Contracts with carriers under subsection (a) may be entered into without regard to section 3709 of the Revised Statutes or any other provision of law requiring competitive bidding. I understand by this section that the Secretary of HEW can simply decide to give to a carrier of his choosing large administration contracts without going through the competitive bidding process which has been devised over the years as the fairest way known for the Federal Government to deal with private groups bidding for public business. I believe such an exemption is contrary to governmental concepts which prohibit monopoly and foster free competition, as exemplified by the antitrust laws. Finally, I must deplore the fact the passage of H.R. 6675 would represent another giant step toward centralization of more and more of our national life in Washington. Hospital and medical care is a very personal type of relationship. As such, regional and local patterns of living must be observed if such care is to be most effective. Ways of doing things and of grouping people in hospitals and nursing homes that might be completely satisfactory in one part of the country, with its particular set of customs and mores, might cause difficult social relationships if applied in other sections of the Nation where the customs and mores are different. But H.R. 6675 makes no provision for varying local and regional traditions-it will, in effect, "nationalize" all hospital care-at least for the aged-to one concept and one standard developed in Washington. In view of the antagonisms and strife that have been fermenting in our Nation for many years in the area of human relations I think sober consideration should be given to any Federal proposals that would accelerate rather than inhibit such fermentation. Thank you for your kindness in listening to my comments on H.R. 6675. Senator GORE (presiding). Thank you, Mr. Coleman. This concludes the public hearings on the bill. The committee will commence executive consideration of the bill on Tuesday, May 25. We stand adjourned. (By direction of the chairman, the following is made a part of the record :) STATEMENT OF NATIONAL PHARMACEUTICAL COUNCIL, INC., NEW YORK, N.Y. (Submitted by Newell Stewart) Mr. Chairman and members of the committee, The National Pharmaceutical Council, Inc., is an organization composed of 25 companies engaged principally in the manufacture of prescription drugs. It was created to assure the public of high-quality pharmaceuticals by promoting optimum professional standards at the manufacturing, distributing, and dispensing levels. The council adheres to the principle that the physician's prerogative to perscribe a precise drug for his patient be held inviolate, and one of its aims is to assure proper methods and procedures so that a patient will receive the specific drug or brand of drug that is ordered by his physician. The council respectfully urges that (1) the definition of the term "drugs" and the term "biologicals" as presently set forth in section 1806 (j) of S. 1 be changed and (2) the provisions concerning the determination of cost of services in section 1809 (b) be amended for the reasons and in the manner set forth below. It is the firm belief of the National Pharmaceutical Council that legislation should not interfere in any way with the practice of medicine or the manner in which medical services are provided. Section 1801 of S. 1 recognizes this principle by stating: "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 to exercise any supervision or control over the administration or operation of any such hospital, facility, or agency." The National Pharmaceutical Council further believes that a corollary of this principle is that a physician's determination of the drug to be administered to his patient should be made on the basis of what he believes to be the best, specific medication for his patient and not by the predetermined availability of a limited number of drugs listed in a compendium of drugs or selected by a committee of other physicians, nor should the physician's determination of the drug to be administered be influenced by the amount of reimbursement to be made to the provider of services. For these reasons the council urges that section 1806 (j) be changed to read as follows: "(j) The term 'drugs' and the term 'biologicals', except for purposes of subsection (g) (5) of this section, include such drugs and biologicals as are ordered or prescribed by the attending physician on the medical staff of a hospital having an agreement in effect under section 1810." and that section 1809 (b) be amended by adding the following words immediately following the first sentence of this section which ends with the word "agencies"; "Except as provided in subsection (c) (1) of this section, costs for items or services furnished a patient shall be deemed to be reasonable if they are ordered or prescribed by the patient's physician for medical reasons, and if such costs do not exceed the amount customarily charged by the provider of services to persons not subject to this title." FEDERATION OF CITIZENS ASSOCIATIONS OF THE DISTRICT OF COLUMBIA (Submitted by John R. Immer, President) The health committee of the Federation of Citizens Associations on February 23, 1965, voted unanimously in expressing opposition to medicare for the aged under Social Security because its members-only one of them a physicianbelieve that under this sort of regime medical care would be extremely costly and would unnecessarily increase payroll deductions far beyond current rates. It believes that under State and locally administered programs, with Federal help, those actually in need would be better served and the quality of medical service would be better. It therefore adopted the following resolution : "Be It Resolved That the Federation of Citizens Associations of the District of Columbia does support and approve the bill H.R. 3727 introduced by Congressmen Herlong and Curtis and known as the eldercare bill, for the following reasons: "1. No elderly person needing health care shall be denied because of inability to pay. 2. It is appropriate that Government revenues be used to finance health care when other resources have been found to be inadequate. "3. Every level of government-municipal, county, State, and Federal-should assume a responsible share in financing such programs. "4. The health care provided by the programs should be adequate and should be equal in quality to that available to those who can pay. "5. Maximum use should be made of voluntary prepayment and insurance mechanisms. "6. Administration of such a program should be the responsibility of State governments. Participating States should be required to meet adequate standards of administration in order to qualify for Federal funds. "7. Eligibility requirements for benefits should be fair, realistic, uncomplicated, and practical. "8. Any such health care program should provide funds only and not direct services. "9. Funds for such programs should come from general tax revenues and not from Social Security." Approved by the federation February 25, 1965. Dr. EDWARD A. KANE, HANSON T. PERKINS, M.D., TEXAS ACADEMY OF GENERAL PRACTICE, Tarrant COUNTY CHAPTER, FORT WORTH, TEX., IN OPPOSITION TO COMPULSORY SOCIAL INSURANCE MEDICINE Whereas in June 1961 the American Medical Association House of Delegates passed the Bauer statement which reads as follows: "The House of Delegates believes that the medical profession will see to it that every person receives the best available medical care regardless of his ability to pay; and it further believes that the profession will render that care according to the system it believes is in the public interest; and that it will not be a willing party to implementing any system which we believe to be detrimental to the public welfare." Whereas it has become apparent that compulsory social insurance medicine will be a part of whatever omnibus health care or social security bill is offered this Congress; and Whereas the built-in controls in any such system would make hospitals, patients, and physicians subordinate to the Secretary of Health, Education, and Welfare; Therefore be it Resolved That each of the members of the Tarrant County Academy of General Practice is urged to refuse to be a party to any such regimentation; and be it further Resolved That the membership is also urged to call this resolution to the attention of colleagues, hospital administrations, and the public. Passed in regular meeting March 17, 1965. ASSOCIATION OF MINNESOTA INTERNISTS RESOLUTION AND LETTER Senator WALTER F. MONDALE, U.S. Senate, Washington, D.C. MINNEAPOLIS, MINN., March 24, 1965. DEAR SENATOR MONDALE: Thank you very much for your thoughtful reply to my letter some time back in reference to the proposal on national health legislation by the Association of Minnesota Internists. You may be interested to know that the House of Delegates of the American Society of Internal Medicine (the society is comprised of 8.000 physicians) wholeheartedly approved our resolution even though it was accused by one member of being socialistic (I am sure you are aware it is not a program for socialized medicine even though it does contain a comprehensive proposal for health care for catastrophic illness for the entire population). We now face the difficult task of getting our proposal accepted by the American Medical Association which, as you know, is committed to the support of the so-called eldercare bill. We do feel our proposals, frankly, are superior to either or both the Herlong-Curtis and the King-Anderson bill, and although it is obviously true we are extremely late with our proposal, we still feel that we would be amiss if we did not try. We will be extremely grateful to you if you will ask your colleagues in the Senate what they think of our proposals, and let us know their suggestions. We feel we are in an unusual position to help influence medical opinion, but before we embark on an intensive program of so doing, we want to be sure that our proposals are workable. Sincerely, C. E. LINDEMANN, M.D., Chairman, Medical Liaison Committee, Association of Minnesota Internists. RESOLUTION 1, ASSOCIATION OF MINNESOTA INTERNISTS TO BE PRESENTED AT THE 1965 ASIM NATIONAL CONVENTION Whereas