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Let me take that one step further. The argument is often made that preventive care is useful and primary care is useful because, among other benefits, it will save us money in the long run.

It is, I think, correct that a number of components of primary care will, in fact, pay for themselves by avoiding long-term treatment which is costly.

Having said that, I would hate to rest my case on that observation, because it seems to me that it is to use a false accounting system.

If there is a child who is sick with a high fever and you do nothing, the child may get better in 10 days, and let me assure you the gross national product will not be affected 16 years later when the child enters the labor force.

But if you do something and it only takes 5 days, you have saved a lot of pain and a lot of concern, and a lot of worry on the part of the child and certainly on the part of the parents, and the normal accounting system that puts everything in terms of GNP does not take account of pain and concern and worry.

I think that it is regrettable that on occasion those programs are favored which can "pay for themselves."

That is a humanitarian component to health care, an awful lot of it is about that, and it seems to me, again to use the phrase of civilized society that in an accounting we ought to pay attention to those components as well so that the thrust for equity is not only for the little boy on the renal side and not only for the people on the preventive side who will, in fact, as a result of the preventive treatment, save the economy's resources, but also for the people, all of us on occasion, who need care and supportive mechanisms and it won't make a bit of difference to GNP, but it will make an awful lot of difference to the quality of life of the Nation.

Mr. ROSTENKOWSKI. Thank you, gentlemen.

Congressman Pike will inquire.

Mr. PIKE. Professor Fein, I am very impressed with your statement about the complexities of deciding who gets what unless we essentially give everybody everything and the cost of doing it, and the choice of making these decisions.

Obviously you feel that any system should provide a kidney machine at home for anyone who needs it. Would you put any limitations whatsoever on the kind of care which should be provided under a national health system?

Mr. FEIN. Let me try and answer that with more than a sentence. Mr. PIKE. Heart surgery for everyone?

Mr. FEIN. I believe that in fact in this economy with a GNP of over $1 trillion, we can do an awful lot more than we are doing. I believe also that we can do an awful lot more than we are doing within existing budget resources if we had a system which was more rational in its allocation.

I do believe that we would at various levels save money out of the waste that we now have.

Some 2 years ago there was an influenza epidemic in Boston, and the question was asked, as patients were in beds in the halls of the hospitals, "Does this not demonstrate that there is a shortage of beds?"

One of the keen observers, a hospital director faced with that question, found it rather difficult to answer, but when pressed he said, "No. There is no shortage of beds, because 25 percent of the people who are not in the halls, who are in beds, don't need to be there."

We have designed a financing system that encourages their being there, and that is the costly part of medical care, which is to say, I think we could do an awful lot better for the $104 billion we are now doing if we did not have a preference for high cost, technological, institutional care.

A lot of people can be treated in other forms for the same $104 billion.

Two. Other societies, in fact, have demonstrated that you can force and bring a more rational allocation by not having an openended budget system. as is the case in the United States.

One of the interesting observations is that in the United States, if you want to know what we spend on medical care, you ask the people at the Social Security Administration, Office of Research and Statistics, approximately 6 months after the end of a fiscal year, "What did we spend in the year beginning a year and a half ago?" but in Britain you know what you are spending, because you have decided what to spend. This does force very hard decisions.

In Britain it forces the hard decisions because Britain is a poor country. I don't think the decisions would be quite as difficult in the United States.

Three. If we come to a point where, in fact, medical science is able to do things for people that are beyond our budget abilities, even with whatever reallocations we might make from other spending sources, I would like to see a societal decision. Shall there be open heart surgery financed or shall there not? That is a tough one. It is a tough one, because the next question has to be-if society says that in terms of its priorities it can't do primary care and open heart surgery and that it opts for primary care-will you deny open heart surgery to those who can afford to pay for it of their own pocket? That is a tough one.

I know where I stand on it, but I can respect the fact that others would have a different point of view.

Mr. PIKE. You know where you stand on it, but I don't know where you stand on it.

