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a dollar a month per person. Labor union leaders, who have a vested interest in shoving the cost of health care onto the taxpayers to free up billions in union health and welfare funds for other uses, argued the cost per capita would be less than the cost of a package of cigarettes a week.

So, Congress plunged in, ignoring the warnings of excessive costs from physicians, economists, and private insurance company actuaries. HEW officials said medicare hospitalization alone would cost only about $900 million the first year, rising in 5 years to a mere $1.7 billion.

What happened! Government statistics show that hospitalization under medicare the first year cost three times more than HEW actuaries said it would. As predicted by insurance experts and others, costs skyrocketed. Medicare in 1976 cost $17.8 billion. Medicare and medicaid together cost $33.1 billion in 1976-an increase of 2.264 percent from 1965. As Senator Talmadge has noted, the estimated cost of these rograms for fiscal 1978 will be $47.5 billion.

Medicare was supposed to be a foot-in-the-door toward full-blown socialized medicine. Remember, the late Aime Forand, speaking in favor of the King-Anderson bill-which became medicare/medieaid—said: “Let's get our foot in the door and we can expand the program after that.” It turned out to be a mighty big foot that just keeps growing.

And if it costs $17.5 billion to partly pay for medical and hospital care for the elderly and indigent, is that not foolish and reckless and irresponsible and dangerous to argue that the Nation can afford full-scale compulsory political medicine for everyone, such as is proposed by Senator Kennedy and by the American Medical Association and others?

Honest people with a serious desire to pursue and expose the truth about political medicine should read "Medicine and the State" by Dr. Matthew J. Lynch and Stanley S. Raphael. It is by far the most objective, most searching inquiry ever undertaken into political medicine and its consequences in the countries of Europe which have had the bad judgment to adopt it. “Medicine and the State" is published by the Association of American Physicians and Surgeons. We will be happy to make copies available to the members of this committee, with the hope that you will study it carefully and digest its message completely.

"Medicine and the State" shows conclusively that when government assumes the role of payor and provider of medical care, the quality deteriorates and the cost goes up, most of the time in quantum leaps.

An important aspect of government intrusion into the field of medicine which congressmen have willfully refused to consider is that government is a political organism which by necessity must impose political decisions on the art and science of medicine. Medicine is an art and an individualistic science: government is a paternalistic political entity. The two are incompatible.

The inherent characteristic of government is to tighten its grip on whatever it gets hold of. In the case of medicare and medicaid, the rising cost, for which government is largely responsible, is used as an excuse to take over the operation of hospitals and, at the very least. to further interfere with physicians.

And that, of course, is a political act which directly violates a political promise made by Congress. That is the promise made in section 1801 of the medicare law that the law could not be used to let government officials or employees exercise supervision or control over the practice of medicine or the manner in which medical services are provided or over the administration or operation of any hospital.

But that is the way it is with politics—the promise to do good is too often the precursor of bad deeds.

We find it difficult to understand the surprise and alarm at the swiftly climbing cost of medicare and medicaid when there appears to be no corresponding surprise and alarm at the out-of-control growth of the power-drunk Government here in Washington. No one seems concerned that the dollar that was worth a dollar in 1940 is worth 19 cents because of the theft called inflation or that even the 1967 dollar is now worth only 54 cents. This thievery by officeholders through inflation is performed under the monopoly power of government to regulate the value of money.

No one in Congress or the White House or the bureaucracy is facing up to the appalling fact that the annual Federal deficit has ballooned an astounding 2,442 percent since 1950, that while private spending for health care since 1950 has increased 797 percent, Government spending has spiraled upward by 1,860 percent, that the amount of earnings and income taken away from citizens and spent by Government has grown from 32 percent in 1950 to 53.7 percent today.

A few noisy people who envy the professional and financial success of the majority of physicians or do not like doctors for a variety of other personal reasons, keep shouting about the rising cost of medical and hospital care. We have listened and listened and we just do not hear those voices shouting their indignation that HEW is getting fatter and fatter and fatter at the expense of taxpayers. Make no mistake—these long-suffering taxpayers are growing mighty tired of this kind of misrepresentation here in Washington.

