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coordination of services, set standards for personnel and services, and handle complaints, grievances, and other local problems.

15. Foster a pluralistic and flexible system of administration. Widely divergent ideas about how medical care can best be administered exist in the various parts of the United States and among health care personnel and the public-at-large. We should certainly not decide upon any one method as necessarily best for everyone or for all time. As science and technology continue to develop new methods of diagnosis and treatment, new drugs, and new systems of delivery, we should be willing and able to adapt our arrangements to respond to new needs and styles.


A national health security plan is not a panacea which will solve all the problems of medical care in the United States. The continuing increase in demand for medical services while the supply remains inelastic will certainly create rising price and cost pressures into the foreseeable future. Changes in organization, delivery, and access to services to meet the increasing demand will not occur overnight. Responsive changes in medical school curricula, admissions, and orientation, however, are now underway, but they will take time to complete.

Health education and preventive health care must meanwhile be expanded so that the available medical personnel and facilities will be able to handle acute and chronic sickness and disability. We must also make an effective effort to distribute medical services in a manner more rational and socially conscious than that at present. Through a national health security plan we could focus our planning and our priorities for a more intelligent and equitable distribution of the miracles of medical science to the people of this nation.


1. The national health insurance bill which eventually will be enacted by Congress has not yet been introduced at the time this statement is being written. Judging by past experience, the Congress is likely to include some important and unexpected elements in any final piece of legislation that takes into account the forces of influence and compromise which mold the legislative process. Administrators of the eventual plan must be ready to implement the unexpected.

2. Providers and consumers should be fully consulted during both the legislative and administrative process to assure successful and acceptable administration of the entire program.

3. A comprehensive public-information and health-education program is vitally necessary to obtain public support for the legislation and understanding of the key issues and to avoid excessive demands on the medical care system. Such a program should start substantially before any new significant benefits begin.

4. Important, new benefits should begin preferable between April and October in order to avoid paying initially for services during high-morbidity periods (November-March) which will involve handling of a larger volume of claims than during low morbidity months (April-October).

5. Benefits under national health insurance should be phased into operation by a predetermined schedule which takes into account the progress made under the Health Resources Law and any federal manpower legislation.

6. The federal administrative authority for the program should be in a board of three to five persons rather than in a single administrator. The federal board should be in operation a number of months before any major new benefits or policies are put into effect. A board will avoid the implications of rule by "a czar" of medicine.

7. A separate health appropriations bill should be procesed by the Congress to ensure that all health legislation is considered in relation to every aspect of health and medical care. This would mean including the medical budget for the Defense Department and the Veterans Administration.

8. The Health Insurance Benefits Advisory Council should make a report with any recommendations each year on the operation of the plan. Each five years an independent advisory council should review the program and make its report to the President and the Congress with its recommendations. The membership of the council should follow that provided by law for the Advisory Council on Social Security.

Mr. CORMAN. Thank you.
Mr. Siegfried ?


Mr. SIEGFRIED. My name is Charles Siegfried. I think I should include some biographical background at the outset. Prior to retirement in 1973, I was employed by Metropolitan Life Insurance Co. for over 43 years. I served as chief actuary and president, and in the years prior to retirement was vice-chairman of the board and chairman of the Executive Committee. During a long period of my career with Metropolitan I was associated with health insurance matters. I participated in many intercompany activities, and in 1966 was president of the Health Insurance Association of America. In 1972, I was a member of the President's Committee on Health Education. For a number of years, I was a member of an advisory council of the Department of Labor having to do with the Welfare and Pension Plans Disclosure Act and was a member of the 1971 Advisory Council on Social Security. Because I am surrounded by members of the academic profession I call attention to the fact that I am chairman of the Board of Trustees of Franklin and Marshall College, but particularly I want to call attention to the fact that at the present time I have no association with the insurance business nor with any other business.

I think it is helpful in discussing matters of this kind to always be aware of the enormous complexities associated with the subject of health insurance. Other fields of insurance seem simple by comparison. I think it is also helpful at the outset to remind ourselves that the picture overall is by no means bleak; many aspects of what we refer to as problems stem from great successes in medical science and technology or are the result of economic and social conditions beyond the control of medical practitioners or health insurers. Past accomplishments encourage the hope and belief that we have the ability to cope successfully with these problems and that even more will be done if we act carefully and wisely in the period ahead.

