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We would like to have you proceed, and we will hear from you, with your direct statements first, and then we will have questions that may go across the panel.

Dr. Etzioni, you may proceed first.

STATEMENT OF DR. AMITAI ETZIONI, PROFESSOR OF SOCIOLOGY, COLUMBIA UNIVERSITY, AND DIRECTOR, CENTER FOR POLICY RESEARCH

Dr. ETZIONI. Thank you, Senator Moss. I would like to compliment you on calling this series of hearings.

I believe it would be desirable if you could invite the Secretary of HEW and his staff to come before you and take a Hippocratic-type oath, because these regulations which they propose are harmful, and many, many older Americans and disabled Americans will suffer severely.

I would like first to cover some of the main arguments given by HEW officials for the introduction of profitmakers into this particular service, and I would like to show why these arguments simply do not hold.

In part, one argument has been made by an HEW official, according to a quote, that the position that proprietaries should not be allowed is a "Communist" position. That is a famous, clearly identifying line of abuse. It is, however, a fact also that most of human services in this country are not provided on a for-profit basis. Most of our schools, public and private, are not profitmaking. Most of our short-term hospitals are not for profitmaking. The language is confusing. You call them private hospitals, but they are mostly voluntary. It is only in the nursing home area where most of the service is provided on a for-profit basis. And this is the area of human services which is most rampant with abuse.

Second, like Congressman Koch, I am in favor of the private sector, but I must report to you that this particular area of service has not attracted the IBM's, the Xerox's, even the McDonald's or the Lockheed's.

What we have here is an unusual concentration of real estate manipulators and quick-buck artists.

There are exceptions-there are some decent hardworking people. However, most proprietaries in this particular area are a shame to American business, and, therefore, should not be allowed in.

The study already referred to, which HEW refused to release to the public, is said to have an insufficient sampling. You can always study the matter more. The fact is that the present study of HEW is the biggest, most systematic study ever done in the field, and it suggests that proprietary nursing homes provide poorer care and more abusive care than the voluntary.

Let HEW release the findings, with the note that a bigger study is still needed. But we certainly ought to have the partial findings, based on the very expensive study, since these are better than no findings at all.

It is argued that you can point to abuses in the voluntary. That confuses the argument. Yes, you can find a few serious abuses in the voluntary agency.

First of all, some voluntary agencies have been abused by proprietaries, and we will have a suggestion in a future paper, as to additional regulations necessary to prevent proprietaries from using voluntary agencies as coverups, to get around regulations.

PROPRIETARIES ARE "ABUSE LEADERS"

In some cases, the voluntaries sin too, but across the board, statistically, there is no doubt that the proprietaries have been, in this particular area, the abuse leaders. Therefore, I very much hope that you prevent HEW at this point from allowing them to further extend their grip.

The final argument which has been made by HEW officials is that, if we have regulations which would prevent abuse, they could be applied to both voluntary and proprietary. The answer is we do not have effective regulations for either cost or quality control-especially for quality control.

We have not developed quality mechanisms, and the effect is we cannot correct the abuses of persons buying Cadillacs instead of medication, and when we do catch them, they then move to the next State under a different name.

I would like to take 2 minutes to suggest an alternative, positive system, very much in line with Congressman Heinz' suggestion, where we should allow older persons to have effective control of services.

I would like to see a voucher system which allows older persons to cash in, at voluntary agencies only, for specific amounts.

If it is taxable, it means that rich people will keep little of it, while poor people will keep all of it. Thus, while everybody will get the same amount, the poorer people would benefit.

Second, the voucher system allows the consumer to choose, and it removes the funds from agencies which provide poor services, because the aged person would not go there to cash the vouchers.

Finally, I think the vouchers should be allowed for specific services. The more you push on your clients in the nursing home, the more Congress shells out.

People come to you each time, and they say that they have a service that would cost less, and, therefore, you should shift people from nursing homes to at-home health service.

I say this is misleading. Home health services will cost more, not less, than nursing homes, for the simple reason that for every old person in a nursing home, there are at least 19 in the community.

Perhaps as many as 40 percent of those now in nursing homes could be discharged-that is the highest figure ever cited.

However, 40 percent of 4 percent-the proportion of aged in nursing homes-is very little. Out there in the community at large is a sizable number of persons, I would think at least twice as much, who need nursing home services, because they are not able to move around. So even if you would get a perfect selection system, you could not discharge as many people from nursing homes to home health services as would need to be institutionalized.

