IV. IMPROVE COST CONTROLS Strengthening comprehensive health planning, providing additional health manpower, and promoting ambulatory care are all essential ingredients for improving the availability of health care and doing so at a lower overall cost. It is also essential that cost controls be introduced in order to slow the upward spiral of health-care costs. Accordingly, Aetna Life & Casualty proposes: A. That no Federal loan or grant for a specific health facility or service be made unless the project is certified by the appropriate comprehensive health-planning agency as an essential need, and, in the case of a grant, that the need is of high priority. B. That reimbursement of health-care services under all Federal programs be subject to the following conditions: (1) That care will be covered only in those health-care institutions which have a review committee of qualified physicians that effectively check whether the services rendered are of good quality and are necessary for the proper treatment of the patient, and whose management takes effective action with respect to adverse findings of the review committee. (2) That the professional services of physicians and allied health personnel be subject to effective peer review and that no payment shall be made for any professional service which is found to be unnecessary. (3) That no payment be made for that portion of a fee charged by a physician or allied health personnel which exceeds the prevailing level of fees in the community. (4) And that the services of a health-care institution be paid for on a "controlled charges" basis and that no payment shall be made unless the institution uses controlled charges for all its patients. Under the controlled-charges system, each institution would budget its expenses for the fiscal year and establish charges for services that should produce the income assumed by the budget. The cost of capital would be includable in the budget, and hence in the charges to patients, only to the extent that the capital expenditure had been approved by the applicable comprehensive health planning agency. The institution would file its budget and its charges with a reviewing agency composed of representatives of consumers, insurers, and health-care institutions. Should the budget reveal that the institution apparently would not operate efficiently, in comparison with comparable institutions providing comparable services, or the charges appear out of line, the reviewing agency would request a revised budget and revised charges. Filed charges would be deemed to be acceptable by the reviewing agency unless it acted to the contrary within 60 days of the filing. The reviewing agency would be able, however, to request a prospective change at a later date. For valid reasons, budgets and charges could be revised during the year in accordance with the foregoing procedures. V. EXTEND AVAILABILITY OF COVERAGE TO ALL I have emphasized that our major problem is to improve the availability of acceptable health care. We must not, lose sight, however, of the fact that at least 11 percent of the population under age 65 has no health insurance at all and that the poor need assistance with financing and adequate level of health-care coverage. Solving this latter problem need not be as costly to the Government as it might appear. At least 60 percent of the population under 65 is covered under employer-sponsored group medical-expense insurance programs, some quite rich in scope. It is logical to build on this private health insurance in extending the availability of health insurance to all. For example, group plans could cover permanent part-time employees and even temporary employees where the temporary employment is expected to be at least a calendar quarter. When employment is suspended due to layoff or labor dispute, some provision for continuation of the group coverage could be made. Most important of all, when an employee becomes totally disabled, he could be permitted to continue his coverage until becoming eligible for medicare. A. Minimum standards for group medical-expense plans Accordingly, Aetna Life & Casualty proposes that the Federal Government limit the deductibility of an employer's expenditure for medical-expense benefits for employees and their dependents to 50 percent instead of the present 100 percent if the plan does not include all of the following features: (1) That eligibility for coverage include all full-time and all parttime employees working at least 20 hours a week for at least 13 weeks of the year. Inclusion of the insurance industry's model coordinationof-benefits clause is recommended to avoid costly over-insurance. (2) That coverage continue for at least 1 month during a layoff or labor dispute with no increase in required employee contributions, with provision for continuation for up to 11 more months during such layoff or labor dispute subject to the employee's paying the full cost of the coverage. (3) That coverage continue during a period of illness or injury up to a maximum of 6 months with no greater employee contributions being required than would have been had the employee remained actively at work. If at the end of the 6-month period the employee were totally disabled, coverage would be continued for as long as total disability continued but not beyond the date he first becomes eligible for benefits under title XVIII of the Social Security Act. The employee would not be required to contribute more for such continued coverage than he would have paid had he remained a healthy, active employee. (4) That coverage continue for dependent children who are totally disabled, provided the child were insured under the plan prior to age 19 and became disabled prior to that age. This continuation would remain in effect until the child recovered or became eligible for benefits under title XVIII of the Social Security Act. The employee would not be required to contribute more for such coverage than would have been required were the child a dependent under age 19. Admittedly, the foregoing does nothing to help the hardcore unemployed, the near-poor whose employers do not provide group medicalexpense insurance, and the self-employed who are uninsurable because of poor health. These three classes of people need Government assistance in financing their health care. This assistance would be more acceptable if it were in the form of a subsidy for private health insurance rather than the present welfare type of payment. B. Uniform insured plan for poor, near-poor, and uninsurables (1) That the Federal Government encourage each State to make available, through a reinsurance pool underwritten by all carriers, a uniform plan of health-insurance benefits to the poor, near-poor, and uninsurables. (2) That the uniform plan be operated like a group plan with all the administration being performed by one carrier or a set of carriers chosen by the State with the concurrence of the Secretary of Health, Education, and Welfare. (3) That the benefits provided by the plan be at least the minimum benefits specified by the Federal legislation creating the program. (See exhibit I.) (4) That poor families would be defined in the law as those whose adjusted income for the preceding calendar year was less than a specified dollar amount, which would be uniform for all States. The adjusted income would be gross earnings less the sum of the $600 personal exemptions allowed in the income tax law. This would avoid the rigorous means tests which some States have applied in administering the medicaid program and simplify and reduce the cost of administration. (5) That the upper income limit for the poor be the lower income limit for the near poor and that there be an upper income limit for the near poor specified in the law and uniform for all States. The near poor would be required to make a contribution towards the cost of their coverage, which would be a percentage of the adjusted income for the calendar year on which their eligibility for