Following are major factors which contribute significantly to complicate the problems and issues in health care organization, delivery and financing:

One, the great expansion in medical science and technology, which is still continuing and which, in a labor-intensive system, seems to raise costs rather than reduce them.

Two, the historical development which has led to heavy reliance on hospitals and in-hospital treatment, with the result that in many cases treatment is provided where less expensive alternative modes of care would probably suffice.

Three, wide diversities in the social condition and outlook of the American people stemming from differences among rural, town and urban situations and ethnic backgrounds. Differences in economic status further complicate the others.

Four, a conscious striving for good health does not appeal to large numbers of people. Ignorance, indifference, other priorities and the normal hazards of modern life all seem to contribute to more illness and demand for a greater quantity of medical services than seems necessary.

Five, special considerations affect children, the aged and the age groups in between. These may cause variations in programs for dif

ferent age groups as we move ahead. I think Mr. Cohen had that in mind in a comment he made.

Six, the fact that the scope, variety and volume of possible health and medical services seem to have no natural or foreseeable limits. Mr. Cohen referred to that also.

Seven, the uncertainty that exists as to the efficacy or consequence of many forms of medical treatment.

The above factors complicate our situation. One factor, though, which I regard as especially favorable, is the existence of a vast mechanism of insurance and prepayment whereby a very high proportion of the population is already coping in a satisfactory way with the costs of medical care. I am not aware that a comparable situation exists or has existed anywhere else in the world.

This brief recital is barely adequate for present purposes. I mentioned our heavy reliance on hospitals. This suggests that inadequate emphasis has been given over the years to alternative systems for the delivery of medical care and to meaningful experimentation which would shed light on the true value and significance of various alternatives. Regarding insurance and prepayment plans, too little attention has been given to the consequences of the emphasis on first-dollar coverage which has been so strongly advocated over the years by some. This brief recital should make clear that there are many underlying matters that need to be brought into focus before there can be meaningful exchanges of thinking and certainly before legislative decisions can appropriately be made.

I have tried always to think in terms of action: What is it I would favor as a way of improving our current situation?

I believe it is necessary to have a careful regard for all the major factors I have mentioned previously. Hence, I believe it is desirable to move on a number of different fronts in a coordinated way. Also, I believe it is important to adopt an evolutionary type of approach. I favor moving constructively from where we are in such a way that we can take advantage of experience and not be set back painfully by unexpected surprises. I think Mr. Cohen was trying to avoid just that.

I favor moving in ways which enlist the cooperation and support of as many people and institutions as reasonably possible,

There are bills before the Congress which would do this. They represent a distinct current advance and provide a solid base from which change can be made readily if experience truly indicates its desirability. I like particularly reliance on voluntary action by that large part of the population that is capable of financing its health care through non-governmental means. I like also the constructive and humane approach on behalf of the poor and the near-poor in some of these bills. I believe much more attention deserves to be directed at this important aspect of the total problem.

If we need more government action, I believe the evolutionary approach will provide a good basis from which to form a judgment as to what it should be. We have much to learn before we will be ready for the next step. But this approach can provide the necessary experience quite quickly. It is not a stalling tactic by any means. Its desirable qualities emerge even more strongly when one considers the costs and risks inherent in alternative programs.


I have heard it said that a national health insurance plan is inevitable and that the plan finally adopted will be made up of elements of the various plans that are being advanced. This may be a natural political process, and compromise of that sort may be required. However, the serious dangers in any such process should be recognized and strong efforts should be made to avoid major disasters. I believe that can be accomplished most surely by building on current strengths and arranging a program that can evolve and can adjust to changes which are shown to be desirable by the accumulating experience.

While it is perhaps understandable that so much interest is directed at the concept of national health insurance—a program for spreading the costs of medical care through premium payments and taxation so that the burdens of medical care costs fall less painfully and, one hopes, more equitably. Even though that is good, I believe more attention should be directed at steps that will help keep the aggregate burden more bearable.

