T It has been a year in which millions of America's laid-off workers joined both the lines at the Unemployment Office and the swollen ranks of 40 million Americans who face disaster in the event of even a short acute illness or injury because they have no health insurance at all. It has been a year of doctor strikes, public hospital overcrowding, private hospital and nursing home profiteering, and scandalous abuse of the weakest and least able of our senior citizens. And it has been a year in which health costs have gone completely out of control, with physician fees escalating 40 percent faster than other items in the Consumer Price Index and hospital charges soaring 105 percent faster, while the hospitals placed the blame on their own employees whose wages still averaged under $7,800 per annum in all hospitals and at the poverty level of $5,800 in small hospitals. Mr. Chairman, these are the types of problems with which your Committee must deal, and not merely the problem of which new financial patch to apply to a defective and already over-costly health care system. These are the problems which even the Administration has noted, and ignored on grounds that the Federal budget can absorb no new spending programs. While we should be reaching out to assure that every child has access to immunizations, and the family the means to pay the costs, the Administration wants to tighten up and shift even part of the meager existing Federal support for these services to the States and to the family budgets. The Administration's policies would divert minimal Federal amounts in prevention and cause billions in the treatment costs to the States and families in future years. They would throw millions of additional Americans on to the medical dole. Health is a great aspiration of the American people, but the budget cutters in the Administration suffer from severe buck fever when we face serious health problems. Although it has finally promulgated regulations on dual choice under the HMO legislation signed into law 20 months ago, the record is one of indecision and over-reliance on the private sector to which the Administration itself constantly offers magnificent opportunities for inaction. Placing total reliance on the failing private insurance industry to solve our health care crisis, the Administration 11 months ago shelved for a year its own national health insurance plan. Whether or not the shelf life will be extended is not yet clear. What is clear is that the problems which caused an initial, if tardy, Administration response have not been solved and, indeed, have been more fully exposed to public view. Sometimes it seems that the medical and medical insurance bureaucracies have ruled out compassion in dealing with people, but it is the fearful cost of health services that, rightly, draws most attention to the problems. When the Committee for National Health Insurance was organized in 1968, Federal, State and local governments spent $20 billion for health purposes. Last year, costs of the same services escalated to $41 billion. Two years from now, the governmental budgets will be emptied of over $55 billion for health care unless changes are made in the system. Total costs, private and public, now are an estimated $118 billion annually and consume 8.3 percent of the GNP versus $54 billion and 6.5 percent of GNP in 1968. It is, therefore, not a question as to whether the Congress should delay action on the issue of health care. The crisis has moved to such a stage that you will have no choice but to provide for an inordinate number of additional billions of dollars or say to the elderly and the poor, "We'll have to take back what we've given you." In their recent national poll, the Cambridge Survey found that only 13 percent of the American people felt the present health care system was functioning relatively well, while 57 percent demanded a total national health insurance program as provided in the Health Security Act or even a complete Federal takeover of the entire system with doctors placed on salaries. The depth of public dissatisfaction should be underestimated only at one's political peril, even though health may not command the urgency of the problems of the general economy and unemployment. Federal employees will receive phantom pay raises next January because of 35-to-45 percent higher health insurance premiums which threaten to wipe out most of the five percent wage increase. The situation is no less disturbing in the private sector where higher premiums also mean lower wages. We all purchase health services in the same sellers' market, and the prices there are completely out of control. To the extent that health care costs and health insurance premiums continue to absorb more of the hard-earned dollars of the American worker than of his foreign counterpart, the competitive position of American business and industry will continue to be weakened. Jobs as well as paychecks will be cut. THE AMA BILL The illness that afflicts the health care system is now generally diagnosed. In order to provide effective treatment, it should be clear that each of the causes must be dealt with, and dealt with concurrently. Unfortunately, all but one of the major bills before your Committee, Mr. Chairman, choose to ignore most of the causes or even the symptoms of the illness. An example is the plan developed by the American Medical Association, which resembles the previous Nixon and Ford plans. While it is generally