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tion of access as it relates to them as individuals, not measured after the fact by utilization, is substantially higher than probably all of us would

say

what that real access was. I am very troubled that all of us in dealing with this issue, as difficult as it is at times, are dealing with it more from the side of looking at many times unrelated statistics that don't prove what the public thinks they have.

As an example, even though you are hearing continuing arguments as to the number of physicians in the so-called primary carriers, those in practice in even my own State, the second highest State physician per capita basis, something like 75 percent of the people in my State believe they do in fact have a primary physician or a general practitioner.

Now, if you count the physicians by medical specialties you will know that just isn't true.

But I think we tend to deviate from what the public thinks they have. I think that is the issue that has to really be dealt with in a much more sophisticated way than previously done.

Mr. ROSTENKOWSKI. Yes. Dr. ENGLAND. I forgot to to resent something a moment ago. [Laughter.]

Dr. ENGLAND. The idea that somehow access is limited in the rural areas, I would like to take issue with. No one is more rural than I am and I think we do a job that would rank with any area. I think that is true generally. The statistics that come from rural areas are sort of peculiar. I saw a survey performed by Southern Illinois University Medical School, which is located in a county adjacent to mine and according to their information on a census of hospitals in my county, they were off 50 percent. They concluded there was no medical society in existence in the county and I am the secretary of it.

In surveys somehow, you get out what you put in. In the rural areas, I don't think that they have a particularly peculiar problem with regard to access. I would agree that the situation in the so-called ghetto is different but I think there are explanations for that, too.

Mr. STARK. I have heard the argument many times that there is an opposition to the Government intervention in the health field. The argument goes that we have adequate insurance for the majority of our citizens. I heard some figures today, and I am not sure which panelist mentioned this, that we have some 90 percent of our citizens covered by health insurance. I may have misunderstood that but I would like clarification if I did hear correctly.

But I wonder how comprehensive the insurance covering these people is and whether it is universal enough to warrant saying we don't need additional coverage under Government sponsorship or any other sponsorship?

Mr. CATHLES. I am afraid I was responsible for the 90 percent figure. It is a figure developed from surveys of the Health Insurance Association of America. The figure is 94 percent and that is an estimated figure because there are no precise figures. It is related to basic hospital care, which, of course, many of us would say is not comprehensive care.

But, nevertheless, although the total figure is related to basic hospital care, there is a very high percentage of these poople covered for what might be described as catastrophic care. The HIAA estimates that to be at the end of this year 144 million. Now 144 million out of 185

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million noninstitutionalized people is a high percentage for comprehensive health coverage.

Mr. SOMERS. Mr. Cathles, I think the last HIAA estimate showed about 82 percent. I suspect that the difference may be that you may have added up the various figures they use for the different types of insurance. Whereas, HIAA does concede that there is a tremendous amount of duplication in those different figures; that is, many millions of people have duplicate health insurance I am one of them, covered by two or more.

So I think that reduces the total by a very great many millions which brings it down to, I think, somewhere in the order of 82 percent of those under 65.

Mr. CATHLES. If you add up all categories which the HIAA has identified, group, and HMO's, et cetera, et cetera, you will come to more than 100 percent. You have to adjust for the duplication between group and individual policies and you have to adjust for the duplication between the Blues and commercial insurance. This is not an exact adjustment. So that, as I said before, this is not a hard-and-fast figure. But nevertheless, that is the estimate that the people or the actuaries in the insurance industry have come up with interpreting the HIAA figures.

But it doesn't make a great deal of difference whether it is 82 percent or whether it is 94 percent. I guess those might be the opposite ends of a range because the Social Security Administration has come up with a figure of about 78 or 80 percent. Theirs was based upon equally unscientific, perhaps, or even more unscientific approaches and probably the truth is somewhere in between. But it is a very high proportion of the total population that is covered.

Dr. ENGLAND. What is it that should determine the comprehensiveness of the policy?

Mr. SOMERS. Whom are you asking?
Dr. ENGLAND. Anyone that will answer.