Mr. FEIN. I don't believe that I feel comfortable in a society in which-remember, when we talk about open heart surgery and the expensive things we are talking about life and death situationsin which life becomes a matter of a marketplace where some can purchase it, life, because they are rich and others can't because they are poor.

Mr. PIKE. So as a doctor you will say to the rich man, "You will not get it?" You are not a doctor. You are a professor.

You would say to the rich man, "You would not have it?” Mr. FEIN. I would. Rationing life through a lottery is one thing, but rationing through income and wealth is quite another. Mr. PIKE. It is a tough question and I thank you.

I want to let other people in here, but I would like to ask one question of all of the members of the panel. Taking the totality of

our medical system, nonsystem, monstrosity, whatever you opt to call it, and comparing it with any other nations in the world, tell me which nation you would prefer to swap our system for, if any. Mr. FEIN. I will take a crack at that.

In many respects I think Canada.

Mr. PIKE. You would swap our system for Canada?

Mr. FEIN. I am including the whole thing of the delivery and the financing system and of culture and attitudes. If I could really have anything, I would prefer the British system. I think, however that we are so far away from that as a society in terms of our social values and our traditions-that to say the British is to say quite a mouthful. I would note, however, that Canada, is much more like our system on the delivery side as well as having traditions and culture of the people much more like ours. Canada has made a very key decision on the financing side, to say, "Thou shalt be insured without deductibles and without coinsurance." That strikes me as a step which this society coud make without great trauma. Mr. PIKE. Professor Reinhardt?

I would like to go down the panel.

Mr. REINHARDT. I view the Canadian and the American health care delivery systems as being so similar that I cannot make a distinction, between them.

Mr. PIKE. I want to take the totality of it, the delivery and the financing. Whose system would you swap for ours?

Mr. REINHARDT. I think then I would take the Canadian system over ours because of its superior health insurance coverage. I don't think the Canadian system is the finest imaginable system in the world, but I do believe that it is superior to what we now have, and the reason is simply that the average Canadian citizen is free from the enormous uncertainty of the financial impact of illness. Mr. PIKE. What do you think is the finest in the world? You said you did not think the Canadian is the finest in the world. What do you think is the finest in the world?

Mr. REINHARDT. I might even modify that. I could think of ways in which to improve the Canadian system, but I would say probably the Canadian system is the finest now operating in the world.

As to the delivery system, I really cannot discern any substantial difference between the Canadian and American delivery systems. In connection with the European systems, I might tell you that in your alma mater, where I ply my trade, we have a project to study the European health systems. I hate to give any conclusions before I embark upon a study. As a social scientist, I can respond to your question only in a few years from now. As a nonsocial scientist Mr. PIKE. Hopefully that won't be too late.

Mr. REINHARDT. Hopefully not. As a private person, I can tell you subjectively that should I travel in Europe I would hop on the first airplane to North America should I become sick in Europe. So I would vote with my feet. I would certainly pick our American system over those in Europe; given my current income.

Dr. FREYMANN. I would say it is difficult to pick a system. Of one thing I am sure: The usual indicators mean very little. Infant mortality, for instance, because how you judge.

Mr. PIKE. Even lifespan?

Dr. FREYMANN. Lifespan is another one, but there are socioeconomic factors affecting life expectancy which are quite independent of the efficacy of the health care system.

So I think I would go along with Professor Fein in saying that if there was a switch to be made, I would also

Mr. PIKE. The question is should we make the switch, not if there is a switch to be made. Should we make the switch?

Dr. FREYMANN. I will give you the good news and then the bad news. I would say the switch should be made because I quite agree the Canadian citizen has had all the concerns of financing his health care, the direct financing of his health care, removed from his back. That is the good news.

The bad news I say expecting that my economist colleagues may have more up-to-date information. When I last looked at the figures, there was only one nation in the world spending a larger portion of its GNP on health than the United States, and that was Canada. Canada followed Sweden and France in the rate at which its health care costs were escalating and all three nations were way ahead of us. The Canadians are paying for what they are getting.

