excess of the needs of individuals," "harmful," services and those "grossly inferior," stated as the bases for disqualification, involve subjective medical judgments which defy accurate medical judgment; (4) limit the medical review committee to the function of reviewing disputed claims, and not evaluating the national program. The bill should be amended further to provide that the Medical Review Team, and its functions, shall be the responsibility of the state medical society unless it fails to act. In the latter case the Secretary should be empowered to appoint. As a less desirable alternate, the members of the Medical Review Team could be appointed from a list submitted by the medical society. Further it should provide for public notice of disqualification only after the bearing and the court review; and provide penalties for abuse in the program and sequential warning, temporary suspension (30, 60 days, etc., depending on degree of offense and whether second offense, etc., up to a period of three months). (5) Section 6 permits payment to providers of service at less than the reasonable cost when such providers customarily charge less than cost for other patients. If a "public provider" furnishes services free or for a nominal payment, HEW can determine fair compensation.

While Section 6 appears to be a reasonable one, it should be kept in mind that some hospital charges will undoubtedly increase as a result.

(6) Section 7 would require a utilization review committee of an institution to determine whether: (1) admission to the institution, or (2) further stay, or (3) furnishing of particular professional services (including drugs and biologicals) was medically necessary, and promptly to notify the institution, patient and physician where the finding is negative. The law would then prohibit payments where any such finding has been made.

At the present time a Utilization Review Plan of an institution must provide for review, on a sample basis or other basis, of admissions, duration of stays, and services furnished but must provide for review of each case of extended stay and also determine medical necessity of further stay. The law provides for 3 additional days of benefit payments after a negative finding and notification. Where a finding has been made that the admission was unnecessary, no payment would be made. Thus the denial of payment would be retroactive to the date of admissions. The 3-day grace period is removed from existing law.

The AMA previously objected to initial certification of the need for admission to a hospital, and this initial certification requirement was removed from the law. Under this bill the utilization review committee would be required to review the attending physician's judgment as to the need for hospitalization. The present requirement of the UR committee under medicare is to review extended stay cases to determine need for further stay; thus it does not review a great number of cases of hospitalization where the patient is discharged earlier. Requiring committees to review all cases of hospitalization would impose a tremendous burden on the committee, and create additional heavy demands on physicians' productive manhours.

An adverse finding by a committee would subject the patient to individual liability for hospital charges. As a result, this provision could act as a restraint on patients receiving care, particularly in those cases where a physician recognizes the possibility of differing medical judgments concerning the admission. We believe that this section of the bill should be deleted entirely. In the event that this cannot be accomplished, then the provision in present law permitting 3-days' benefit payment following the date of such determination should be retained and made applicable to admissions and long-term stay by adding at the end of proposed section 7(b) the following: "except that, if such a finding has been made, payment may be made for such services furnished before the 4th day after the day on which the hospital or extended care facility, as the case may be, received notice of such finding."

(7) This section would permit the Secretary, when he finds that more than the correct amount has been paid to a provider of services or other person for services under medicare, to correct such overpayment by requiring refunds or by reducing subsequent payments. When necessary, he could determine the "excess amount" on the basis of estimates, sampling, or other methods which approximate the excess.

We believe that Section 8 should be clearly limited to those providers who are paid on a reasonable cost basis, where such approximations could apply.

If this is not done, then the section should be amended to provide that, where payment has been on a reasonable charge basis, the excess payment shall be the amount of actual payment less the reasonable charge for the specific service rendered.

Before closing, one further comment is required inasmuch as the HEW proposal omits an opportunity to effectively cut costs in government programs and to upgrade the quality of care provided. At the present time, the medicaid program allows the states to furnish chiropractic services to individuals. Pressure continues for the inclusion of such services under medicare. The following statement, contained in the unbiased and independent study made by the Department of HEW, at the request of the Congress, describes chiropractic :

Chiropractic theory and practice are not based upon the body of basic knowledge related to health, disease, and health care that has been widely accepted by the scientific community. Moreover, irrespective of its theory, the scope and quality of chiropractic education do not prepare the practitioner to make an adequate diagnosis and provide appropriate treatment. Therefore it is recomended that chiropractic service not be covered in the medicare program.