Second, even if you provided a minimum amount of home health services-just think about it, there are 19 people out there to every

1 inside, and most in need of some services; that is a very expensive program, not per person, but nationwide.

VOUCHER USE SHOULD BE LIMITED

Therefore, the vouchers should be limited to specific things. You could cash it for transportation to a day-care hospital. You could cash it for rehabilitation. You could cash it for services in your home, but it should not be open ended.

Finally, we keep talking about the need for comprehensive plans. I heard that again today. It is a dream. It is a dream that has been walking the halls of Congress for I don't know how many years.

The essence of this society is a pluralistic, crazy quilt of services. No czar could be appointed to take care of and coordinate all of the services.

The voluntaries do not like to talk to the proprietaries, the voluntaries fight with each other, the proprietaries fight with each other. You must be realistic about it.

A voucher system requires no coordination. You can cash it where you want to go. If you need rehabilitation, you can go here, if you need transportation, you can go there.

I am providing a prepared statement for the record.

I appreciate the opportunity to be here.

Senator Moss. Thank you very much. That is an interesting suggestion.

On these vouchers, how would they be issued? That has me puzzled.

Dr. ETZIONI. I think Congress would have to state how much service they want to provide, and then every person 65 years or older would get a voucher, which he could cash in at any place he wanted to, as long as it is not for profit, for a specific limited amount of services.

Some people would not need the services and they would not cash the voucher, but every person 65 years or older would be issued one

without a means test.

Senator Moss. Thank you.

I will revert to where I was before I got so intrigued with that one, and proceed to the next witness, and we will insert your statement in the record, along with your position paper.*

[The prepared statement of Dr. Etzioni follows:]

PREPARED STATEMENT OF DR. AMITAI ETZIONI

We suggest the subcommittees consider the provision of a taxable home health care voucher for persons above the age of 65, cashable at not-for-profit institutions only.

The basic purpose of the voucher is to enable older persons in need of homehealth services to avoid hospitalization or institutionalization in a nursing home and to obtain services in their home or community center. Such a voucher would:

(a) Allow older persons to get any one of a variety of services, such as rehabilitation, home alterations (e.g., railings), meals-on-wheels, etc. It has often been pointed out that the needs of older people in the area of home health care services vary a great deal from person to person and over time for the

*See appendix 6, item 1, p. 260.

same person. Generally vain efforts have been made to provide comprehensive coordinated programs. Hence, older persons have been put under pressure to be institutionalized, even if their needs for services are limited, because institutions have a wide range of services. A voucher system will allow an older person to visit a variety of service sources, without requiring a high level of coordination among them, a level of coordination which is often unattainable in the crazy quilt of home health care services.

(b) The voucher treats the older person with respect as an autonomous person, allowing him, his family, and those who cousel him, to make the decision as to what service to buy, rather than having these decisions dictated. (c) Services which older persons avoid or find undesirable will rapidly be made visible by use of the voucher. Public funding for these unused services will automatically dry up as reimbursement will be dependent on the number of vouchers cashed at a particular service source.

(d) Vouchers should be taxable, i.e., considered as an addition to a person's income. In this way there will be no need for a means test because all older people could get a voucher, but the poorer they are, the less of this additional income will be taxed away. In effect, the Internal Revenue Service would substitute for the means test. Since all citizens are subject to IRS review, there would be no stigma attached, and such a review would be much more efficient than any means test.

TAX-BACK FEATURE

The tax-back feature also increases the social justice component of the system (because the poorer a person is, the more he will be supported) and largely reduces the net cost of the service by taxing back part of the pay-outs. Note that when a similar system was suggested for child care (as "family allowance") it was considered undesirable because it was suggested that it creates a disincentive for the parents to work (the more a person works, the more the family allowance would be taxed back). This undesirable effect does not apply to older persons because we do not seek to make them work.

(e) Services for which the voucher may be used should include only specific items and not vague categories. E.g., ʼn hours of rehabilitation, of shopping-aides, of specific home alterations (e.g., railings), transportation to day hospitals. The reason is that we wish older people who have no specific home-health service needs to be under no pressure (or opportunity) to use their vouchers. (f) We suggest that the vouchers be cashable only at not-for-profit agencies. While not-for-profit agencies are far from free of abuses; they are, by and large, on average significantly more honest, dedicated and provide higher quality of care than proprietary agencies in this area. HEW moved in August 1975 to alter the regulation to allow profitmakers to move into the home health care service area (to be reimbursed from public funds), a move I hope you will explicitly outlaw. Let me spell out some of the reasons for opposing this move and for suggesting that, at this stage, home health services, which are publicly reimbursable, should be limited to the not-for-profits:

