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So, when I talk about the mix of services, the point is that too many acute hospital days are being consumed. Perhaps there should be added consumption of extended care and more ambulatory care.

Although I am not an expert on the economics of preventive care, and I hear many questions raised of how cost-effective preventive care actually is, I would certainly wish to stand lectured on that point by Dr. Wynder. Perhaps we don't do enough preventive care. As to the final point, the use of allied health manpower can backfire on us.

I have written on this extensively and recently have come to the conclusion that the education and employment of an increasing number of allied health professionals may ultimately mean that there are just so many more mouths who nourish themselves on this activity called health care delivery, that there will not take place the delegation of tasks from the physician to the paramedical that we have anticipated, and that the cost of health care will not fall.

The reason why I suspect that the delegation of tasks may not occur is that at the same time that we are increasing the supply of allied health manpower, we are also increasing the supply of physician manpower, and it is not clear to me why these physicians will feel compelled to delegate tasks when some of them in some areas may well be underemployed themselves.

If my hypothesis is correct, and if we do not worry about providing proper incentives for the use of allied health manpower, I think we will find that the use of such manpower will increase the costs of health care substantially.

One way perhaps to use allied health manpower wisely is to remove them from the control of the physicians, as I mentioned before we recessed for lunch.

Mr. MARTIN. Professor Fein?

Mr. FEIN. I think the most important thing would be a recognition that the health system is interrelated in all of its facets and that there is probably nothing that you can do in any single area that would not have a very substantial impact in other areas.

In that sense, or that recognition which the Congress has in many fields, you are aware that housing policy will affect transportation policy and energy usage and so on because patterns exist, and all of that.

Mr. MARTIN. Are you then saying we should not proceed along a modular system?

Mr. FEIN. No. I will come to a modular system a little bit later. But it is important to recognize, I think, that as you proceed you have to worry about side effects. In terms of the priority questions that I believe you are asking for, I would say the first would be achievement of equal access to care and the recognition that one can structure the financing mechanism in a manner that will affect the supply resources. Whether you will have the high intensive hospital care or low intensive hospital care will depend on what you will pay for it.

A friend of mine went out recently, a few years ago, to a city in upstate New York, where the hospital wanted to add additional beds. It was a multistory general hospital, the beds were full and there appeared to be need for yet additional beds.

There was a top story and there the beds were empty. That was an extended care facility and the beds were empty because the physician,

to move the patient from the other floors to this top floor had to fill out a long and complicated form and Blue Shield wouldn't pay the physician for care delivered on that floor. So the patient stayed on the lower floors, at high cost. It was possible to arrange an experiment in which the form was reduced to half a page and Blue Shield on an experimental basis agreed to pay for care on the extended care floor and as a result patients were transferred. Within 3 months the application for yet additional beds was withdrawn, and outmoded facilities were closed down.

The financing mechanism can be used to affect where physicians are, what specialties they will go into, and what kind of care will be delivered. That can be done by duress, it can also be done by incentives.

In that sense I would remind you that at the present time we have created a structure of finance which is providing incentives but they happen not to be the incentives that we would like to see. They happen to be the high cost incentives.

I would also say that a high priority item, therefore, becomes structuring the financing mechanism in the same way that most industries in the United States face finances: All firms face a budget constraint. that causes people to ask: "What are my resources and how shall I allocate them to hit the high priority items?"

Given a constraint of resources, given a recognition that financing can affect the supply decisions, one can, I think, within a limited budget, achieve much more equal access to care than we now have.

Now, I have not addressed the modular approach per se, that is, I have not put forward my plan for how to phase something in. I don't know whether this is or is not the appropriate time to start down that path.

Mr. MARTIN. It may be that we have the information or a report on the example you gave of the Blue Cross experiment in New York City, you said?

Dr. FEIN. New York State.

Mr. MARTIN. I would appreciate it if you could direct us to the report on that. That would be very interesting to look into in detail. Dr. FEIN. I will do so.

