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gency category and while we were in Great Britain, in fact, there was a case of a women who died because of three delays in admission so she obviously had gone from "early” to “emergency” to an early demise.

But I think that has been not the experience peculiar to all systems with respect to that percent of GNP, but it does em to me to be a very real danger.

I have to run and I apologize to the panel.

Mr. CORMAN. We will suspend briefly, gentlemen, but we will be back as soon as we can.

[A recess was taken.]
Mr. CORMAN. I see we're back.

Mr. ROSTENKOWSKI. All right, go ahead. You will come back, won't you, Mr. Crane?

Mr. CRANE. Unfortunately, I can't. I have a meeting that I must attend of about 20 people.

Mr. ROSTENKOWSKI. Mr. Stark, I have some questions for you.
Mr. STARK. Yes, sir.

Mr. ROSTENKOWSKI. You say that incredible chaos would result if people generally chose to supplement the modest NHI benefit package. But isn't it true that large number of people already have dual coverage and not just medicare beneficiaries? I didn't realize this makes for chaos.

Mr. STARK. I think I could turn that over to our insurance people and let them describe it firsthand.

Mr. THOMPSON. Well, you do have a substantial number of people in the country who are carrying duplicate polices. There is no question about it.

The majority of the insurance companies, ourselves and Aetna and all the others, have provisions whereby those benefits are coordinated. So the issue of two payments for the same single cost is really being eliminated from the system.

We also provide, as I mentioned in my direct testimony, a supplemental coverage for people over 65. That system has worked pretty well because frankly the advantage of being able to coordinate those two claims processing systems, since we also act as the medicare carrier within the State, so there are efficiencies in doing it that particular way.

There still is a great deal of slippage though within this country and when you see the concern over the total cost of health care you have to recognize that in areas such as no-fault legislation which we have in our State and which many of the States have and Congress is considering that now, you have a direct opportunity for dual payment and that is an excess in the system that must be eliminated. The most recent Senate bill does take that into consideration. But in every State that I am aware of now, you have the opportunity except in New Jersey, you have the opportunity otherwise but you have the fact of dual payment.

Mr. STARK. My concern is not so much the fact that the private sector will be able to cope with this eventually, but you are jumping from a matter of 20 million people in terms of medicare up to 200 million people. I think for that period, unless something is looked at very carefully, dual coverage is going to create a good deal of chaos, perhaps not for the insurance company which sells the coverage, but for the providers and the beneficiaries.

Mr. ROSTENKOWSKI. Mr. Cotter will inquire.
Mr. COTTER. Thank you very much, Mr. Chairman.

Gentlemen, its been a most provocative session and I want to welcome you all here particularly Mr. Cathles from my home State with whom I have had a long and rewarding friendship.

Mr. Cathles, to get back to that 94-percent figure which has been a source of some discussion here, could you break that down for us to a finer degree?

Mr. CATHLES. This comes from the sourcebook of Health Insurance Institute, 1974–75. It lists for years, beginning in 1940 to 1973—which is the last year for which data is available—the number of people covered by all insurers, by all insurance companies, by group policies, by individual and family policies, by Blue Cross and Blue Shield, and Medical Society plans, and by other plans.

It starts out with the under-65 population covered, $170 million, which is made up of $103 million by all insurance companies. That is broken down to $82 million under group policies and $47 million under individual policies. Obviously duplication exists because the group and individual add up to more than $103 million, which was the total figure.

For Blue Cross-Blue Shield, just one figure for both the group and the individual coverage, $72.7 million. Then for all other plans, which is your HMO's, self-insurance arrangements, et cetera, et cetera, $8.8 million.

If you take the total of the 103 and the 72 and the 8.8, again you come up to more than $170 million. So again we have duplication.

Mr. COTTER. Even if we were to reduce that figure to the 80-percent figure as put forth by the Social Security Administration, it would appear to me that a very high percentage of the under-65 population have some type of coverage. Of course it can vary between


and between individual policies. Some may be adequate, some may be highly inadequate.

