erations research people as a zero-sum-game. Other things being equal, if one physician bills more, another physician loses. Therefore, the physicians themselves control overbilling. And they use fee schedules to redistribute physicians into areas where there is a shortage of physicians.

I think it would be interesting to see how these utilization controls work, and how the West Germans control drug prices. In West Germany drugs are fully covered by health insurance. There are many reforms we may want to introduce here which the French and Germans have already tried. We can get relevant cost figures there. We can obtain clues on how to administer certain programs or even on how not to. It is for these reasons that I see the French and German systems as interesting case studies from our perspective.

Dr. WYNDER. I would also like to gain more knowledge from the German experience. I read a few months ago that they estimate that unless more controls are exercised over expenditures that by the end of the century the cost for health care will equal that to the entire German budget today. In other words, we can learn from some of these countries to what extent an undisciplined health care system, an undisciplined population, will bring the health care costs to such levels that it cannot be afforded by any society.

I think one thing we can learn from the Germans, and perhaps the Swedish and British experiences, is to what extent costs have spiraled to a level that society can no longer tolerate them.

Mr. ROSTENKOWSKI. Professor Fein.

Mr. FEIN. I would want you to visit Canada in order to at the very minimum listen to individuals who are very much like us who do not have the emotional baggage that we seem to have about the importance of cost sharing and who have had experience in some of their provinces with deductibles and coinsurance and without deductibles and coinsurance and have concluded that which sounds heretical in the United States, that it does not make sense to have coinsurance and deductibles. It think that is a very important lesson.

I would want you to visit Britain, not because I am so pessimistic as to believe that the United States will be in the near future as poor as Britain, but because I think that there one would see the, A, need for central budget decisionmaking, particularly in a poor country but in any country over long periods of time; B, the difficulty that is involved in negotiating with the medical profession; but, C, the opportunities that exist in a society in which there is a rational discourse for negotiation with the medical profession.

I think that I would want you to visit West Germany for reasons in many cases to see how not to do certain things in terms of administrative components, mandating pots of money, and additionally, to see what happens when there is a defined pot of money that society has said represents its priority judgment about the field and how resources can and cannot be allocated.

I think that those three countries would give one a measure of confidence about various critical elements.

I would also urge that you visit, as all of you do, the United States, because there are some lessons to be learned here about what can be done when we try and do things even within the very difficult constraints that are now faced because of the multiple sources of funding and because of the economic situation.

Dr. WYNDER. In case you don't want to travel, I suggest a book written by the Health Minister of Canada. Perhaps your staff could get it for you. It is an impressive kind of account by a health minister as to how he believes medicine should be practiced tomorrow.

It is a booklet that is available from the Canadian Health Services. Mr. ROSTENKOWSKI. My staff informs me we already have that. Are there any Communist countries that you feel we should visit? Mr. VANIK. Socialist.

Dr. WYNDER. One of my colleagues recently returned from China. Of course, in a society like China, if you would really like to wipe out a given disease, you can make the people do that.

He mentioned one particular example which I would like to call to your attention.

There are certain areas in China where the incidence of cancer of the esophagus is very high. The Chinese working cadre will bring populations together and ask them to swallow a tube with an inflatable ballon at its tip. Then as you draw it up, you pull up some cells from the esophagus on which you may make an early diagnosis of cancer of the esophagus.

He tells me that hundreds of people will stand and be asked to swallow this tube, and they will do so. I don't know whether we could get anyone in America to practice that kind of preventive medicine. So in areas where you can make population do things, you certainly can do that.

An interesting question that I asked my friend, was "What is China doing on smoking?"

"Well," he said, “nothing."

In all the time he was in China not one person told him anything about smoking. The probable answers to this may be that Chairman Mao is a heavy smoker and perhaps more importantly that China is a sizable exporter of tobacco.

Dr. FREYMANN. I think China is of particular interest. I am not suggesting that the committee should necessarily go there, but I think it is of particular interest because it is the only nation I know of which has really changed its health care system.

