STATEMENT OF GEORGE MEANY, PRESIDENT AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORANIZATIONS BEFORE THE SUBCOMMITTEE ON HEALTH OF THE WAYS AND MEANS COMMITTEE ON NATIONAL HEALTH INSURANCE November 6, 1975 Mr. Chairman, four years and 12 days ago, I testified on behalf of the AFL-CIO before the full Committee on Ways and Means in support of the National Health Security Bill introduced by Representatives Corman and Vanik, and many others. In those four years, health expenditures have increased 50 percent to more than $118 billion for fiscal 1975. Total federal expenditures for personal health services have increased 86 percent to an estimated $28.6 billion for fiscal 1975. Federal expenditures for Medicaid have nearly doubled in that time. - 8.3 percent Today this nation is spending more than ever before of the total value of the goods and services it produces for health care. And the sad fact is that despite all this money, despite the finest technology in the world, despite the greatest medical schools and the most highly-trained despite all this, Mr. Chairman, the American people are not any doctors - healthier. One thing that has not changed during the four years is the status of action on national health insurance. It is still at Square One. There have been two national elections in that time. Many of the successful candidates had pledged themselves to action on national health insurance. There have been numerous public opinion polls which indicate strong and growing public support for a program like Health Security. - One of the principals in the national health insurance debate organized medicine has put forth a new proposal which, for that organization and only that organization, could be called "more liberal." The problems of access, cost, waste, duplication, poor quality the undeniable health care crisis that exists in America have become more - critical. (1) Let me make it clear, however, that the past four years have not been entirely futile. The issue, the alternatives and the necessity for action have never been in sharper focus. There have been, and continue today, efforts to confuse the question, particularly on the matter of cost. On this issue there has been honest confusion, honest disagreement and, regrettably, dishonest scare tactics. So, our testimony here today will be frank: what we are for, what we oppose, and our views on the major controversies that this subcommittee must resolve. In our opinion, a national health insurance program faithful to that * Incentives for reform of the health care delivery system. Additionally, it should be pointed out that these items reinforce each other. We believe it is essential to have universal coverage if administrative overhead is to be kept to a minimum. controls are also cost controls. Similarly, some of the strongest quality In my testimony, I intend to cover these points. However, there is one overriding question that dominates debate about national health insurance. And that is cost. How much will it cost? Appended to my testimony is an excellent article by Dr. Rashi Fein of Harvard Medical School which places the cost issue in perspective. urge every member of the subcommittee to read this article. I - The bottom line cost of Health Security --the $100 billion figure that attracts the wrath of editorial writers and the attention of political speechwriters is both its biggest drawback and the major source of the program's strength. One hundred billion dollars is an incomprehensible figure. One is tempted to say that anything that costs $100 billion isn't worth it. But $100 billion is what this country is spending on health care today. - If Health Security were enacted tomorrow, its cost would not be $100 billion in addition to the $100 billion now being spent as some of its opponents would like you to believe. Its cost would be the same $100 billion that is now being spent. The health care system in America is a $100 billion industry right now. We a new health industry when we are not talking about creating a new enterprise speak of national health insurance. - - Health Security would take the same money that is being spent today by individuals, insurance companies and governments to purchase health care for some individuals, and use that money to purchase health care for everyone. So, while federal expenditures for health care would increase, it would only increase by the same amount that other expenditures for health care are reduced. The pie is the same $100 billion. The difference between all national health insurance proposals is how that pie is divided up. That does not mean that there isn't a dime's worth of difference between the programs, since they would all cost about the same amount. There are vast differences. - the First, the total cost of Health Security would be out in the open bottom line would be clearly visible to everyone. The true cost of other proposals would be hidden in many different budgets, millions of out-of-pocket expenditures, and hundreds of insurance company forms. Secondly, only Health Security would use that money to purchase health care for everyone. Finally, and most importantly, because Health Security has one budget, it is the only program that could effectively control its future cost. There are those who say the federal government can only "afford" a $2 billion or $8 billion program. That is the height of political irresponsibility. Two billion for a worthless catastrophic program or $8 billion for the Nixon-Ford program would be like pouring money down a drain. Health Security is a new and different financing mechanism -- a new way, a better way of spending old dollars. we cannot afford is to continue to spend it in the same way. This cost issue - - What which is really a non-issue continues to confuse the debate about national health insurance. It is a recurring theme that is intertwined in a host of side issues. Hence, we will return to it often in our discussion of the nine essential elements of Health Security. Comprehensive Benefits - Only Health Security provides comprehensive health benefits without deductibles or co-insurance, which are barriers to prevention care, early diagnosis and treatment. The reasons for comprehensive benefits are quite basic. Health services follow the dollar. In the '30s and early '40s, when voluntary health insurance was mainly insuring hospitalization, the use of hospital services increased. When insurance was extended to surgery, the number of operations increased. Similarly, the rapid expansion major medical and catastrophic coverage has diverted health manpower and institutional resources into high-cost, specialized, technological care. This space-age medicine may be important where and when it is really needed, but it helps relatively few poeple. At the same time, very few private health insurance policies cover immunizations, laboratory and x-rays (except in confirmation of a diagnosis), well-baby care or physical examinations. Unless a national health insurance plan finances the complete range of Programs that rely on costdeductibles and co-insurance would continue emphasis care, it distorts the best pattern of health services. sharing by the patient - - on treatment for acute illness in expensive hospitals and high-cost treatment by specialists. Deductibles and co-insurance are barriers to health care, which discourage individuals from seeking proper preventive or early treatment. Prepaid group practice plans, now often called HMOs, have proven people well rather than treating them only when they are ill. Health Security is criticized for providing comprehensive benefits without deductibles or co-insurance. Opponents make two basic arguments: That deductibles and co-insurance control costs by making those who use a service pay part of its cost. Without some type of co-payment, the system would be swamped with malingerers seeking health services for every real or imagined illness. The facts do not support these arguments. Actually, co-payments increase, rather than decrease, the total cost of health care. They impose Deductibles and co-payments limit the liability of insurers and the government. They constitute a convenient escape hatch for dealing with rising Allow me to point out two experiences with co-payments one in Canada under national health insurance and one in California under Medicaid. In Canada, deductibles are not permitted under the national health insurance program, but co-payments are. This modest co-payment did result in an 18 percent reduction in services for the poor, but an increase in physician services for the rest of the population. Thus, total utilization increased rather than decreased after the introduction of co-payments. The only effect of co-payments was to shift services from the poor to those able to pay. The California co-payment experiment imposed a modest $1.00 charge for the first two visits to a doctor and 50 cents for the first two drug prescriptions each month. The experiment compared a group of AFDC families with co-payments to a |