[The information follows:]

Cited in "Who Shall Live," by Victor R. Fuchs. On page 99 of his book (Basic Books, 1974), Professor Fuchs refers to a personal communication from Sidney Lee in regard to this matter.

Mr. MARTIN. Both you and Professor Reinhardt commented on the segments of society that have less access to medical health care and I wonder if you could be a little more specific as to which segments we are talking about. Are these the low income, middle income--certainly not the high income.

But are you saying that people who are not covered by medicare. and medicaid are still in the group with the least access to medical care or are you saying people who do not qualify for those, but are in middle-income category are the ones or is there some other concept that you have in mind?

Mr. FEIN. I would think that for certain kinds of care, the kind that has been referred to in terms of primary care, most persons cannot easily find that kind of care.

The system isn't organized to do it.

Mr. MARTIN. You are talking about segments of society, not geographic sections.

Mr. FEIN. In terms of population groups I would remind us that the medicare population, people over age 65, some of them of low income, are in fact in today's market prices paying approximately 60 percent of their medical care costs themselves; that is, medicare covers about 40 percent of the medicare costs of the elderly on average. Here we see a social program which over a decade has actually decreased in its positive impacts.

Therefore, it would follow that some portion of the elderly population, those who are not affluent and those for whom medicaid may not pick up things, may be in trouble. They are likely to be in trouble, all of them may potentially be in trouble, given that the medicare program does not have an upper limit as to expenditures.

Indeed the sicker you are and the longer you are sick, the more the benefits phase out. Twenty percent coinsurance for physicians' fees continues ad infinitum, but the number of hospital days phase out. If you are not wealthy enough to have private insurance coverage in addition to medicare, don't stay in the hospital too long.

The medicaid population, we have introduced for this very lowincome population, we have introduced coinsurance and copay provisions.

It does not strike me that for that population this is likely to increase access.

There are individuals in many of our States with the States now facing their own fiscal difficulties, who are slightly above that medicaid line but whose income is hardly sufficient to take care of medical care costs at today's market prices. Over $200 a day for a day of hospital care in the city of Boston, for example.

You don't have to be sick very long to run up a whopper of a bill. So that it is those population groups as well as individuals in the middle-income group when faced with high expenditures because most of our policies phase out after a period of time.

Mr. MARTIN. Thank you very much.

That was very helpful.

Professor Reinhardt, did you have any comment to add to that? Mr. REINHARDT. I think my colleague has summarized that issue very well.

There are poor and rural areas where, despite the availability of financing there are simply no facilities available.

There are people who encounter considerable difficulty in transporting themselves to health care facilities. Even if one looks at urban centers where out-patient departments of hospitals make health services available, one can easily be misled to believe that enormous amounts of resources are devoted to these people when one studies the level of expenditures on such resources.

For example, in the municipal and voluntary hospital system in New York City, an average ambulatory visit costs between $70 and $100. Can you imagine a routine physician visit to a practitioner costing an average of $70 to $100? That is what it costs in New York City. But you may say these people get a lot of care. On the contrary, $70 to $100 buys a service for which, a short distance down the turnpike I would have to pay only $15.

Where this degree of cost inflation originates is something worth studying. I have not had a chance to sink my teeth into it. But you can certainly be misled by monetary statistics. There are queues in these departments so that the price of availing yourself of certain services acts in as bad a manner as a money price does. You can make the situation uncomfortable enough for patients ration by things other than price. One of the things is to let people wait. So there really is a problem for some segments and they tend to be lower income groups. Mr. MARTIN. Thank you, and I thank the chairman for generosity in time.

Mr. ROSTENKOWSKI. Mr. Corman.

Mr. CORMAN. Thank you, Mr. Chairman.

I hope my patience will be rewarded with a long 5 minutes.

I was thinking about where would we go for that heart surgery that Professor Fein mentioned. I guess it is fair to look at where we

are.