Mr. SOMERS. It is now determined by the resources of those who buy it. Comprehensiveness means exactly what the word means, covering virtually all necessary medical costs. In practice, I suppose comprehensiveness is actually defined as somewhat more than you have

For example, medicare reports that it covers in monetary terms, roughly about 48 percent of the actual costs of the aged for medical care. That is not considered comprehensive by those people.

Should it be 100 percent? Probably not. But it should be considerably more than we have now.

The way it is actually determined now is by what can you afford to buy. The insurance company will gladly tailor-make a contract for you in terms of what you are willing to pay.

Dr. ENGLAND. I don't think that is strictly arbitrary as long as the individuals are deciding it. The problem I am having is trying to identify that person who has the kind of knowledge that must be necessary to control the other guy's activities and determine how he is going to spend the money he has? Who is that? It is not me.

Mr. SOMERS. Mr. Chairman, I think we may be getting away from the topic for which you invited us which was, I gather, correct me

now.

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if I am wrong, the role that the private sector must appropriately play in a national health insurance scheme.

Mr. ROSTENKOWSKI. We will go to the 5-minute rule, and the panel will take questions of the committee.

Mr. Cathles, I take it you regard the individual private insurance mechanism an inadequate approach to meet the health insurance needs of those who cannot be reached by group insurance mechanisms. You describe the individual policies of about 45 million people as plaqued by problems of high cost, incomplete regulatory supervision, limited coverage, and questionable claim practices.

How do we deal with that problem?

Mr. CATHLES. I think that is one of the problems of the present insurance mechanisms. I have suggested as a means of dealing with the problem, a competing mechanism which would make available to anybody who wanted to buy it, a policy at a basic cost. Right now part of the problem with the individual policies is the high distribution cost, expense rates of half of the total premium. If you could eliminate that distribution cost and if you could make a policy available without any loading for the selection which it will obviously get from the uninsurables, then this would make available to individuals almost the same opportunity for reasonably priced coverage that an employee has who works for an employer which has a group insurance policy.

Now, this is going to have impact on the existing system because this would be a policy in competition with higher cost individual policies but at least it would leave the individual the choice as to whether he buys it at this lower cost or whether he decides there are other advantages in the individual policy from the standpoint of supplementing his existing program and from the standpoint of filling his special needs which is more important to him.

I did not intend to impute to individual policies in general, either incomplete regulatory supervision or questionable claim practices. My comments in this vein were directed at certain mass marketing techniques used by a very limited number of companies.

Mr. ROSTENKOWSKI. Would any of the other members like to comment?

Mr. THOMPSON. Let me add this comment, that the nongroup category presents a dilemma. The fact of life is though that in an institution like mine the cost of that particular group is consistently subsidized by the groups.

In the process of premium regulations as it presently is in effect, through the insurance commissioner, the nongroup rates do not rise. They are subject to public hearing, public scrutiny, public debate, and the political pressures on that particular sensitive category of people results in the fact that insurance commissioners traditionally deny changes in the premium level that reflect the real cost to the group so employer groups as a fact of life underwrite a substantial portion of the cost.

In the last 7 years—this is my own experience now in one part of the country-it amounts to some $12 to $14 million paid by employer to subsidize those people who have no relationship with them whatMr. ROSTENKOWSKI. Doesn't that put them at a competitive disadvantage with the commercial groups?

ever.

Mr. THOMPSON. That creates quite a problem. We argue that with the insurance commissioner and employers, who understandably feel that that category of citizenry within the State is not their responsibility.

However, the track record as it were is such that they have in fact subsidized them.

Mr. SOMERS. If I may?
Mr. ROSTENKOWSKI. Dr. Somers.

Mr. SOMERS. That degree of regulation which you describe applies only to the Blues, doesn't it, because of their nonprofit status. Unfortunately, it does not apply to most of the commercial and especially the mail-order houses.

That leads me to ask Mr. Cathles, you did say in your presentation, I believe, that the State regulation of the industry leaves much to be desired. I believe you said that.