coverage was based. The percentage would range from a very nominal figure for those who are just above the lower income limit to an amount which approximated the full cost of the premium for those just below the upper income limit for the near poor. (6) That an uninsurable person would be defined in the law as one who had attempted to purchase private health insurance providing the minimum benefits prescribed by law for State uniform plans and who had either been completely rejected or offered the coverage at a premium rate in excess of that required by the State's uniform plan for uninsurable people. Each uninsurable person electing to participate in the State's uniform plan would be required to pay a contribution reflecting in part his very high claim costs with the balance being borne by the pool as a whole. If the uninsurable individual were a member of a family, the insurable members of the family would secure whatever private coverage they desired for themselves from the carrier of their choice. (7) That participation in the uniform plan would be voluntary except that the State would be obligated to include any family to whom cash assistance is provided. (8) That the policy year of the pool program would run from July 1 of one year through June 30 of the following year. Premiums, contributions, and coverage would be provided for the entire policy year regardless of when the individual actually applied for coverage during that year. (This provision is necessary since some people will not apply for coverage until after they become sick.) (9) That all carriers, profit and nonprofit, licensed in the State to write medical expense benefits would share any losses suffered by the pool and would be allowed an appropriate risk charge for assuming this risk. (10) That the administering carrier or carriers would set the premium rates for the uniform plan for each year with the advice and consent of a non-man actuarial committee appointed by the Governor of the State from among actuaries recommended by the other carriers. (11) That the State's cost of the program would be the excess of the premiums charged by the pool over the contributions made by the near poor and the uninsurables. This cost would be shared by the Federal Government on a basis related to the difference between the per capita income of the states and the per capita income of the Nation, with a minimum Federal contribution of 65 percent for all States whose average per capita income was higher than the national average and with a maximum Federal participation of 90 percent. To the extent that a State wished to provide more than the minimum benefits required by the law, it would be permitted to do so. However, the extra premium required for the additional benefits would be shared by the Federal Government at a rate equal to 75 percent of its sharing rate for the minimum benefits. We believe that each family is responsible for insuring its own medical expenses with assistance, where appropriate, from the Government. At the same time, we recognize that no insured plan can soundly provide benefits for every single dollar of medical expense that a family might incur. Thus, the Nation needs a catastrophe medical program under which each family would be responsible for its own medical expenses up to a portion of its income, or up to the amount of its insurance, if greater. The State would pay any medical expenses incurred in any given year in excess of the family's responsibility. Obviously, such a program could not be instituted overnight by any State, even with Federal assistance. Instead, the program should be phased in gradually, starting with the poor, then the near poor, and finally the balance of the population. Before embarking on an open end medical expense program of this type, Congress should be aware of the tremendous cost of providing room and board for those people, primarily the elderly, who are not physically able to feed and clothe themselves or take care of their daily personal needs. Congress should determine whether this is a medical problem, the cost of which should be covered under the State catastrophe programs, or a social problem which could more effectively be met through some other means. The problem exists. It is an enormous one. The question is how best to solve it. C. Catastrophe medical expense program Specifically, Aetna Life & Casualty proposes: (1) That the Federal Government encourage each State to set up a catastrophe medical program by agreeing to share the cost at a rate equal to 75 percent of the sharing rate applicable in that State for a pool program of minimum benefits as described in section B above. (2) That the Federal Government specify that its sharing would initially be available only with respect to the poor and would specify a time schedule under which its sharing would become available for the near poor and finally the entire population. (3) That the Federal Government would specify the types of medical expenses eligible for inclusion for purposes of Federal sharing initially, and provide a time schedule for including additional expenses. (4) That the amount of the annual deductible under the catastrophe program-the amount of medical expenses the family would be responsible for before it would be eligible to have the balance of its expenses paid for by the catastrophe program-would be set by Congress in the enabling legislation. The deductible would be such as to be zero for the poor and then rapidly increase to give the average worker ample incentive to secure adequate health insurance which would at least cover his deductible. An illustrative scale of deductibles is attached hereto as Exhibit II. VI. ESTABLISH A NATIONAL ADVISORY HEALTH COUNCIL Health care and health-care problems are so complex today that no President and his Cabinet can be fully informed. It seems desirable, therefore, that the President and his Cabinet have available the advice of a group of experts in the provision and insuring of health care who would be independent of political pressures. Accordingly, Aetna Life & Casualty proposes: (1) That a National Health Advisory Council be appointed by the President of the United States. (2) That the council be of limited size, say nine members, each serving for a 3-year term with the initial terms on a staggered basis. (3) That the council encompass a broad spectrum of those associated with the delivery, financing and receipt of medical care, including in particular a consumer representative and a State administrator of health programs. (4) That the council be responsible for keeping the President and his Cabinet advised about the major problems in the field of health care and for recommending: the priorities that should be established for allocating available funds or manpower to solve such problems, the agency that should administer any given governmental healthcare program, and the governmental health-care programs that should be revised or discontinued because they are ineffective or no longer serve an essential need of the Nation. Our present health-care system is not working as well as it should. Some people do not have access to acceptable care because of income or place of residence. All find that good medical care is becoming increasingly expensive. The shortage of health-care personnel grows more critical daily. Catastrophe looms behind the approaching crisis. We are confident that these problems can be solved by bold, imaginative action. The comprehensive and interrelated programs proposed by Aetna Life & Casualty build on the strengths of all the elements of our present system. They combine the unsurpassed flexibility, innovativeness and managerial skills of the private sector with the unique economic capacity of the public sector. Out of this cooperative endeavor would arise a new partnership of unprecedented scale and potential. We are prepared to enter such a partnership. We invite Federal, State and local governments, our fellow insurance companies and all |