agreed today that every American should have health insurance coverage, the AMA insists that coverage must be voluntary and not universal-or as they call it, "compulsory.' This bill (H.R. 6222) asks you to pass a law to mandate employers to offer second-rate private health insurance policies, purchased from carriers of the employers' choice, to all employees. However, the employee could be required to pay 35 percent of the premium costs. The marginally-employed and the lowincome employed (for example, those hospital employees with incomes of only between $5,800 and $7,800 per annum) would be reluctant to pay about $350 a year for their share of the insurance. Many could not afford it. Others would not want it after they examined the policy and found that they and their families would still be liable for up to $2,000 per year in co-insurance payments, or up to $1,500 if they were single. Many services would be limited, others excluded entirely. The AMA bill is typical of others which would mandate employer-employee insurance. These bills provide for the most inequitable financing of services. An employee earning $6,000 per annum would pay as much as an executive earning $60,000. Since the AMA bill is totally lacking in cost controls, even greater escalation of medical costs than at present would occur should this approach be enacted. Since quality controls would be absent and more dollars present, even greater incentives would be provided for over-utilization, over-prescribing and unneces sary surgery. Mr. Chairman, doctors are not ogres. We believe that the large majority of physicians are dedicated, hard-working, competent and concerned individuals. Our quarrel is not with our doctors. Our quarrel is with a system which corrupts its own members and fails to meet the needs of the people-with a system which produces too few doctors, rewards inefficiency and ineffectiveness, leaves millions unserved in rural America and the inner cities and forces consumers to pay atronomical amounts for episodic care. The AMA bill would not remove patient frustrations which plague the doctorpatient relationship. It would only extract higher fees from patients and make solo practice, fee-forservice even more rewarding for doctors than at present. Health care would for the foreseeable future be locked into this corrupting system which lies at the root of many malpractice actions. Abuses would be ignored. In the Health Security Bill (H.R. 21) which we support, provision is made to continue the fee-for-service system, but to introduce essentially needed controls on the cost and quality of the services delivered under this system. Early in this century, in a preface to his book, "The Doctor's Dilemma," George Bernard Shaw wrote, "That any sane nation, having observed that you could provide for the supply of bread by giving bakers a pecuniary interest in baking for you, should go on to give a surgeon a pecuniary interest in cutting off your leg, is enough to make one despair of political humanity." LONG-RIBICOFF BILL Those who believe that progress must be made incrementally regard the LongRibicoff Catastrophic Insurance Plan as an acceptable response to the health care crisis. We believe, however, that this bill has serious and even fatal flaws. While the bill lacks any provision for representation of the consumer, it is clear that it would greatly strengthen the position of the private insurance companies. A $30 billion industry which has failed to provide universal coverage, failed to control medical costs, failed to assure quality and which has enjoyed great success to date in defeating real national health insurance proposals would be further enriched by the Long-Ribicoff bill. By law, the major share of the estimated $8.9 billion additional first-year costs of the program would flow through the insurance industry, which already retains $4 billion for its operating expenses and profits in ineffectually administering current health insurance plans. We have provided in Appendix A, case histories of people who would not be helped by catastrophic insurance. Mr. Chairman, catastrophic health insurance won't help people because it is based on a myth. The myth is that people already have good basic coverage but require protection only against catastrophic illness. The reality is that people do not have good basic coverage. Some do, most do not. In its "Forward Plan for Health," even the Administration concedes this point, as follows: "The fact that most of the insured population has inadequate benefits is . . . troublesome. Most basic insurance policies exclude preventive care services, ambulatory care, and prescription drugs and medical devices, and many policies still exclude pre-existing conditions and congenital defects. In addition many policies include only limited coverage of other necessary services, such as mental health care. The usual protection against medical and financial catastrophes is also inadequate. About half of private policies limit total benefits in a lifetime to $10,000 or less, and almost two-thirds of current policies limit hospitalization to 60 days or less. In addition, virtually all policies have no upper limit on the amount of cost-sharing a patient is responsible for, regardless of how much has already been spent." In other words, catastrophic insurance would be like building an archway with no foundation. Most people would be wiped out long before the trigger point for any benefits. Mostly