We all know there is a finite limit to the availability of health care. Not everybody that needs heart surgery is going to get heart surgery. But if you consider a 12-year-old boy and an 85-year-old man, the first is poor, the second is wealthy, we will probably patch up the 85-year-old man under the present system. Would you all concede that we probably need to change the present system without knowing where we go from here? Would you concede that where we are probably is not where we ought to be?

Mr. REINHARDT. This gets one into a kind of benefit-cost calculus that some of us are simply reluctant to perform because it is so uncomfortable.

We always talk about the infinite value of human life. It is, of course, true that economists can infer from human behavior that the individual in society actually places a very limited price on his life; otherwise, why would anyone ever speed? Clearly, while driving we are quite willing to put a limited value on our life.

The question of the value of a human life really does arise, and I think it was mentioned earlier that one can make a simple assumption that enormous resources should, if necessary, be devoted to saving virtually any life, irrespective of the age of the person whose life is endangered.

I guess one could use criteria to determine how much effort should be devoted to saving a given human life, but the establishment of such criteria is too uncomfortably hard-hearted to be seriously undertaken.

Fortunately, you have to do that and not I.

Dr. FREYMANN. I should point out to Dr. Reinhardt that it is very easy for him to say and for me to agree, but by 1990 we are going to have 30 million voters over the age of 65, and they may object to setting arbitrary limits by age. On the other hand, those whom we all agree need health services most, those under 18, don't have a vote at all.

So that there are implications here that go beyond matters of pure health care need. But I agree with you, Mr. Corman. I think we should be dissatisfied with where we are. The concern which I expressed and which I think my fellow panelists also feel is that wherewe go from here to improve the system must be done very carefully..

Otherwise we could throw an incredibly intricate system out of balance and make things worse.

Mr. CORMAN. I must say that I share that view, but the trouble is I frequently get the feeling that some people in the health care system say you know we should go carefully, if at all. I do think we need to go someplace from where we are.

Dr. FREYMANN. May I come back to what I was saying to Mr. Martin? I think the main need to improve the system is providing primary care to the entire population.

This is something that the whole population needs, but that there is at present a grossly inadequate system for paying for any kind of primary care. The only exceptions are the very few people who have major medical insurance coverage.

Mr. CORMAN. Really it is because of economic decisions the Government and insurance industry have made, isn't it?

Dr. FREYMANN. Right.

Mr. CORMAN. But we must write that into the new formats that we need to make.

Dr. FREYMANN. I am working with people who are going into careers as family physicans. What concerns them, and they are frank about it, is whether they can make a go of it financially.

Mr. REINHARDT. On the subject of access to primary care, Dr. Fein has already mentioned that this really touches all Americans. Perhaps no region is more generously endowed with physicians than the State of Massachusetts, particularly the Boston-Cambridge region. Yet I have had an unfortunate experience there involving my own child, in a case that seemed to me to be an emergency. In that instance it was impossible to gain access to our own pediatrician within 2 hours. That was the lack of access of a sort.

We have given one particular profession in this country, a monopoly to serve as entry points into the medical care system. As I mentioned this morning, we have not burdened that profession with the mandate to be responsible for providing those access points when and where needed. Ultimately, we may have to look to other health manpower to provide these entry points. We may have to use paramedical personnel to say, pediatric nurse practitioners-to remove them from the control of the physicians, to let them practice as independent practitioners and so introduce a degree of competition into the health care market—a degree of competition that has never been there.

I cannot see why a society would want to give to one profession so powerful a monopoly and ask literally nothing in return.

Mr. FEIN. Let me follow up on the comment about the primary care residents. I am in a medical school and I meet a number of young men and women even as they enter school, highly motivated, talking about primary care and so on. Over the 4 years there is a significant attrition in the number who speak that language and have that motivation in part, I believe, due to the pattern of medical education, reinforced, if you will, by a society in which medicine is high drama. Say to the average American what is medical care, and I suspect that the response will not be, "It is going to the doctor when I am not feeling well." The response will be in terms of surgery and life and death situations. Most medical care isn't about surgery and life and

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