I entirely agree.

Yet, the industry has apparently resisted any attempt to go to Federal regulation in insurance. I am wondering why that is so for companies like yours, Aetna. The industry as a whole has gotten a worse image than it should because of the mail-order houses, flyby-nights, et cetera, which don't resemble the respectable Aetna's and Metropolitan's. Wouldn't you be better off if that were made clear through a regulatory process that evaluated these rather dubious operations which are going on throughout the country?

Mr. CATHLEs. You took one little statement I made and blew it up into quite a bit.

Mr. SOMERS. That is a good debating technique, I believe.
Mr. CATHLES. Yes, I know.

But I did not mean to imply that State regulation of insurance was ineffective with respect to the great bulk of the insurance which is offered.

But I did say there was this one thing in the insurance operation which the States have trouble in regulating because it is marketed under a trust which is established in a State which has no laws and then marketed more broadly. So that the powers of the particular insurance commissioners just don't enable them to cope with that kind of a situation.

But this represents a very small portion of the total insurance coverage that is marketed in the United States. And to infer from that that the State insurance departments do an inadequate job, I think is a very big jump.

Mr. CORMAN. Excuse me, gentlemen, we are under time pressure. Mr. Crane wanted an opportunity to inquire before we had to go vote. Then we will be back with general discussion and further questions by other members.

Mr. Crane wanted to get some questions in at this point, however.

Mr. CRANE. I thank you for generously yielding to me. I do have a conflicting meeting after this vote, too.

There is something in Dr. England's testimony that intrigued me. I believe it is based upon-I saw in your biography that you had

worked with the Indian Service hospital at Fort Defiance, Ariz. I also see you have worked in rural areas of New Mexico, too.

You made reference in your testimony to familiarity with the Indian health care program. The reason that struck me is I think Mr. Stark or maybe it was Mr. Cathles had indicated that where Federal funds had been reduced in support of State mental health programs, particularly, that there had been a cutback in appropriations made at the State level to continue those services and I am intrigued by that inasmuch as I was recently in Great Britain and they commented on one of the problems of total public expenditure in the health care field being that when you politicalize medicine, it becomes a lower priority item. There are other more glamorous appealing areas for public investment.

I gather, Dr. England, that something comparable to that was your experience with the Indians in Arizona or New Mexico ?

Dr. ENGLAND. At the time that I had experience with them, the Indians, of course, had no vote, so they were politically castrated.

They were the sole responsibility of the Federal Government and while the few devoted physicians that were there did, I think, a superior job given circumstances and resources available to them, it was far from ideal. There have been some changes made since then. At that time it was the responsibility of the Department of Interior, Bureau of Indian Affairs to provide medical care. I believe it is now the responsibility of the Public Health Service.

I don't think that any improvement has stemmed from that reorganization.

I was struck by a television documentary a year, perhaps 18 month ago—I can't remember what network it was on, CBS perhapsbut they studied the dilemma of the Indian and his general circumstances and the social situation in which he finds himself on the reservation, and if that was a truthful documentary it would indicate to me that the Indian has experienced absolutely no improvement in spite of the fact that there has been more activity to improve his lot since he has become more of a political animal.

Interestingly enough, never in that documentary was it ever pointed out that the one responsible for all the things that need to be corrected is the Federal Government and what is wrong is due to lack of action on the part of the Government.

Again, it demonstrates that Indian health, given the Federal budget, is not a high priority item and I think that would be true of the medical care of all of us if we continue to pursue the route we are on.

Mr. CRANE. That was essentially what I had heard from a number of British physicians' staff people and administrators within their health system where the figures are 5.5 percent of their GNP is spent on health and you have these incredible waiting periods for surgery and a variety of classifications for admittance into hospitals. Emergency care as I understand it is comparable to here in the United States but when you get to the chronic level they have categories of early admittance and then “when convenient.” If you are unfortunate enough to be in the “when convenient” category you may be able to look forward to moving up to the early because of aggravation of your condition and at some point your "early” may put you into the emer

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