the rich would benefit-rich providers, rich insurance executives and rich patients. Working people would pay the bills. Catastrophic health insurance has deductibles of 60 hospital days and $2,000 in physician fees and medical expenses. This is a bill with a deductible of $11,500. (It is only in the rare situation that a patient would incur $2,000 in physician insurance fees in a year without a period of hospitalization). Catastrophic health insurance will not provide any benefits at all to 99.5 percent of the American people, but it sounds good-like the organ grinder whose playing was supposed to soothe the people buried alive by the earthquake debris. Mr. Chairman, there are other important reasons why we would oppose catastrophic health insurance as an alternative to comprehensive health insurance. It would create greater imbalance and inflation in the health care system by adding to incentives for very expensive care and disincentives for preventive care. It would distract the Congress and the public from serious consideration of a comprehensive national health insurance program on the theory that the most serious problems were being dealt with by providing coverage for catastrophic expenses. It would invite providers of services to raise prices, especially for the seriously ill and dying, on the excuse that the family or individual would thereby become eligible for catastrophic benefits. The net result would be a price rise in all aspects of health care. It would create incentives for longer hospitalization and other institutional care. There would be tremendous pressure to keep the patient in the hospital until the trigger point for catastrophic was reached. It would weaken efforts to institute quality controls since catastrophic coverage would not take effect until after the 60th day of hospitalization (and consequently any controls written into the bill could not be instituted until after the 60th day of hospitalization). Because of the high deductibles and the overwhelming emphasis on major illness, it would further distort the allocation of national health care resources, turning them further away from health maintenance, early diagnosis of disease, home health care, and other neglected aspects of the system. It would strengthen the hand of the commercial insurance companies vis-a-vis national health insurance. It would aggravate the maldistribution of services caused by eco since the major beneficiaries of catastrophic coverage would be th able to spend the deductible amounts. ...went It would further skew manpower away from rural and small tow increasing the funds available to pay lucrative specialists in the u It would increase the cost of Medicaid and Medicare and other G programs. (By pouring more money into the private sector, simultaneous acceleration of costs of public programs would occur). It would increase the fragmentation and complexities of the financing system. We have provided in Appendix B, comments on Title II of the Long-Ribicoff Bill. HEALTH SECURITY Mr. Chairman, we are convinced as are a majority of the American people, that our nation needs a universal, comprehensive national health insurance program. This country is one of the two or three top spenders on health care in the world. Yet the United States is the only industrialized nation in the world that does not have a national health program for its people. We do not need to spend more money; we are already spending too much. And we know from direct experience in our own Union that the cost problem is getting worse and worse. Let me put it to you in terms of the average auto worker in Michigan whose family health insurance premium amounts to somewhere over one month's wages-monies he could have in the pay envelope if they were not diverted for this high priority need. By estimates of the Department of Health, Education and Welfare, unless there is intervention in the system, by 1980 he will have to forego two months' wages for the same benefits. We need to ask ourselves and we need to ask our elected representatives in the Congress whether this is a situation this nation can continue to tolerate. Similarly with Medicare and Medicaid. The OMB estimates that costs which totalled $10 billion in 1970 will increase to $25 billion in FY 1976 and total $52 billion in FY 1981. Unless this Committee and this Congress does something about the health care system, there is no escaping the fact that you will have to provide the $27 billion more for the same inadequate health programs we have today. But it would be wrong to look only at the dollar sign in terms of health care, It would be wrong to emphasize only that this country spends far more per capita on health care than any other nation in the world and that by most of the accepted indices of health studies we lag behind almost every other industrialized or semiindustrialized nation. We need to look at the quality of the care we are getting. We need to ask ourselves whether the many studies and reports of needless surgery should produce action programs to correct the situation. We should be deeply disturbed by the large numbers of us who end up in hospitals each year as a result of reactions to prescribed drugs-some estimates indicating that as many as 80 percent of these reactions could have been avoided. We need to worry when we are told that as many as 30 percent of all the x-rays taken are either inaccurate or unreadable. We should be demanding far more aggressive measures