This Congress is being asked to slap a 9-percent ceiling on the yearly increase in income of hospitals. But we have not seen any proposal from the White House or HEW to limit HEW's spending increases to 9 percent a year. And that is interesting because HEW's budget has grown 973 percent since 1960, from $15.1 billion to an estimated $162 billion for 1978-and that is an average of 54 percent a year.

Medicare and medicaid have not proved anything, except that when Government tackles something it inevitably runs the cost up without improving it-like Amtrak, the postal service, airlines, food stamps, and other welfare programs. Medicare and medicaid simply have not improved the quality of medical and hospital care for their recipients; they have not made care more available; they have just increased the costs.

The truth of the matter is that S. 1470 is in itself a ringing declaration of Government failure in attempting to control and pay for the provision of medical and hospital care for a portion of the population. It is stirring proof of what happens when Federal bureaucrats presume that they are more competent and capable of providing goods or services than private citizens.

Thank you.

S. 1470 would create a ponderous, tangled and complex structure of procedures for reimbursing hospitals and physicians which would be intended to curb costs. What it would actually do is create an injustice on hospitals and physicians by bludgeoning them for a situation caused by the very Government that is wielding the club. It would add to the bureaucratic cost of administering these programs. And when this program also failed because it was the wrong answer to the problem, some new controls would be imposed.

The Government has proved it is incompetent and incapable of providing, regulating and paying for health care services to the elderly and the indigent. It is time that this Congress courageously faced up to that indisputable fact and made arrangements to abandon these disastrous experiments in governmental intrusion into private affairs where it does not belong.

Before these programs were enacted, U.S. physicians gave more than a billion dollars of free care to their patients every year. They are willing now as they were then to assure that no one in this country is denied needed medical care solely because of finances. We assure you the elderly and the poor will be denied far, far less than they are now if these programs are recognized as abysmal failures and abandoned.

We urge that this committee not pass 1470 but deal with the question of Government interference in medicare and medicaid, where it is doing more harm than good.

Senator TALMADGE. Thank you, Dr. Dorrity. I certainly agree with you on one thing—we ought not to expand further coverage until we can get a handle on the costs that we are expending now.

Senator Curtis?

Senator Curtis. I want to say to you, Doctor, in reference to your remarks about inflation and the fact that the chief culprit was unbridled government spending, that you are speaking to receptive ears. The distinguished chairman of this subcommittee, Senator Talmadge, is the author of a constitutional amendment that will compel the Government to go on a balanced budget. He cosponsored mine and I cosponsored his. Mine is slightly different.

He believes that there is much danger in deficit financing. Serious individuals were worried when deficits remained at $2. $3, $4, $5 billion a year. Now we are talking in terms of $50 to $60 billion and it is time to take note; we certainly agree with you. Whether we are talking about hospital expenses or household expenses or anything else, inflation is across the board. The Government cannot escape its responsibilities.

We also believe that, aside from its effect on inflation preventing the continuous rise in national debt, the pay-as-you go requirement will mean good government, because then the Congress will have to consider programs to see which ones are desirable, which ones are absolutely necessary, which ones should have priority and they will have to believe in them enough to say yes, we will raise the taxes to pay for them.

I just wanted you to know that you are speaking to a receptive audience this morning.

In reference to medicare and medicaid, I am not critical of anybody else, but it just so happens that I did not vote to originate, either one of them. At the same time, I feel that the care of those citizens who are unable to get reasonable and adequate medical care from any other source is the responsibility of the Government.

I, however, would like to see that responsibility exercised on the local level and not from Washington. I think that that avoids many problems. It avoids the problems of regulations and control of businesses, operations in the private sector, as well as professional.

My idea of revenue sharing is that you first balance the Federal budget, then you release areas of taxation so that the State can pick

it up.

I am convinced that the American people are very thoughtful, intelligent, generous, and good, and on the local level, the handling of many aspects of welfare, including medical care for those who cannot provide it any other way, would result in not only a better program, but I think there would be more compassionate and helpful care to the individuals who must receive medical care at public expense.

Would you concur with that general statement with reference to local control?