But it seems to me that if we are covering some 80 percent of the population, it would appear that we have the mechanism or the vehicle upon which coverage to all people could be expanded at a minimum of cost and a minimum of administrative headaches and so forth.

Would any of you care to expand on that?

Mr. CATHLES. You have the mechanism in place, but you have some problems. You have the problem of the group that cannot afford to buy more than just the basic hospital coverage, so if you want to get thắt marginal group of employers covered, there has to be some mechanism which helps them to pay or which subsidizes them in some way.

Nr. COTTER. But if I may interrupt, I am just exploring this, you also mentioned some individual policies the acquisition costs are much higher. Of course, if these were to be brought under a group, there could be a savings in that area, could there not?

Mr. CATHLES. If there were mechanisms to make available comprehensive coverage at reasonable cost to the individual, you would have a greater percentage of our total population covered. No question

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about that. Some people do not buy because they cannot afford to or they buy less comprehensive coverage than they want because they cannot afford to pay more in premium. That is one part of the problem..

In addition to this there are people temporarily laid off, and, people terminated at their place of employment. A period of time elapses before they can get another job and coverage lapses because they cannot afford to pay the premium. They are not welfare cases, they are not even near-poor. But there are many demands on their budget and with the insecurity which comes from lack of a current job they frequently do not continue coverage. This is a third category which makes up the difference between the 185 million who are potentially eligible for private coverage and the 144 million who we estimate have comprehensive coverage.

Mr. COTTER. For the sake of argument, let's assume the 80-percent figure is correct. Of that 80 percent, how many would you estimateor guess, and I know it is a matter of conjecture-would have what we would term adequate or near-adequate coverage for the basic hospital and surgical coverage ?

I know it is an unfair question to throw at you.

Mr. CATHLES. We estimate 144 million and you take what percentage of 185 million that is and that would be it.

Mr. COTTER. I am talking about the 144 million. What percentage would you say have adequate basic hospital and surgical insurance?

Mr. CATHLES. We estimate that 144 million have catastrophic type coverage, which I would say would be reasonably comprehensive coverage.

This would include those covered under HMO plans which provided comprehensive coverage. This would include the auto workers, the steel workers, the rubber workers, patterns have been established in these industries which provide very comprehensive benefits; for example, 365 days of semiprivate hospital care, 730 days of extended care facilities, reasonable and customary surgical diagnostic X-ray and laboratory, benefits, and, prepaid prescription drugs, now even dental benefits in auto and steel; very liberal basic benefits.

It would also include those with major medical coverage which provides maximums in excess of $10,000. Most of these major medical policies supplement basic benefit plans. So the maximum coverage available is a lot more than the $10,000. But this is the kind of coverage which goes to make up these figures.

We also include the Blue Cross-Blue Shield major medical protection which is available through their more liberal contracts.

Mr. COTTER. What strikes me about this figure, 80 percent or 94 percent, it would strike me that we have the mechanism, that they are doing a reasonably good job and the simplest approach would be to expand on this type of mechanism rather than to start from scratch with some type of a bureaucratic Government entity handling it.

Mr. CATHLES. I think a real good job has been done in reaching the potential market. The potential market, as I see it, is not those who cannot afford to pay. I think an insurance mechanism can only reach people who can afford to pay.

Now to reach the people who cannot afford to pay, I think you have to have some other mechanism which helps them to be covered, but you can use an insurance mechanism in the administration of coverage for those who cannot afford to pay.

Mr. COTTER. With Government subsidies and whatever?

Mr. CATHLES. Yes. And they are efficient mechanisms which have a good record of cost efficiency vis a vis Government administration.

Mr. COTTER. Thank you. My time is expired.

Mr. VANIK. What you are saying, Mr. Cathles, is that you can handle the cream but you cannot handle the skim milk and the troublesome things that occur, so for that group you think probably the Government ought to assume responsibility perhaps by assuming the expanding medicaid to take care of the group of where that is now and where the private enterprise can handle it through insurance carriers?

I am talking about the funding.

Mr. CATHLES. I do not think that is a fair interpretation of what I said, however.

Mr. VANIK. Well, how are we going to handle that group that is below the group that can pay?

