(4) KACI believes that the present health care system must be improved-not discarded. Government financing within the health care system should be limited to: Medical protection for the poor; aid in education and training and the construction of facilities; and research. Such financing should emanate from Federal general revenues, not from payroll tax sources.

We would summarize our comments in the following way. The problem with the U.S. health care system, as we believe it to be, is not just dollars. It is a problem of resources, of manpower, facilities, and organization. To overload the business community with mandatory costs to finance national health insurance or to use tax money to finance increased demand for health care services when available resources are insufficient to handle it is not, in our opinion, justifiable or a wise use of money.

Kansas business views itself as a purchaser of health care and, as such, is concerned with how its dollars are spent. Because of the vast amount of dollars spent on health care, business believes, that it has a legitimate interest in the organization, delivery, and quality of health care in the United States.

Therefore, KACI supports the position taken by the National Chamber of Commerce and by many responsible economists that shuns the illusion that only total Federal involvement will solve all our problems, including improving the delivery of care and keeping health care prices from increasing even more.

I thank you.

Mr. Roy. Thank you very much.

We have a fourth witness, Al W. Tikwart, Jr. He identifies himself primarily as a private consumer.

STATEMENT OF AL W. TIKWART, JR.

Mr. TIKWART. Yes, sir; and a taxpayer.

Mr. Roy. And a taxpayer, right.

We would welcome your statement, Mr. Tikwart.

Mr. TIKWART. First, I would like to thank you gentlemen for this opportunity. I probably won't be as polished because I don't have the facilities at my command, as do the large organizations that have appeared on the panel. I would like to present some facts that affect the middle American.

Health care costs are too high for the average American. If you would kindly look at attachment 1, gentlemen, I have taken three incomes per hour, $5 per hour, $10 per hour, and $48 per hour. The $5 income is $10,400 per year; the $10 is $20,800, and the $48 is $99,000 plus.

The taxable income on the first man would be $6,000; on the $20,000 man, $15,000; on the $99,000 man, $84,000. I am assuming a 12 percent standard deduction, also that this is an average family of 4 dependents, filing a joint return. The Federal tax for this person of $5 per hour amounts to $1,028. His net after that, gentlemen, is $5.124; the net per hour is $2.46. I have used taxable income less Federal tax to represent one possible type of net spendable income. One could use other statistics such as the U.S. Department of Labor cost of living to arrive at a net spendable income.

The person making $20,000 per year, his net per hour is $5.87.

The person making $48 per hour, his net is $23.41 per hour.

How many hours would it take of work to pay a $15 bill? You know, the average cost in this city ranges from $10 to $25 for an office visit that takes 5-15 minutes of the doctor's time. $15 for the man making $2.46 per hour would be 6 hours of work; for the man making $20,000, it is almost 3 hours of work; for the man in the $100,000 bracket, it is 38 minutes.

What if an individual would have a $5,000 medical bill that is not covered by insurance? I have gone through the tax ramifications, and it shows that for the man earning the $5 per hour, his earnings now would be $1.55 per hour for a year's work. The man earning $20,000, his earnings are $4.22 per hour; and the man at $100,000 is $22.92.

With this $5,000 bill that could occur-and this amount is not uncommon. We've had two boys in the last 411⁄2 years, each of whom has required surgery and $5,000 is a realistic figure for surgical and hospital care. For the individual earning $5 an hour, the government pays about $838 out of the taxes; the individual pays almost $4,162.

The $20,000 a year man, the Government pays the big sum of $1,098 and the individual pays $3,920.

While the man in the $100,000 bracket, $1,424 is paid by Government taxes, well, it is almost $2,700, and he pays only $3,576. This is less than the man earning one-ninth of what the $48 man earns.

We have a tax inequity here. Once again it shows that our income tax system is very progressive for the middle class but regressive for the rich $100,000-year man.

Why have medical costs increased? I feel that there are two reasons for this.

First off is the great demand for services in a field which was already a seller's market, while the supply of doctors has increased very little. This increased demand was brought about primarily by Government social programs such as medicare and medicade.

No. 2, I also believe that the present system of private insurance. such as Blue Cross and Blue Shield, also have added greatly to the cost. This is due to the fact that doctors, the people who control the supply, serve as members of these boards. We have heard today from the Blue Cross representative the exact figure, a 50-50 ratio 50 percent doctors-50 percent public. I wonder what the census is on the public's portion of these boards? How many people are the young persons, you know, 20, 21, how many are the young married, the young family men on these boards? How many are the retired-type people? These are the persons who bear medical expenses and I question that they are proportionally represented on these boards which are so influential in setting medical fees.

But I know as soon as a certain percentage of the doctors in a community charge a fee for a given service, then Blue Cross-Blue Shield automatically raises the payment for that service. This shows little regard, I believe, for the true supply-and-demand situation.

How can we keep this spiraling cost of medical care down? I believe that it could be done primarily by training more general practitioners, adding to the supply.

Where would we get the money to do this? I believe that one practical solution to this question would be to see that the State and the Fed

eral Government are repaid for the $16,000 to $26,000 average per student per year for medical education. This figure was obtained from a study done by the Association of American Medical Colleges, the professional organization that represents the Nation's 114 private and public medical schools. The article appeared recently in the Kansas City Times, Thursday, October 11, 1973, see attachment 2 [p. 562].