I said before that no nation that has instituted national health insurance has changed its system with health insurance. It has done quite the reverse, it has frozen the system it had.

The National Health Service did not create the British system. That system existed and the National Health Service was superimposed on it, ditto for Sweden and Germany and for all of the Communist nations of Eastern Europe and Russia.

China is an exception. The Chinese really did change their system, and they did it in a very simple way. A highly trained specialist who was a graduate of Peking Union Medical College and did not see the wisdom of becoming a family practitioner in a commune was sent off to a camp to think things over. Amazingly enough, it was not very long before the whole system was changed.

I submit that China is the one nation which has changed its health care system, but no other nation has. There is a lesson in this for us. Mr. ROSTENKOWSKI. Mr. Duncan will inquire.

Mr. DUNCAN. Thank you, Mr. Chairman.

I want to thank the panel. You have been very helpful. The reason I mentioned at the beginning that we should have some practicing

physician on the panel is when I read the résumé of each of you, that for Dr. Freymann and Dr. Wynder, it shows that you are primarily engaged in research, and in an article that I also read, Dr. Freymann, that you had written, that said there are two factions in the medical profession, one directed toward research and teaching and the other whose occupation is private practice. That is the reason I happened to mention that, that we should have someone whose occupation was private practice. But you have been very helpful.

Someone suggested that perhaps we should go to Canada. It might not be necessary. I was looking at our fact book, and I noticed that in the last few years we have 439 physicians who migrated from Canada into the United States. So perhaps we could talk to some of those without spending the money to go there.

Also we have 364 from England. I understand now that the number is up to over 400, which is more than four medical schools could produce in this country.

It is also my understanding-you might correct me-that the Canadian Government limits the benefits on their national health insurance and also that they only pay 50 percent and the remainder is paid by the Provinces, is that correct?

Mr. REINHARDT. Yes.

Mr. DUNCAN. And it is a complete cost share arrangement that they have with their Provinces.

Is it also true that in Canada they spend less than 1 percent of their gross national product on national defense-they pretty much depend upon the United States for defense and consequently they are able to put a little greater proportion of their GNP into medical care?

Mr. REINHARDT. I think the latter point is certainly well taken. Even these percentage figures, as Dr. Fein says, do fluctuate considerably; and one has to take them with a grain of salt.

The Canadian expenditure is not really that drastically much more than ours. I don't think it is more than a percentage point more.

Again, one would have to keep this in mind that the Canadians clearly do try to deliver more than we now do for the extra percentage point, and Canada is a somewhat poorer country than the United States.

If you take into account those facts and also the fact that in paying physicians Canada does have to be somewhat competitive with the United States, you should not be surprised that the percentage in Canada going to GNP is somewhat higher than here.

Mr. DUNCAN. In 1973, you said that any national health insurance would place an immediate added burden on the Nation's already strained health care provider system. Is that still your opinion, Dr. Reinhardt?

Mr. REINHARDT. That introduction of health insurance would increase the demand for health services?

Mr. DUNCAN. Yes; you said it would place an added burden on the Nation's already strained health care provider system.

Mr. REINHARDT. Yes; that is still my opinion if the health care delivery system remains organized as it is now.

Mr. DUNCAN. Don't you think we ought to be careful that we don't promise more than we can provide?

Mr. REINHARDT. I think you have to be somewhat gradual in phasing things in. For example, benefit packages can be expanded over time. You might initially be very cautious in covering drugs and increasing drug coverage over time. You might limit physician services. You might indeed initially ask for copayments and deductibles in the expectation you will ultimately phase them out.

I would suspect if full comprehensive health insurance coverage is introduced in the United States now, there would be a strain placed on the delivery system.

Mr. DUNCAN. How long do you think it would take to implement an adequate national health insurance program? Any one of you gentlemen may respond.

Mr. FEIN. Let me begin the answer with the question that you asked Professor Reinhardt about the degree to which you would increase the demand for medical care and strain existing resources. In 1969 Roger Egeberg was appointed as Assistant Secretary for Health. He indicated then he did not think we could have national health insurance in the immediate future because it would strain the resources of the medical delivery system.