The National Council on Senior Citizens has publicly stated:

Chiropractic treatment, designed to elminate causes that do not exist while denying the existence of the real causes, is at best worthless and at worst mortally dangerous.

In the interest of effectively cutting costs and providing quality care, the medicaid program, should be amended to exclude payment for such services and the Congress should resist any recommendations for its inclusion under medicare.

In closing, general comment is germane at this time. When the medicare law was adopted by the Congress, section 1801 provided assurance of freedom from interference with the practice of medicine. The profession and the public accepted this assurance in good faith. The integrity of this commitment compels the most careful scrutiny of the proposed legislation.

SUMMARY OF PROVISIONS CONTAINED IN A BILL "TO PROVIDE FOR MEDICAL AND HOSPITAL CARE THROUGH VOLUNTARY HEALTH INSURANCE FINANCED IN WHOLE OR IN PART BY INCOME TAX CREDITS"

Section 1 declares that it is in the public interest for the government to provide assistance and encouragement to all persons who seek protection for insuring against the expenses of illness and that private health insurance coverage is an appropriate means to do so since, through competition, incentives are provided for the lowering of health care costs, the introduction of innovations in the delivery of health care and the maintaining of quality health care. It then states, as the bill's purpose, to provide a mechanism for every resident to obtain comprehensive health insurance of his choice.

Section 2 amends the Internal Revenue Code by adding a new section of income tax credits for the cost of health insurance premiums. Subsection (a) sets out how the amount of credit is calculated and names as eligible taxpayers every individual who elects to be covered under this Act and who is not eligible to receive military medical care. The tax credit is a percentage of the actual cost of the insrance premium (s), with the percentage based on the individual's tax liability as computed on his personal income tax return. The percentage ranges from a high of 100% for the individual with a tax liability of $300 or less to a low of 10% for the individual with a tax liability of more than $1300. Subsection (a) further states that the credit is available only if the premium(s) have been paid for "qualified medical care insurance policies" covering the taxpayer, his spouse, and dependents.

In the event that more than one policy is purchased by the taxpayer, subsection (b) limits the total credit to the applicable percentage determined by the table provided in subsection (a).

Subsection (c) provides that the taxpayer may elect to receive a "health insurance certificate" equal to the applicable percentage of the allowable premium. The certificate is to be redeemed by the carrier who accepts it in payment of the premium for a "qualified medical care insurance policy." In order to be so qualified, the carrier and the plan must be registered by the appropriate state agency. Subsection (d) defines a "qualified medical care insurance policy" as one offered by a carrier who has been registered in the state by the appropriate agency, which has also registered the package of benefits and premium offered by the carrier. The "qualified" policy must include:

Part I.-60 days of inpatient hospital services and emergency room and outpatient services; and

Part II.-All medical services wherever rendered.

Deductibles and coinsurance:

Part I.-$50 on inpatient services, 20% of the first $500 incurred expenses for emergency room and outpatient services;

Part II.-20% of the first $500 incurred expenses.

The qualified policy may also include any of the following as supplemental coverage:

Part III.-Prescription drugs ($50 deductible per year); additional hospital days (20% coinsurance); cost of blood in excess of three pints; and other personal health services furnished pursuant to written direction of a physician (20% coinsurance).

A carrier is defined as a voluntary association, corporation, partnership, etc., or other non-governmental organizations, lawfully offering a health benefits insurance plan.

Subsection (e) provides for the redemption by the IRS of health insurance certificates.

