first time since the middle of the 1971.

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Less than half the people under 65 have protection against catastrophic health care costs, and almost none of those over 65 have that kind of protection, and this at a time when, just for example, the costs of a terminal cancer can exceed $20,000, easily.

Too many of the health insurance policies are sort of a standby kind of equipment, not furnishing protection until one is stricken and then protection only in the most expensive facility, a hospital. Therefore, we would argue that in addition to rejecting the unwise counsel of those who say we should act only sometime much later when conditions they believe will improve for them, I would argue just as strongly against partial action. The attractions of ne taking a half step or a quarter step in the face of a complex problem are certainly understandable. But given the interactions between all of the parts, dealing with only a part of our health care system risks making the entire problem very much worse.

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So I think we can all agree on the need to improve health care financing for the lowest income Americans, and your bill addresses that problem, Mr. Chairman, and to assure that all Americans have protection against truly catastrophic health expenses, and your bill addresses that problem. But these, we believe, are only minimum objectives. In our view, the American people deserve and need more of protection against health care costs than would be provided by what we believe is only a partial solution.

A program that provides better protection for the poor and the t small percentage of the population who do incur catastrophic expenses would do little to assist the many families in the $5,000 to $15,000 income range who face growing problems in their attempts to finance needed medical care. It is these families now that are too often forced to accept a shallow health care insurance coverage or none at all. And it is these families who are often forced to obtain individual coverage, for which the payout is less than 50 percent of the premium dollar, and it is these families for which major illness poses the greatest threat of defeat in their fight for a ༢ decent standard of living.

If we provide comprehensive health insurance for the poor and ར we do not assist these other Americans to obtain better and less expensive coverage, then I think we will be widening even more the gap between excellent protection for the poorest and inadequate coverage obtained by those moderate and middle income families. who have the most difficulties now in obtaining such coverage. Better protection than they now have is an essential, and if they do

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not get it, I think that we will fail to meet the reasonable expectations of the American people.

We believe a comprehensive approach is essential to protect all Americans against the rising costs of health care and to meet the gaps left by existing policies. If we only take a half step forward, it will promote such major problems as overuse of hospital services and underuse of preventive services and outpatient care and excessive rates of inflation.

Now, the problem has been raised at the outset, Mr. Chairman and members of the committee--and I would like to devote just a moment to this-that any kind of major new health insurance program will put too great a strain and burden on existing resources, and thereby contribute to inflation. We do not believe that is so, and I would like to mention just two or three points in connection with that problem.

The central reason for national health insurance is to improve the financial access to care for those 25 million persons who do not have any insurance coverage at all, and for the many millions who have inadequate or unbalanced coverage. On the surface this suggests that large increases in demand on our health care system would occur automatically. I do not think that need be nor would be the result. Many of the persons who lack health insurance do get some health services, and many spend a substantial fraction of their own income on medical care, often much more than they can afford. Their access is erratic, and delay frequently means higher costs to

them.

We think comprehensive health insurance can achieve a significant reorientation of the use of services, freeing up resources in some areas to meet needs in others. And by providing balanced coverage with cost-sharing that is uniform over all services, demand can be shifted from acute and inpatient to preventive and ambulatory care. And it is a shift that we think is essential, that we think would occur. We think it would be a very good thing if it occurred, and we think it would not add to the demand, the total demand in such a way that would strain our resources.

Comprehensive health insurance will increase demand, of course, and we have sought to incorporate cost-sharing in our proposal to keep that increased demand within reasonable bounds. And we think that is an essential feature of any bill. Our actuaries have projected that the increase of national health care expenditures as a result of our proposal would be about $6.5 billion, an increase for covered services of about 8 percent. And we think that 8 percent can be handled quite easily with the resources that we have and will have.

Broken down by types of services, increases from our plan can be expected of about 3 percent for inpatient services, 9 percent for ambulatory care, 10 percent for physician services, 15 percent for dental services. In other words, we think demand would increase in ways that would improve the total distribution of health resources and be well within the increased resources that we will have.