In 1969 we waited and it is now 1975. In 1974 instead of $60 billion, we were spending $104 billion. Much of that is explained by inflation, but a good deal of that is explained by an increase in demand which we were able to meet because it is a fact that our medical schools have expanded markedly in the last few years, that is point 1. I don't think it necessarily strained the system.

Point 2: None of us, I think, are here pleading for more and bigger and better dollars for that health care system. I think some of us are saying that the question is "How are we going to distribute the $104 billion that are now being spent and how are we going to share in the goods and services that are already being provided?" That a system will have to ration unless we want to have it cost as much as the public and providers want it to is abundantly clear.

The question is "Do you want to ration on the basis of price and income?" I think that one could implement a national health insurance program quite clearly, that is, with leadtime to work up administrative mechanisms.

I think the system could absorb it. I think the tax system could absorb it. The money, the $104 billion, is already being spent. If one wanted to take time to phase a system in, a full and comprehensive system, I don't think it is necessary, but if one wanted that, I would urge that the kind of phasing in we do have the following characteristics: Each step logically leads to some subsequent step rather than, as we have on occasion done in the past, implement a step which we must then take apart to move to the next level.

Mr. DUNCAN. My time is about up. I want to move on, but let me ask you, how much do you think a full comprehensive health insurance program would cost?

Mr. FEIN. I believe that a full comprehensive health insurance program with a commitment and with a willingness on the part of the Congress to do battle with those who would like to preserve the existing organization would cost slightly less than what we are now spending.

Mr. DUNCAN. Let me ask you this. Do you think we should have a share-cost basis with the States such as Canada has in her Provinces ! Mr. FEIN. Intellectually I like that. I think it has great merits. My difficulty with it is that we are 50 States. They have many fewer Provinces. The disparities between some of our States in terms of resources, in terms of income and in terms of mix of population and their income-in terms of poverty, if you will-are such as to make it difficult for me to see how we could do this while preserving a fundamental principle, namely, that people in Mississippi and people in Massachusetts are all Americans.

Mr. DUNCAN. Where would we get the money? Where would the Federal Government get the money other than borrowing it?

Mr. FEIN. Individuals and business are now spending a lot of money on private health insurance. That is the money that I am talking about.

Obviously it would be silly for me to come before you and say that the Federal budget can pay for all this without increasing the revenues to the Federal budget. I would point out that those revenue increases would necessarily translate into decreases in private consumption for private health insurance.

Mr. DUNCAN. I have several other questions I would like to ask, but I would like to submit them to the panel to answer for the record. I do thank you, Mr. Chairman.

Mr. ROSTENKOWSKI. We are going to work until quarter to 1 and we are going back at 2 o'clock. I don't want to cut off anyone with respect to getting some answers for the record. So if Mr. Duncan could come back at 2 o'clock, fine.

Mr. DUNCAN. Thank you.

Mr. ROSTENKOWSKI. Professor Reinhardt, did you want to say something?

Mr. REINHARDT. Just to clarify the record, it is true the introduction of health insurance would place additional demands on the existing health care delivery system and would burden it. I mentioned the phrase "as it is now organized it would produce some strain,” but I don't believe it would break the system.

First of all, we can look to Canada. What happens when a system has additional burdens placed on it? The health care delivery system could utilize more delegation of tasks from physicians to paramedical or physician substitute personnel.

Second, the length of the face-to-face contact with the doctor, the patient visit, could be reduced. Those are the two responses of a health care delivery system to additional demands.

It is in this way that the system accommodates. In a recent paper I wrote I am not sure which one-I remark upon the unbelievable flexibility a health delivery care system has in accommodating even rapid shifts in demand or composition of demand. I will send you, sir, a table that shows physician-population ratio and physician productivity in three regions in the United States.

New England, which has the highest ratio

Mr. DUNCAN. The quote I gave you was the health service reports or something. I think it was in that.

Mr. REINHARDT. I see.