bers because we are hearing that this bill builds on the current employer mandate. It doesn't. It deeply transforms the way employers participate in this, and the effect is to eliminate any private sector involvement and cost control. Would you agree?

Mr. POMEROY. I agree with a great deal of what you say. I think the present lower inflation rate shows also long-overdue provider self-restraint that we haven't seen. Cost containment is achieved through one of two strategies: Sheer brunt of budget, like they have done in the United Kingdom, where they say this much is available for your health care, you sort it out, and we see a system that has got dramatically lower standards of medical technology, quality of care, than we might find in most of this country; or you do it on a case management basis, no shortcuts, carefully evaluating the needs of the patients and trying to match them with the best, most cost-effective medical care. That is what, because they haven't had other tools, much of the private sector efforts has been devoted to, and they have developed technologies and business plans that are accomplishing that objective, I think, and to an unhealthy degree it is wiped out.

I wanted to raise the issue of Worker's Compensation reform. In this area, the company paying the claims is removed absolutely from managing the care of the people they are paying the claims for. If you have a company paying claims, they have a strong incentive to move the Worker's Comp claimant into rehabilitation, to get them back to work as soon as possible. There is no market structure that has a bigger cost containment incentive than on that Worker's Comp carrier. They are wiped out from their costcontainment role altogether.

I think, as you mention, rather than build on the cost containment forces that have developed in the private sector, it wipes out a lot of them and throws them into some new alliance experiment.

Mrs. JOHNSON. As a member from a State that has extraordinarily high Worker's Comp costs and is just now moving into this kind of case management, there is a lot of concern that this bill will destroy the growing ability to deal constructively with those costs in a way that is really better for people, too.

Larry, back to the issue of Becky because more than 50 percent of the small businesses in America are being founded by women, because women don't find a level of opportunity in established business that men do and they are not willing to wait any more. So whether or not you can expand a small business is of particular interest to women. I maintain that our society has a far greater interest in allowing a small business with its new product or its new invention to hire those next marginal people because until you get up to 40 or 50 employees, you are not going to be exporting.

We need invention, products and market expansion. If you keep small businesses at four or five-and I do every year two conferences on how to set up and expand small business; I see where the break points are between being very small, moderately small, and the next step-if we make it harder to grow, we do fundamental damage not only to opportunity for women in our society but also to the vitality of our economy.

Becky's problem, I think, is far better solved with a combination of an individual mandate and an outright voucher or subsidy to expand the wage to ensure affordable insurance.

We grew up with fuel assistance. We recognize some people don't make enough to pay their fuel bills and so we give them the wherewithal. If we did an honest job of subsidizing premiums up to 250 percent of poverty income, we could have health care for everyone as a solid social policy, which is what it is, without having the heavy-handed consequences on our economy, which in small towns is going to be great. Even if you fix her so that she stays alive, she is not going to a expand her business.

This is of enormous concern to me because Connecticut is losing its big producers, big companies are downsizing and they are not going to grow very soon. The small businessmen, the people who come through my office now, who have figured out that you could make tiny air conditioners instead of big air conditioners, it is their growth that is going to matter to America's future.

Every time we increase the marginal costs of hiring someone by several thousand dollars, we make a difference in the vitality of our economy. So I hope that you will work with some of us who are looking for universal coverage and that absolute access, that all Americans deserve but are looking for a far more flexible, locally oriented system.

I also strongly support your interest in electronic telemedical networks. You ought to be concerned with how slow Congress has been to fund EACHS and RPCHs. We have not put our money where our mouth is for 3 to 5 years now. To think health care reform is going to somehow fund the very resources that have to create the network we are talking about is high risk, and I am really interested in a system where we can see far more visibly how we are going to move the resources to create the system that is going to guarantee universal access; and I would rather raise the taxes for the vouchers and see it than try to push it into the invisible arena of small business where we won't be able to see the jobs we don't create.

In Hawaii, there is clear evidence that while many businesses have survived, they don't hire; and they say that themselves. So I appreciate your testimony and I think the variety of concerns that you have brought to our attention has been very fruitful for us. As Vermont will have its opportunity, I hope Connecticut will have an opportunity to do something equally different from the President's proposal.

Thank you, Mr. Chairman.

Mr. CARDIN. Congressman McDermott.

Mr. MCDERMOTT. Thank you, Mr. Chairman. I am sorry I did not hear your testimony. I was in the Energy and Commerce Committee testifying about what I think is a better health care plan than the ones presented here, except by Mr. Sanders, the single-payer system.

I am sorry Mrs. Johnson left because I wish to follow up on the issue she raised.

The State of Washington has adopted a health care reform plan very much like what the President is proposing. It is going to be very instructive to talk about whether you want to have a payroll

deduction premium or this individual premium that people are talking about setting up for people.