Dr. DORRITY. Absolutely. In fact, I think the first responsibility lies with the families. Then, I think if they cannot handle it, the churches; if they cannot handle it, the community; if they cannot handle it, the cities and counties; if they cannot handle it, then the States. But never as far as the Federal level. I go along with that.

I have a couple of other suggestions. I am pleased to hear your comments about the fiscal responsibility. This has bothered me for a long time and I think that our way out of the mess that we are in is if we return to fiscal responsibility, fiscal sanity, with sound money systems, no compromise for 5 to 10 percent inflation per year.

You cannot lose 5 percent of anything 20 times, or it is gone. At the present time, if we return to sound money, fiscal responsibility, constitutional government and the Ten Commandments, we can ride out the storm. If we cannot, we will hit the bottom.

Senator CURTIS. I have no further questions.

You alluded to section 1801 of the act. I would like to have that printed in the record at this point.

Senator TALMADGE. Without objection, it will be. [The material referred to follows:]

PROHIBITION AGAINST ANY FEDERAL INTERFERENCE Section 1801. Nothing in this title shall be construed to authorize any Federal officer or employee to exercise any supervision or control over the practice of medicine or the manner in which medical services are provided, or over the selection, tenure, or compensation of any officer or employee of any institution, agency, or person providing health services; or to exercise any supervision or control over the administration or operation of any such institution, agency, or person.

Senator TALMADGE. Thank you very much, Dr. Dorrity, for your contribution.

The next witness is Dr. Dave M. Davis, immediate past president, Georgia Psychiatric Association and director, psychiatric services, Peachtree-Parkwood Mental Health Center, on behalf of the American Psychiatric Association and National Association of Private Psychiatric Hospitals.

Dr. Davis, it is a pleasure to welcome you before our committee as a valued friend and a valued constituent.

STATEMENT OF DAVE M. DAVIS, M.D., IMMEDIATE PAST PRESI.

DENT, GEORGIA PSYCHIATRIC ASSOCIATION, DIRECTOR OF PSY. CHIATRIC SERVICES, PEACHTREE-PARKWOOD MENTAL HEALTH CENTER AND HOSPITALS, ATLANTA, GA., ON BEHALF OF THE AMERICAN PSYCHIATRIC ASSOCIATION AND THE NATIONAL ASSOCIATION OF PRIVATE PSYCHIATRIC HOSPITALS

Dr. Davis. Thank you.
With me is Mr. Caesar A. Giolito, American Psychiatric Association.

I am here to present the views of the American Psychiatric Association, which represents 23,000 psychiatrists in the United States, and of the National Association of Private Psychiatric Hospitals, which represents 178 free-standing psychiatric facilities, containing over 15,000 beds.

We share the concern of the author and cosponsors of S. 1470 regarding the need to contain rising health care costs and support the objectives of this bill to achieve this goal.

While we believe and urge that equal attention be paid to the needs of Americans with mental and emotional illness vis-a-vis those with physical illness, we understand that the purpose of the bill is a longterm basic structural solution to the vexing problem of rising health care costs.

To achieve that important goal, we recommend your consideration of amending the bill to authorize a demonstration program-subject to rigorous, ongoing, organized peer review-to determine-as we believe it will—that appropriate psychiatric intervention and treatment does reduce medical care costs.

We would be pleased to work with the committee professional staff and develop the appropriate amendment to achieve that goal, if the committee is interested in pursuing that objective.

Senator TALMADGE. If you would excuse me, there is a record vote on the Senate floor. I will go over and cast my ballot and return immediately.

The committee will stand in recess momentarily, subject to the call of the Chair.

[A brief recess was taken.]
Senator TALMADGE. The subcommittee will be in order.

Dr. Davis, my apologies for having to recess for the vote. You may proceed where you left off.

Dr. Davis. Senator, we recommend your consideration of amending the bill to authorize the demonstration project, subject to rigorous, ongoing, organized review, to determine, as we believe it will, that appropriate psychiatric intervention and treatment does reduce medical care costs.

We believe that such a demonstration program would prove that the placing of psychiatric benefits in medicare on a par with physical illness benefits would result in even greater cost savings. It has been dem

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