It is said that profitmaking is an integral part of the American system and cannot be banned. While I agree that the private sector has many virtues and strengths, in the area of human services, in general, we rely on not-for-profits (e.g., most education-not only public schools but most so-called private schools -is provided by not-for-profit; most short-term general hospitals-87 percent; and practically all welfare agencies are not-for-profit). Moreover, profit services in this area do not attract the IBM's or Xerox's of America, not even the Lockheeds, but often (with some exception) a cynical bunch of real estate mainipulators, small-time quick-buck artists, and vicious exploiters of the sick and old, who should be driven out of this field rather than allowed in.

It is further suggested, by an HEW official, that if we have standards and make the providers of services abide by them, what difference does it make if they are proprietary or not-for-profit? The answer is that, as our whole miserable record in the area of nursing homes show, we have been unable to evolve effective mechanisms for enforcing regulations. (We have regulations which themselves could be improved, but are not. in part, because of the proprietary pressures.) At least until we find effective auditing and inspection systems, we should keep out the sector where the grossest abusers are concentrated-the proprietary health service agents.

Press and legislators point to abuses in the not-for-profit sector, to suggest that there is really not much difference between the two sectors. Actually, while there are instances of abuses in both sectors, statistically they are more common in the proprietary health sector than in the not-for-profit. HEW should release a breakdown of its data on nursing home maltreatment by type of ownership. Also, the violations of the not-for-profit are often of a different kind: e.g., over charges rather than abusive service. Of the few instances of abusive service in the not-for-profit sector that we are aware of, most are perpetuated, not by genuine not-for-profits, but shells used by proprietaries. In a future report which we are preparing, we shall suggest legislation to close this loophole.

Finally, it is said there are not sufficient not-for-profits to provide the needed home-health services and they are not willing to expand their services. This reluctance could be largely overcome if Congress would guarantee that the program would not be suddenly discontinued (by securing, say, a 5-year funding).

COST

People come before Congress frequently and suggest that what they advocate will save money. In the area of home-health care, it is said that to provide services for an older person at home will cost much less than in a nursing home and that as much as 40 percent of those in nursing homes could be discharged and serviced at home.

First, it is not yet firmly established that an equivalent package of services will necessarily cost less at home, or which format of home-health is most economical (e.g., at home? in community centers? health satellites? etc.). I am trying to get the Division of Long-Term Care of the National Center for Health Services Research and the Office of Research and Statistics of the Social Security Administration to study this matter systematically.

Second, it must be noted that for every older person who is in a nursing home and should not be, there are at least two out in the community who should be in a nursing home because they have service needs which do require institu tionalization (e.g., are not mobile). Hence, a much more rational selection of those "in" v. "out" would not reduce nursing home population or costs.

Third, there is no acceptable reason to provide home health service only to those who are now in nursing homes and may be discharged. Since there are roughly 19 older people in the community for every 1 in nursing homes, and many of those are in need of some service, a home health service will be a costly service, not necessarily per person, but for all those who need it. Note, though, that vouchers put a ceiling on total expenditures, while current programs are open ended.

I am quite aware that this may not be the time to introduce such a voucher system,,though we might at least experiment with it in some parts of the country to see how well it works and what it costs. Also, the principles here evoked are those which, in my judgement, any home health service should abide by reliance on not-for-profit at this stage of the development of our regulatory capacity; respect for the older person's self and free choice; variety of sources of services rather than vain attempts at coordinated comprehensive services; provision of specific services for all older people who need them but with a ceiling and on a tax-back basis, to enhance social justice.

[Amitai Etzioni, with Alfred Kahn and Sheila Kammerman, prepared the position paper, "Public Management of Health and Home Care for the Aged and Disabled." Dr. Etzioni served shortly as staff director of the New York State Moreland Act Commission on Nursing Homes and Residential Facilities. His work includes "Modern Organizations" (Prentice-Hall, 1965), "Genetic Fix" (Harper & Row, 1975), and "A Comparative Analysis of Complex Organizations" (Free Press, 1975). He is a frequent consultant to government agencies and contributor to the Washington Post, New York Times, and Wall Street Journal. Dr. Etzioni served as chairman of the Department of Sociology at Columbia University from 1969 to 1971.]

Senator Moss. Our next witness is Gerald A. Hawes, audit manager, office of the auditor general, Sacramento, Calif.

Mr. Hawes, please continue.

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