to see to it that the large numbers of inaccurate or even wrong findings of laboratory tests are reduced sharply and possibly eliminated entirely. How on earth can we expect to get adequate treatment from the health care system if it is based on faulty tests? In the interests of “economy”, those who would do nothing advocate the incremental or step approach. They acknowledge the problems in health care to which I allude. But they say, "Let's try to get them fixed one by one. We should not try to do it all at once." Mr. Chairman, creeping incrementalism will not shore up our collapsing health care delivery system. A complete breakdown would be the more likely result of adding catastrophic insurance and other incremental patches to the Medicare and Medicaid models. The incremental approach is reminiscent to Huxley's frogs. He kept them in A tank and raised the temperature of the water very slowly, only about one degree a day. Within two months the frogs were boiled to death without knowing what was happening to them. If the temperature had been turned up rapidly, they would have jumped out of the water. If we enact a national health plan which will generate real reforms, we can preserve the best in our present system and replace its worst features. If we add patches, the whole system may go under in a few years. Those who favor incrementalism, completely abandon cost and quality controls, and systems improvements. Unless these are built into any plan, the plan will do nothing but exacerbate the problems it is trying to correct. Incrementalism has been the approach which we have followed in the United States in the last 30 years. It is precisely this approach which has led us to the sad state of affairs in health today. The Health Security program through seeing all of the problems in relation to each other, and through using the leverage of large funds coming into the system, proposes to begin to integrate the necessary corrective measures in restructuring the system. It is admittedly evolutionary and it will take time to produce progressive change. But it sees the problem as a whole and deals with it in like manner. Delivering health care to every American depends on the development and organization of the available resources, and an equitable financing system. It depends on the leverage and support of a national health insurance plan which will create the resources and provide the leverage needed for reforms. Health Security alone meets these standards. Many national organizations-religious groups, labor, senior citizens, health professionals and others-have endorsed the principles of the Health Security Act as essential to the legislation you are considering. The first of these principles is health care as a right, unabridged by any means-tests, work earnings tests or any other requirements. No greater observance of the nation's Bicentennial could be imagined than the enactment of a law which will make real the principle that every American has a right to health care. We believe that the legislation enacted must: Provide for comprehensive health care services, including preventive care as well as diagnosis, treatment and rehabilitation. Provide payment in full for all costs of covered services, including the extraordinary costs of catastrophic illness. Finance all covered services through a Trust Fund based on payroll taxes and general revenues, administered by the federal government. Contain strong quality control mechanisms. Establish prospective reimbursement of providers to control costs, eliminate duplication and reduce waste. Assure effective consumer participation and public accountability. Provide resources, development and distribution in a system responsive to community needs. Of the bills before your Subcommittee, only the Health Security Act measures up to these essential principles. CAN WE AFFORD HEALTH SECURITY? The question of costs was well answered by Dr. Rashi Fein, Professor of Economics at Harvard Medical School, "New parks, roads or bombers represent money for things the people would otherwise not have. But medical care is different; we are already spending $104 billion, and private expenditures account for $63 billion of that total. "So the issue is a non-issue. The question can we, as a people, afford national health insurance, really means can we afford to spend what we are already spending and surely the answer is 'yes'." Understandably, this Subcommittee is concerned about costs to the Federal budget, as well as costs to State and local governments, and to the family budgets. Our consulting actuary has prepared an analysis of comparative costs of national health insurance programs for future years. Using the methodology developed by the Administration, including some assumptions with which we would not necessarily agree, the analysis shows nevertheless that H.R. 21 would, within four years, actually save $21 billion annually in national health expenditures in comparison with the catastrophic insurance program. It would save $25.5 billion in comparison with the Administration's own CHIP plan, which served as the blueprint for the new AMA bill. And it would save $11.6 billion in costs which would otherwise occur as a result of doing nothing. The reasons for the savings are not complex. Under the Health Security bill, all costs would be anchored to budgets prepared and approved in advance. Under H.R. 21 system reorganization would be encouraged, with the concomitant say |