Subsection (f) provides technical amendments and subsection (g) establishes an eleven man Health Insurance Advisory Board to include the Secretary of HEW, the Commissioner of IRS, and nine public members. The duties of the Board are set out in subsection (h) and include the development of guidelines and regulations to establish minimum standards for the care of state insurance departments in qualifying a carrier and its plan, and the development of programs for the maintaining of quality medical care and the effective utilization of available financial resources, health manpower and facilities, through means which provide for the particiption of carriers and providers of service.

Subsections (i) and (j) provide authority for the state designated agency to qualify carriers and plans and issue registration numbers to those so qualified, and subsection (k) requires an employer or an association which purchases a qualified policy to notify its employees of the amount of their contribution and the registration number of the policy.

Section 3 provides that the Part B medicare enrollee may use his health insurance certificate to pay for his Part B premium expense.

Section 4 authorizes the Secretary of HEW to contract with a state to insure coverage under this program for Title XIX (medicaid) eligibles in that state. Section 5 is a prohibition against federal interference similar to the prohibition contained in the medicare law.

Section 6 provides that the effective date of the Act shall be the taxable year beginning after December 31, 1969.

A BILL To provide for medical and hospital care through a system of voluntary health insurance financed in whole or in part by income tax credits

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Health Insurance Assistance Act of 1969."

FINDINGS AND DECLARATION OF PURPOSE

SECTION 1. (a) The Congress finds: (1) that the resources of many individuals are inadequate to meet the expenses of major illness; (2) that private health insurance coverage is an appropriate mechanism for insuring against such expenses in that through competition incentives are provided for the lowering of health care costs, the introduction of innovations in the delivery of health care, and the maintaining of quality health care; (3) that such coverage for all persons is a desirable national objective; (4) that health insurance should be made available to all citizens regardless of previous medical history; and (5) that it is in the public interest to provide government assistance and encouragement to individuals who seek the protection of insuring against the expenses of illness.

(b) The purpose of this Act is to make it possible for every individual to obtain comprehensive medical and hospitalization insurance of his choice, subject to minimum standards, designed to protect against the costs of customary illness as well as major medical expenses, on a guaranteed renewable basis and regardless of prior medical history.

INCOME TAX CREDIT FOR MEDICAL CARE INSURANCE PREMIUMS

SEC. 2. Part IV of subchapter A of chapter I of the Internal Revenue Code of 1954 (relating to credits against tax) is amended by redesignating section 40 as section 41, and by inserting after section 39 the following section:

"SEC. 40. COST OF MEDICAL CARE INSURANCE PREMIUMS "(a) Allowance of Credit to Individuals—

"(1) Determination of Amount of Credit-Every individual determined to be eligible under subparagraph B of paragraph 3 and who is not eligible to receive military medical care shall be allowed, at his election, a credit against the tax imposed by this chapter for the taxable year in an amount equal to the applicable percentage of the allowable premium (determined under paragraph (3)) paid during the taxable year by such individual.

"(2) Applicable Percentage The applicable percentage for each taxpayer will be based on tax liability and determined under the following table:

Income tax liability and percentage of allowable premium credited
against income tax

"(A) Except as provided in subparagraph (D), the allowable premium is the aggregate amount of premiums paid in behalf of eligible beneficiaries (defined in subsection (B)), during the taxable year under one or more qualified medical care insurance policies (defined in subsection (d) (1) by the taxpayer, or by his employer in his behalf and from the taxpayer's funds.

"(B) 'Eligible beneficiary' shall include the taxpayer, his spouse, and dependents as defined in Sec. 152. For purposes of this provision, a child of divorced or separated parents, shall be an eligible beneficiary of the parent who has custody and who has paid the allowable premium. "(C) Tax credit shall be allowed for aggregate amounts of premiums on more than one qualified medical care insurance policy only to the extent that such combination of policies does not provide duplicate coverage of health care costs for any eligible beneficiary.

