DR. JOHN HAMILTON, ROCHESTER, NEW YORK

As a practicing physician, I believe the scope, methods of delivery, and cost of health care should be determined by the public who are our patients and your supporters. This will give us a National Health Insurance program of greatest benefit to the public at a cost they will accept. My recommendations today come from my experience in care of patients from all socio-economic levels in more than 20 years of private practice, from observation of my patients' attitudes in selecting insurance coverage, and from lessons learned from three alternative health care plans introduced in our area in the past two years.

The desires of patients are shown by many examples in private practice. I should like to identify a few of these and show some existing problems which should not be perpetuated in National Health Insurance.

One concern of the patient, which must be taken into consideration, is the source of his care. When the Medicaid program first started, physicians received usual and customary fees and essentially all Medicaid patients went to private physicians and the hospital clinic population almost disappeared. Then Medicaid administrators decided the 6% of the program's total expenses going to physicians was too large, and they cut the physicians' fees by 50%. This resulted in reimbursement at less than the cost of seeing a patient in the office. Most physicians then gradually stopped seeing Medicaid patients, most of whom returned to hospital clinics which receive what is called a "facility fee" for each patient seen. This "facility fee" was approximately six times the amount paid to private phyThe "facility fee" included laboratory and x-ray charges. How

sicians.

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ever,

a study of area patients showed 83% needed only advice or a physician's personal service, not the additional services for which the facility was reimbursed. The facility cost problem was compounded by regulations governing the number of pills or refills a patient could have on prescriptions, resulting in numerous unnecessary return visits for just prescriptions. Facility fees are so excessive that most groups receiving them will not participate in capitation programs. I would conclude that patients prefer private care in a physician's office, and that equal fees should be received regardless of the source of care.

The introduction in our community of three pre-paid comprehensive health care plans in the past two years gives further evidence of patient choice of site of health care delivery. The first of these alternative plans was a closed panel group. The second was a neighborhood health network with limited choice of physicians and the third a plan allowing for free choice of physicians at their offices. After two years of experience, the closed panel group and the neighborhood health network plan have enrolled approximately one third of their projected number of patients. In several large industrial groups, where premiums were not paid in full by the employer, less than 5% of those eligible enrolled in any of the three plans. These three programs have proved to be very expensive. figures show costs of approximately $100 per month per family. The majority of those who enrolled in these plans did so only when their insurance costs were paid by their employers and the vast majority enrolled in the program offering care in physicians' offices. The only plan that has not been heavily subsidized at present is finding it essentially impossible to enroll patients at the required $100 per month figure. The other two plans

Actuarial

have continued to operate through subsidization amounting to about $30 per month per family and in addition one of the plans receives facility fees for many of the patients it sees.

Three conclusions can be drawn from this experience.

First, the vast majority of patients prefer to receive their health care from their own physician in his office. Second, this comprehensive coverage is so expensive that few are willing to pay for it individually, but prefer it and will subscribe when a third party pays the premiums. Third, there is no evidence that group practice has reduced the cost of medical care.

The insurance coverage that patients prefer is shown by other examples also. This would appear to be directly related to the cost.

Originally

Blue Cross-Blue Shield had a basic plan covering semi-private hospital rooms, surgical fees in full and limited maternity coverage, and almost the entire area population subscribed with physicians agreeing to cost control. Over the years at the insistence of patients, physicians, industry, and insurance regulations, the coverage has been increased greatly with premiums increasing to an extent that many now cannot afford coverage or still purchase only the most basic coverage. It would appear that patients want full coverage, but can only afford a certain percentage of their income for They need subsidization for the balance of a comprehensive

health care.

insurance premium.

The need for catastrophic coverage is obvious to all, but again, what is catastrophic financially to one family is not to another, although the medical condition may be the same. Psychiatric illness can be catastrophic, just as a stroke, and should be covered equally as well. A further example we see in private practice relates to how insurance is administered. Locally our Blue Cross-Blue Shield plan covers about 85% of the population. It operates very efficiently and satisfactorily with minimal

reports and forms and with an administrative cost of less than 10%. Other private carriers also function efficiently and I assume at a profit, and they pay taxes. They also stabilize premiums by using reserves rather than increasing premiums frequently. When compared to the administrative costs of 53% for our Medicaid program with its multitude of rules, regulations, forms, inefficiencies and computer problems, the difference between a governmental and private insurance carrier is obvious. Cost control must begin with administrative expenses. It is a tragedy when more than one half the cost of a health program is not available for health care and thus does not benefit the people for whom it was designed. Federal financing must be used for part of the national health insurance coverage, but I believe it is obvious that the administrative savings and efficiency of the private carriers should continue to be utilized to the fullest extent, and federal administration should emulate private carrier standards.

A last attitude of patients to consider is their dignity. The information required in the complex forms presently needed to qualify for Medicaid followed by the required forms in offices and hospitals demeans patients and embarasses their providers. It should not be continued.

The quality of health care is of highest importance to both physicians and patients. Statistics from our area show that 95 97% of the physicians properly give quality care and contain costs.

percent who do not are common to all programs in our area.

The three to five

Peer review and

hospital utilization have and PSRO in the future will continue to identify

this group and keep it to an irreducible minimum.

In summary,

I believe the type of National Health Insurance most

beneficial to patients and all of us must:

1. Preserve the right of the patient to make a choice between

all care systems.

2.

3.

Pay equal fees regardless of source of care.

Effi

Maintain efficiency and control costs of administration. ciency of private carriers should be utilized and federal insurance or subsidy should be comparable.

4. Provide as much basic coverage as the nation can afford, and full catastrophic coverage, both subsidized on a sliding scale based upon patients' ability to pay.

5. Assure quality care on an individual basis, through peer review and elimination of administrative red tape which does not consider the

patient's dignity.