I suggest there are three major possibilities that deserve investigation:

First, greater utilization of research in health maintenance and medical care delivery. We have had a considerable amount but I believe we need much more.

Second, a variety of activities related to health education and motivating individuals to meet their personal responsibilities to maintain acceptable standards of health and well-being.

Third, a program for utilizing vast untapped human resources in dealing with the needs of the ill and the elderly.

I will very briefly try to indicate more clearly what I have in mind on these three points. Many people think we already have mountains of statistics, and any suggestion that we need more to be a stalling tactic. There is, in fact, a serious lack of information" of the kind needed to deal with national health insurance issues. The reasons for this lack are well known—the process is costly and the need has not been given a high priority. The tax laws contribute to the unfortunate end result. In the world of manufacture and of most business, research is supported on a wide scale. Expenditures for research are a deductible business expense for tax purposes. The same is not generally true as far as many insurance companies, prepayment plans, or medical care institutions and hospitals are concerned. Research and statistics can, of course, be a luxury and can be wasteful because they serve no truly useful purpose. This must be guarded against. On the other hand, it seems reckless to accept the financial and other consequences of ever-growing costs of medical care. We need better methods than we now have for learning where added costs exceed the benefits obtained.

Concerning health education and motivation: Commencing in the fall of 1971, a group of distinguished persons drawn from a variety of fields of interest and expertise devoted a great deal of thought and effort to the subject of health education. In a report submitted to the President in 1973, the following statement is made:

The recent and continuing debate over national health insurance has uncovered à great deal of concern about the delivery and financing of health care. That concern is felt by the public as well as by Government and private institutions both inside and outside of the health field.

However, after more than a year of intensive study and research, we are convinced that results of any changes or improvements in the delivery and

financing of health care will be virtually nullified unless there is, at the same time, an improvement in health education—which means not just supplying information about health to people, but motivating them to accept the information and put it to work in their daily lives.

Unfortunately, the important, and often crucial role the individual can play in maintaining his own health has rarely been clearly explained or adequately. dramatized.

Our findings regarding the ignorance or apathy-or both-of American institutions and organizations, indeed, the public at large, toward health education. are chronicled in the body of our report.

While there were differences of view as to how such improvement should be attempted, there was no disagreement with the view expressed I have just quoted.

Concerning untapped resources for dealing with the ill and elderlymedical care is a service-oriented activity. While some cost savings might be effected by use of mechanisms in place of human labor, it does not seem that substantial reductions in total costs can be achieved by that means. To deal with the total problem of human sickness and disability, the need is for many more human hands rather than fewer. The hands seem to be in being and are by no means already fully employed. It may sound far out at this stage, but a plan for involving the youth of our Nation, as well as older persons, in a plan of national service devoted to the ill, the disabled and elderly, is conceivable and seems to have exciting possibilities.

In earlier times, untold services of this kind were rendered by members of religious organizations. Many fraternal associations had arrangements under which their membership rendered personal assistance of this sort. While the substitution of paid-for services through insurance and related plans has seemed preferable, I believe we are witnessing limitations on that approach.

This development has its counterpart in the moves that were made to treat sick persons in hospitals rather than in their homes. I believe we have learned, or are learning, that there are limitations on the acceptability of institutional treatment under many circumstances, and more preferable alternatives must be sought. The conditions existing in many nursing homes suggest the best, right answers may not yet have been found.

' A program of national service utilizing young people in large measure could not only improve our national effort at dealing with the problems of illness and disability and old age, but could be a powerful instrument in health education.

In summary, the subject under consideration is one of awesome complexity and magnitude. We should be wary of the connotations of the expression "national health insurance" because the issues involve so much more than those normally associated with insurance and the financing of medical care costs. In seeking to improve on the current situation, it is important to recognize the many strengths that now exist and to seek a basis for sound evolutionary development. The subject calls for much more sound experimentation and statistical analysis than has heretofore been employed. We have much to learn as well as much to do. The true goal of our endeavors is a healthier and sturdier and happier citizenry.

Thank you.

Mr. ROSTENKOWSKI. Thank you, Mr. Siegfried.

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