The Washington State experience has been that the most difficult problem to solve is to figure out an individual premium for 5.2 million people in the State of Washington, because they are all going to have a different one, depending on who they work for and what kind of company and how big it is and how much money they make. And these are the friends of this plan who are putting it together. There are five different committees operating, trying to get a handle on a system that you can efficiently, year by year, decide individual premiums on the basis of where you work and how much you work, and so forth, simply because they want to avoid using the income tax structure and a payroll deduction for accumulating the premium.

It is, in my opinion, an absolute Rube Goldberg nightmare. We are not going to be able to foist that on the American people because of the complications of setting premiums and deciding the way in which people are going to pay.

I think, Mr. Chairman, that is one of the most difficult problems we have to solve. How do you deal with the fact that people have different abilities to pay for their health insurance and how do you do it in a fair way in a democracy? I think that the individual premium issue is simply a nightmare that we are going to have to avoid as a Congress.

Mr. CARDIN [presiding]. This will not be the last word on this issue. Thank you for your testimony.

The next series of witnesses are in a panel. First, representing the Federation of State Medical Boards of the United States, Dr. James Winn, the executive vice president. We have Dr. Dennis O'Leary, president of the Joint Commission on Accreditation of Healthcare Organizations; Margaret O'Kane, National Committee for Quality Assurance, president; Dr. David Nash, member, board of directors, the American Medical Peer Review Association; and Dr. Paul Kerschner, chair of the Consumer Coalition.

Welcome. As I indicated at the beginning of the hearing, your entire statements will be made part of the committee record. You may proceed as you so desire, starting with Dr. Winn.

STATEMENT OF JAMES R. WINN, M.D., EXECUTIVE VICE PRESIDENT, FEDERATION OF STATE MEDICAL BOARDS OF THE UNITED STATES, INC.

Dr. WINN. Thank you and good morning. I am Dr. James Winn, the executive vice president for the Federation of State Medical Boards of the United States. The Federation is a national organization composed of State boards empowered to license and discipline physicians within the United States. The mission of the State medical boards is to protect the public from unqualified practitioners and the Federation assists their State boards with this mission by acting as a clearinghouse for the latest information on licensure and discipline and to assist the credentialing process in the maintenance of a comprehensive database on board actions involving physician disciplinary matters.

We are very concerned about the somewhat ambiguous confusing and cryptic references in the Health Security Act with regard to

State licensure. Particularly, we are concerned about section 1161, which reads that "No State may, through licensure or otherwise, restrict the practice of any class of health professionals beyond what is justified by the skills and training of such professionals. We are concerned that, if allowed to stay in the act, this section has the potential to create an upheaval of the health provider regulatory system. The section appears to imply that State laws unreasonably and improperly restrict the practice of certain classes of providers who are otherwise skilled in providing medical services to the public. It would also appear to override current laws that are in fact already assessing the skill and training of individuals who apply for licensure.

The true criteria for judging competency to perform a certain function in the delivery of health care should be qualifications and training. In fact the three elements-education, training and examination-form the basis for physician licensure in this country. If there is to be some other method for evaluating competency under this act, we would ask that it be brought to light at this time so it may be carefully examined.

Who would determine limitations of skill and training? I would submit that the objective measures already in place in the State licensure process are both adequate and appropriate.

We are also concerned that all although the act gives the States responsibility for establishing the regional health alliances, for certifying health plans and for processing consumer complaints about plans, it remains unclear what role the licensure and discipline practitioners will play in this new system. We believe that this is an important function and that it is properly placed at the State level with State regulatory boards.

With regard to quality assurance, the act would create a large and ambitious bureaucracy. However, there appear to be few, if any, direct references to the actual methods of monitoring and enforcing provider quality standards. State licensure with its attendant disciplinary authority continues to be the best tool to enforce such standards. The quality management program should build on existing structures at the State level rather than create new national and regional ones.

Time does not permit me this morning to review with you the many areas where State medical boards are already filling the quality assurance role with regard to physicians, but I submit to you that much has been done by boards in the realm of quality as

surance.

Medical boards are already experts in investigation and prosecution of consumer complaints about the quality of care delivered by a physician. Health care reform measures should instruct States to adequately fund medical board activities.

Health care reform should also mandate reporting of physician misconduct to State boards by peer review organizations, government agencies and any other entity involved in peer review. New instruments are constantly being developed for use by State boards to assess the competency of questionable and problem physicians. We would urge that the Congress encourage the development of such instruments, and we would also urge that the government encourage and support programs which remediate the incompetent

physician and again allow the contribution of his or her skills and training to the health care system.

I would ask you to consider the following:

Congress should recognize the important role of State medical boards as the proper agencies to license and discipline physicians and to assure the delivery of quality medical care.

Congress should take appropriate steps to assure that States adequately fund State medical boards so that they may carry out their role with increased effectiveness; and

Congress should maintain the role of the States in licensing health care professionals through the medical boards and not include any provisions in legislation to override States' licensure laws or to call into question their validity.

Mr. Chairman, thank you for the opportunity to appear before you today with these concerns. At the appropriate time, I would be happy to answer any questions that you may have.

Mr. CARDIN. Thank you.

[The prepared statement follows:]