Mr. CATHLES. We can administer it.
Mr. VANIK. But where would the resources come from?

Dr. England is worried about where the taxes are going. He does not want to pay for it. How are we going to raise the money to pay for this for those who cannot pay? Mr. CATHLEs. In the final analysis, from the public as a whole.

Mr. VANIK. You mean Congress or the county commissioners or the township trustees? Who is going to do it?

Mr. CATHLEs. The public will have to pay the bill.
Mr. VANIK. By public, who is that?
Mr. CATHLES. All of us, you, me.

Mr. VANIK. The local governments? Do you think Congress should worry about it?

Mr. CATHLES. I think the Congress has a function here. I think somehow the public has to pay for those who cannot pay themselves.

Mr. VANIK. Yes; that is what this is all about.

Mr. CATHLES. I think we are presently very inadequately trying to cover the cost of those who cannot pay for themselves.

Mr. VANIK. I would like any of the members of the panel to put in the record the kinds of policies that they know about that are available--I know you have talked about catastrophic coverage, you were talking about the full year's coverage. Catastrophic coverage in my parlance goes for expenses that are beyond that, are recurrent.

You know you have a system in the insurance system where, if I have a claim for example, some given ailment and I am an individual policyholder, I am not talking about groups, maybe you treat groups differently, but the time my policy comes up, you will exclude the thing that is the basis of my claim because you have a very complicated registry system that transfers the information on my claim to everybody in America that belongs to this group.

As soon as the person has a claim, the information is telegraphed and made available to every insurance carrier. Any insurance carrier that I deal with will say, we will cover you, excluding the very thing that you are likely to claim for. Now what about that?

Mr. CATHLES. I do not think that that is a fair statement.


Mr. VANIK. Well, it operates that way. You know that it operates. Mr. Cathles. The policies written today are guaranteed renewable. You do not have riders eliminating coverage which has been in force.

Mr. VANIK. What are the problems with your relating to dependents? I will take your former company. But they send me a ticket saying your premium is so and so. The agent says, I have a better pol

I icy. I say oh, I get notified in the meanwhile the old policy lapsed because the computer up there did not know I got a new one. They they come back and say, we cannot cover you on that new policy, but we

will reinstate the old one which is already lapsed for 4 months, but they want me to go back and pay the premium from the time of the beginning.

In other words, they want 4 months for coverage when they told me I have been canceled if I had a claim. All of this comes to me in a computer card. The agent, the representative, has no obligations at all. He is not my agent nor yours. I do not know who he is. He tells me I am covered.

If I went to court and tried to prove it, I would be washed out of the box and I know that as a lawyer. That is the problem I have having with your company, which is one of the best ones in the business. Now if this is an experience with one of the best, what can I expect from some of the others ?

Mr. CATHLES. I would think that would be a very responsible reaction because what you have said is that the company said all right, the computer made a mistake.

Mr. VANIK. I cannot argue with computers. I do not argue with our Mr. CATHLES. We would have had to pay the claim.

Mr. VANIK. You could have told me that. Your company could have said, we gave you a cancellation on the old, we turned you down on the new one, and I would have gone from here to the Supreme Court arguing about it but I do not have the resources nor the time.

The next point I want to make, and I want to commend Dr. England, I think his testimony represents what most of the doctors of America are saying. Some of the doctors that I know think Attila the Hun was a terrible liberal and this is one of the reactions we get.


Mr. VANIK. I know, and I have full understanding about how you feel and how most doctors feel. But this is the problem that I have. I think we in the Congress have to establish détente with the medical profession. I think it is one of the most crying needs in America. We have to find out just how far the doctors are willing to go before we can make any system work.

Now, I am glad to learn that everything is happy in Carlinville because in the rural area of Fairfax County next to the affluent area of Washington, it is very difficult to find a doctor. All of us have had those experiences. You cannot go to a clinic because whatever happens happens after the office hours, and if it happens on Wednesdays, there is not a doctor available but on the golf course.

But we sit in offices and we wait and most of the time we cure our own illnesses. One of my colleagues just told me his injury healed up while he was waiting for a doctor to get him in a local area hospital.


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