"(D) Special Rule in the Case of Ineligible Beneficiaries-If the taxpayer pays premiums for a qualified medical care insurance policy which includes coverage for an ineligible beneficiary, then for purposes of subparagraph (A) in determining the aggregate amount of premiums paid there shall be included only that portion of the premium for such policy which bears the same ratio to the amount of the premium paid by the taxpayer as the number of eligible beneficiaries of such policy bears to the total number of beneficiaries of such policy.

"(4) Disallowance of Medical Expense Deduction-If an individual elects to take the credit under paragraph (1) for the taxable year, no amount paid in such taxable year by such individual for a qualified medical care insurance policy shall be allowed as a deduction under any of the provisions of section 213 (relating to deductions for medical expenses).

"(b) Limitations on Amount of Credit-The maximum credit allowed to a taxpayer by subsection (a) of this section for a taxable year shall equal the appropriate applicable percentage of the sum expended for a qualified program for eligible beneficiaries.

"(c) Election

\"(1) Manner of Election-The election of a taxpayer to take the credit under subsection (a) for a taxable year shall be made at such time and in such manner as the Secretary or his delegate shall prescribe by regulation.

"(2) Health Insurance Certificate-A taxpayer may elect to receive in lieu of a tax credit, a health insurance certificate equal in amount to the applicable percentage of the allowable premium; providing, however, that for the purposes of this paragraph, the premium need not have been paid in advance of the issuance of the health insurance certificate.

"(3) Registration Number Required—An individual who elects to take the credit under subsection (a) for a taxable year with respect to premiums paid for a qualified medical care insurance policy shall, under regulations prescribed by the Secretary or his delegate, affix to his income tax return the registration number of the carrier which has provided the qualified medical care insurance policy. "(d) Definitions and Special Rules-For purposes of this section—

"(1) Qualfied Medical Care Insurance Policy-The term 'qualified medical care insurance policy' means: (a) a contractual or other right to benefits under a program offered by a carrier, which carrier and program have been registered by the state insurance department or by such other agency as may be authorized by the state, and which provides base coverage and which requires the payment of premiums; or (b) the Supplementary Medical Insurance Benefits for the Aged program Part B, Title 18 of the Social Security Act as amended). A qualified medical care insurance policy may include supplemental coverage in addition to base coverage.

"(2) Base Coverage "(A) The term 'base coverage' means a program offered by a carrier which provides protection against the basic costs of medical care without regard to any pre-existing health condition, and is guaranteed renewable so long as the carrier continues to offer to the public one or more qualified medical care insurance policies. "(B) Base Coverage shall include:

"(1) Hospital (Part I):

"(a) Inpatient hospital services, including maternity services, for up to sixty days during any policy period, in semi-private accommodations; inpatient hospital services shall include all services customarily charged for by the hospital, except for convenience items such as telephone and television. Benefits under this paragraph shall be subject to a payment of $50 by the beneficiary for costs incurred during each hospital stay.

"(b) Emergency room or outpatient services when performed in the hospital for the beneficiary on an outpatient basis, and billed for by the hospital; such services shall be subject to a 20% coinsurance payment by the beneficiary of the first $500 of expenses incurred during a policy period.

"(2) Medical (Part II):

"All medical services, including diagnostic and therapeutic, provided by a doctor of medicine or doctor of osteopathy who is duly licensed to practice medicine or osteopathy, when such services are provided in the hospital, home, office, or elsewhere; services provided under this paragraph shall be subject to a 20% coinsurance payment by the beneficiary of the first $500 of expenses incurred during a policy period.

"(C) Coverage provided under Parts A and B of Title 18 of the Social Security Act as amended shall, for purposes of this Act, meet the requirements for base coverage.

"(3) Supplemental Coverage (Part III)-(A) The term 'supplemental coverage' means a program of benefits, in addition to those provided as base coverage, offered under a qualified medical insurance policy. Any carrier providing a plan for supplemental coverage must make such plan available to all subscribers to its qualified medical insurance policy.