Mr. FEIN. Could I just comment on the percentage of GNP? This year, though the figures have not been published, it is obvious that as a percentage of the GNP our health care costs will be higher than Canada's but that reflects, gentlemen, the fact that the GNP has not performed very well this year.

Dr. WYNDER. I have not specifically studied the various national health care programs for the different countries excepting as I travel through various parts of the world and hear what the people tell you. I don't think there is a perfect national health care service system anywhere in the world today day, in my view, because the account is always put on the wrong horse, on therapy.

In Germany, for instance, they have gone virtually overboard in providing services for the sick. In Germany today you can go to health spas paid for by the national health service which, I am told, costs Germany 6 billion marks per year.

Now, you could imagine what would happen in this country if every coronary patient could be sent 4 weeks to Palm Springs or to some other nice community. Yet even in Germany they are still debating whether or not the health service system should pay for preventive services as it relates to coronary prevention.

At this moment the system only pays after you already have a heart attack. It does not pay if you have high risk factors. At present the National Heart and Lung Institute has a $12 million per year study going on to determine whether the risk of middle-aged Americans, at high risk for coronary disease could be reduced if we would reduce the risk factors.

Obviously, reducing risk factors for a coronary is a great deal cheaper than open heart surgery.

You may be surprised to learn that in this country, with the kind of health service we have, 50 percent of all Americans never have had their blood pressure taken and of those where it was taken and it was found high, only about a quarter are adequately treated.

So before we talk about health service involving open heart surgery or heart transplant, I would like to see us have a system that treats

the simple things first. They are not very costly and we do know that effective treatment of hypertension will reduce stroke rate by 30 percent at low cost. Certainly such treatment is far more cost effective than to try to treat stroke victims.

I always come back to prevention, because I want you to recognize that many of the diseases from which we suffer today are man-made. We require your wisdom to bring our country into preventive medicine.

One reason that all of the health services in Europe that I have seen are not doing any better is because they are virtually as bad as ours in terms of meaningful preventive services.

Mr. ROSTENKOWSKI. Thank you, Mr. Pike.

I would like to pose this question, and I don't mean by it that members of the subcommittee should run out and buy any airline tickets. But what countries would this panel suggest that our committee visit in order to get a viewpoint on which direction we should move on national health insurance?

I think that it would be most educational, but I was just wondering whether the panel_could make a suggestion or suggestions.

Dr. FREYMANN. I would say first and foremost Canada. You can go to other countries, for instance Sweden. Everyone talks a great deal about the wonders of the Swedish system, but I hope that you will ask Dr. Vincente Navarro, who has just written a book on it, to testify before you go to Sweden.

Sweden and Britain are places that everyone thinks of. The reason I pick Canada, is that we have to work with what we have. That was the whole thrust of my presentation. No matter what you see in Sweden and England, it is not applicable to this country, simply because the systems are so different. The Canadian delivery system is so similar to ours that I think it is quite applicable.

Mr. REINHARDT. I would also suggest Canada. In fact, I know that some of your staff-Bill Fullerton, for example-have already begun to study that system. The reason is that Canadian society and the Canadian delivery system are culturally rather close to ours, and we can see what changes can be made in a short time with a system and the impact of those changes in the short run.

The countries in Europe that I would suggest as interesting are France and Germany, where in some instances one can see what has been tried, what has succeeded, and what has failed.

There are some important lessons to be learned. In some respects the West German financing system is akin to what we once called the medical foundation. The German insurance system is literally 1.800 independent small insurance funds that are financed through employer and employee contributions and pension funds. The funds pool their resources at the state level and turn over a lump sum to a physicians' association once a year, and the physicians' association in receipt of this lump sum obligates itself to deliver all contracted services under the insurance policies to the insured.

For example, the physicians' association is responsible for the regional distribution of physicians. The physicians distribute this pot of money among themselves, generally on a fee-for-services basis, and it is they who control health service utilization. Dr. Fein mentioned that it is important to control the behavior of physicians. In West Germany the physicians' associations, play what is known among op

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