legislation is presently pending in the Congress of this Nation which will, if passed into law, drastically affect the practice of medicine; and Whereas the overwhelming preponderance of practicising physicians in this country have indicated their dissatisfaction with some principles embodied in the aforesaid legislation; and Whereas the Association of Minnesota Internists embarked on a program of evaluation of national health legislation approximately 9 months ago, for the purpose of proposing action on the part of ASIM during 1965: Therefore, be it Resolved, That the American Society of Internal Medicine proceed, with the utmost diligence, to formulate its own policy as to national health legislation, with such policy to embody all parts of the following recommendations which, after additional careful study on a national level, are proven to be workable in solving the Nation's health problems. RECOMMENDATIONS 1. National health legislation policies can be soundly formulated only through careful correlative studies, involving, at the very least, representatives of the Goverenment, the insurance industry, and the medical profession. Because of this, it is deemed advisable that (a) Representatives of ASIM seek liaison with interested individuals in other fields related to the problems concerned in the further development of all important concepts. (b) The American Medical Association encourages the study and formulation of ideas on the matter among members of the profession. Because of this, the American Society of Internal Medicine has the unparalleled opportunity of using its unique concentration on socioeconomic matters toward solving the biggest problem of the medical profession during the 20th century. Once formulated, the findings and conclusions of ASIM should be submitted to the governing bodies of the AMA in a timely manner, in order that organized medicine can utilize what is meritorious therein in presenting its case to Congress and the American people. (c) It is specifically recommended that Members of Congress be enjoined to hold a national conference on health legislation, with representatives from all involved groups present, prior to the passage of any pending legislation on health insurance, in order that such can embody the experiences of each. 2. Whereas the target of most national health legislation proposals has been those Americans over an arbitrarily selected age, the real problem created by the advances in medical science consists in the overwhelming costs of protracted, severe illness wherever it may strike. In order for a solution to this problem to be truly effective, it cannot direct its efforts toward a part of the problem; it must seek to protect all Americans when catastrophe strikes. As a consequence, ASIM should depart from the existing pattern, and seek a national policy of medical insurance for all who fall victim to overwhelming medical expense. 3. In a like sense, there is no wisdom in affording protection in situations where need is nonexistent. Doing so would be open invitation to overusage. There is no evidence that, in the United States, there is a need for Federal legislation to provide for medical expense coverage for either short-term medical care, or for the ordinary routine care of the common chronic illnesses. The indigent are covered by existing Federal and State laws, and, if any such need exists, it can most efficaciously be taken care of by extending them. New health legislation should be directed toward major medical expense alone, and ASIM should pursue such a direction. 4. At the present time, private health insurance is available which protects its beneficiaries from medical expenses beyond a minimal deduction and up to maximums of $10,000 to $15,000. Such coverage would appear to characterize the real needs of the American people generally. While it is not within the province of a group of physicians alone to set the deductible amount which the overwhelming preponderance of Americans could sustain in a short time, such a figure would appear to be between $300 and $500. Coverage of the above type, for a family of two adults and two children, covering an illness for a period up to 3 years, would cost the average wage earner about 11⁄2 percent of his monthly income. Since the goal of this program is to include all people, some of whom may not be eligible under existing coverage through private insurers, the Government must assume some fiscal responsibility for collection and distribution of premiums. 