I believe that a doctor, whose education prepares him to be in the top percentiles of income earners in the United States, should pay back the portion of his education cost borne by the taxpayer. No other field, law, engineering, social sciences, tradesmen, plumbers, any of us, is so heavily subsidized, and in no field is the remuneration so great so quickly.

I have worked in the medical-dental consulting field, and I have studied between 75 and 100 practices, both rural and urban in Kansas and Missouri. It is common for a new doctor in his first year to have a net income after expenses of $30,000 to $40,000; also after a short time, a period of 3 to 5 years, practices of $80,000 to $150,000 net per man are common, and I could go on.

If each new doctor would be required to pay directly, in dollars or services, the approximately $80,000 taxpayer-paid portion of his educational costs, a sizable pool could be created.

For example, in the State of Kansas, medical tuition is about $800 per year. I have had a hard time trying to obtain these figures from local officials at K.U. Medical Center. But this is the figure that I was told was correct. Other medical schools in the area, public and private, range from $3,800 to $5,000. Assuming the difference between the student tuition of $800 in Kansas and the cost of medical education stated earlier, taxpayers are bearing a $20,000 subsidy per medical student per each year a student is in medical school. We, in Kansas, subsidize the education of people to enter the top percentages of income.

Yet, if each year the 10 graduates of the K.U. Medical School would pay $10,000 a year for the first 8 years of their practice, a fund would grow to become a living endowment of many millions.

If you look at my attachment 3, it shows that within 8 years, gentlemen, you could have a fund of $8 million that would perpetuate itself a living endowment. If these figures are correct, the $20,000 per year cost to educate a doctor we could triple the enrollment at K.U. and get three times more doctors into the supply and take care of this demand, but to look at demand without meeting the supply of doctors, we are kidding ourselves.

Now, if a doctor would elect a career other than private practice, such as public health service, or public research, public teaching, credit toward this debt to the State could be given.

I would question some things that came up in testimony by the providers. First, I know that doctors, like any student, are in debt when they graduate. The figure of $25,000 to $50,000 was thrown out. You know, gentlemen, there is a tax loophole called income tax averaging which, if used by a doctor, within the first 6 or 7 years, that his tuition costs, and then some, can be paid back again out of tax savings from income averaging. So I don't think it is an idea of just doctors living less years. I think we poor middle-class Americans who are working harder and trying to meet our obligations in a good honest way are the

ones who are going to live less, and we don't have $100,000 incomes to afford medical care.

I am sorry for a little bit of emotionalism here. I wanted to keep my talk more on an intellectual plain.

I thank you very much for this opportunity to present my views. In conclusion, I would like my three attachments to be made an official part of this testimony. Also, I would like to say that the local TV. radio, and press-Kansas City Star and Times, gave very little or no advance coverage of this important public meeting on national health insurance. I called local stations and press and they said they had the release but could give no reason why they did not give this meeting coverage. I would also like to go on record and thank station WIBW in Topeka for alerting me of this meeting. This is one radio station that can be counted on to give in-depth news coverage. Thank you, again.

[The attachments referred to follow:]

WASHINGTON (AP)-The first survey of its kind suggests that it cost from $16,000 to $26,000 a year for the medical education of an American doctor. That adds up to between $64,000 and $104,000 for a 4-year course.

A special committee of the Association of American Medical Colleges, the professional organization that represents the nation's 114 private and public medical schools, made the report.

Students themselves pay about $2,200 a year in tuition. The rest of the cost is paid by federal, state, local and private funds.

Exemple of LIVING ENDOWMENT Fund

For the University of Kansas Medical School

(Assume 100 grads/year poying $10,000/yr. for 8 years='s taxpayers subsidization for 4 years at $20,000/yr.)

YEAR

Mr. Roy. I thank you for that view. I think it is necessary for all Americans to be thinking about the problems which do exist. You stated the conclusion which you have reached, which has been stated by officials of Health, Education, and Welfare, with regard to postgraduate training and also with regard to training while in medical school, that we are using Federal dollars to train those who are among the highest income groups. So in this sense you would find that there are others who have expressed these thoughts.

Mr. SYMINGTON. I think to sum it up, it is suggested that the medical graduate work it off or pay it off, and I think that that's a reasonable conclusion to draw and it comports with what I think reasonable legislation might result in. I think that perhaps it is not the whole debt. Many other students are subsidized in their ways. The Federal Government finds itself subsidizing practically everybody in some fashion, whether it is a farmer or the merchant marine or whoever it is, and we have to be awfully careful that we don't suddenly have one particular sector draw all the fire for this kind of reimbursement that we sense, so we have to be careful how it is done.

I don't think there is any quarrel with the concept of requiring a repayment of a debt that you owe the taxpayer and your society as a whole. It can be done either through service or through some kind of a payment mechanism.

This is already happening to some extent, isn't it, under the Health Manpower Act?

Mr. SYMINGTON. Mr. Chairman, I don't really have too many questions in my mind that I couldn't submit later for the record.

Every word that you said was significant and gives me something to think about it and I will take it to heart.

I want to conclude my line of questions that way if you want to proceed any further.