5. The relationships between the degree of governmental regulatory control of medical facilities and medical costs has a long record of direct proportionality. Because costs of government at all levels are approaching their limits of tolerance, and because medical expenses on a national basis could severely aggravate such a condition, it would appear to be sound policy to limit the role of the Federal Government to that minimal one commensurate with success of the plan. In our opinion, this role would include the following: (a) In order to get all people into the program, it appears necessary that subscription be compulsory. The Government is best equipped to accomplish this through the use of the income tax agencies. Along with tax payments, payments can be made for health insurance. The simplest method of allowing individuals to procure their own insurance thereafter would appear to be the return to the taxpayer (or income tax return filer) of a certificate from the Internal Revenue Bureau, which he could use to procure his choice of private major medical insurAs will be seen later, such a choice can be of considerable importance in a plan covering citizens of all ages. ance. (b) A special fund, perhaps labeled as the "tax insurance fund," would be set up nationally as a depository for health insurance payments made to the Government, with premiums paid from such funds to insurance carriers as health plan certificates are turned in by them. This fund would be under governmental control. It seems possible that, during an initial adjustment period, moneys from the general fund would be needed as supplements to the tax insurance fund, until experience ratings determined the true costs involved. After an experience period, the tax increment paid by individuals would equal the value of certificates. plus an additional amount needed to cover insurance company losses in providing such coverage. (c) In turn, private insurance companies participating in the program would establish a reinsurance pool amongst themselves. This pool would be administered, collectively, by them, and the companies, individually and collectively, would report to and share in the experience of the reinsurance pool on all coverage provided under the proposal. If benefit payments plus expenses of the private insurers, as reflected in the operation of the reinsurance pool, exceed the premiums collected, the Government would subsidize the reinsurance pool from moneys held in the tax insurance fund (or taken from the general fund). As experience under the program emerges over a period of years, the individual contribution level would be adjusted to reflect the actual benefit costs plus administrative expenses incurred in providing the coverage. 6. In order to prevent overutilization of medical service after payment of the initial deductible amount, it would appear wise to include a coinsurance feature in all coverage. Such a feature would entail payment by the insured of a small part of additional costs. How such payments should be applied might best await the development of this concept by insurance experts. As an example, however, the individual might be expected to pay 20 percent of the cost of the first thousand dollars; 10 percent of the cost of the next thousand, etc. 7. Coordination between the compulsory major medical program and other aspects of private health insurance as presently established is a factor of considerable significance in the formulation of such a program. (a) Private industrial corporations have already established extensive group health insurance plans for their employees. Where such plans exist, major medical premiums under the above plan can be used to supplement them: either by extending such coverages or otherwise. (b) By combining compulsory major medical with other types of coverage. private carriers could continue to maintain a competitive relationship with each other, to the public's benefit. 8. From the standpoint of what medical services would be included in the coverage of major medical insurance, a number of factors are of importance. These include the following: (a) It would appear reasonable to cover charges by qualified physicians, both in the hospital and out of it. This is true because- (1) While most office charges would be unlikely to exceed the deductible amount, followup care after discharge from a hospital would be in excess of the deduction. (2) Under currently existing private health care plans, there is an undeniable waste, due to the fact that hospitalization occurs so that patients may be covered by their insurance. Were coverage for office charges to be a part of such plans, the public would be saved the cost. (3) There is a real possibility that, if Government-sponsored and other insurance plans were to cover the hospital but not the office, private prac titioners would be forced to forfeit income to hospitals, and patient care would degenerate through substitution of the hospital-employed doctor for the private physician. (b) Hospital and nursing home care, which comprise the greatest expense among modern medical costs, would necessarily be covered under the plan. (c) Home nursing care, properly supervised and developed, can readily serve as a means of precluding hospitalization. They should be included and encouraged as part of the health care plan. (d) The costs of drugs and appliances prescribed by physicians outside of the hospital should probably be included in the plan, though such might well need more careful study and regulation than other aspects of care. 9. Utilization review boards. on a hospital staff basis, are becoming a significant factor in the practice of medicine, and are a healthy development when kept within the profession, whether connected with Government-sponsored health |