to go for at the local area. In other words, it uses a central financing mechanism while permitting a great diversity in the delivery systems.

It is a big country and it is a different country and we need that diversity in delivery system. If some people want to opt for HMO's, they can do so, but they don't have to do so.

In the present system by contrast, with multiple sources of funds. it makes it difficult to organize different kinds of delivery systems. It is tough to start a HMO because it is thought to enroll a medicare population because they are covered by one program, a medicaid population, because we have to go to the Governor to get a contract for that population, and so on. So I have no difficulty with the central budgeting device leading to diversity with the equal access to care and with the supply considerations.

Of the various measures that are before the Congress I would find that the most appealing. In line with my earlier remarks, if one were forced for a variety of political reasons to phase in a program, I would like to have the Corman-Kennedy bill out there as what I am moving toward over a period of time in a manner that will actually get me there.

I would conclude with one additional point. While all of us, and you, have been talking about the complexities of the system and the difficulties and the interrelationships and the central city and the preventive care, I would not want the tone of our remarks to color all of our judgment as we leave this room.

I would remind us that; yes, it is a very complex business but I would also remind us that it is not all that tough to write a good bill on the equity side dealing with financial protection. Other countries have done it.

What is tough is that we are trying to write or talk about a bill that would change the system as well. That's very complex. But the Canadians without any great trauma, and they are not much brighter than we are, have a program and it is not that tough to write a good bill. It may be tough to get the votes for it, but it is not that tough to write a good bill on the financial protection side.

Other countries have done it. We have the benefit of their mistakes and of their good points but that, gentlemen, we can do. It is when we can bring in the system that life does get more complex. It is in that regard that I feel we ought to give this high priority to the access for care, the Kennedy-Corman bill does just that.

Mr. CORMAN. Any other comments from the panelists whether you are familiar with it or not?

Professor Fein very accurately stated what it does, in any event. Mr. REINHARDT. Yes: I think if one contrasts that kind of bill broadly with the catastrophic risk bill, I also would opt for the former, primarily because it does the catastrophic-risk bills really do not address the one goal that I posited earlier. That goal is to free the American citizen from anxiety which is, I feel, totally unnecessary. At the minimum every American citizen should have a very concise idea of what the maximum potential financial loss due to illness is, if only so that he or she can plan for it.

Second, I would recommend that the maximum risk should be rather low. I think one talks here really of percentages related to income and not just of some absolute amount.

Dr. Fein would have zero as an optimum percentage. I would be willing to go above that but certainly not to 15 percent. This is a matter, as you said, which one can negotiate.

Health insurance legislation ought not be that difficult to write. The difficult part does come as-Rashi Fein has observed-in trying to obtain the goals of health insurance in a cost-effective manner. The problem is to identify the cost effective system and to devise measures likely to goad the health-care sector toward that optimum.

Legislation declaring that a maximum of "" residents can specialize in surgery would have a very blunt impact on a the health care system, as would, for example, a command to a certain doctor to practice in Kansas, quotas, and certificates of needs for physicians.

I think such direct regulations would be appropriate only if one knew what the optimal organization of medical facilities in this country would be. Unfortunately, we do not know precisely what an optimum system would look like. Therefore direct regulations can be counter productive.

On the other hand, one does not necessarily have to give up attempts to modify the existing system. You can use the physical flows that accompany the delivery of health care in this country. Under National Health Insurance the public sector will gain control over these flows, and it could use them as policy levers.

It does seem to me, for example, that in the design of the fee schedules under NHI, there lies an opportunity to change the health care system at the margin in gentle ways that do not strike as bluntly as direct regulation would.

Finally, I believe that there is one measure whose impact might be blunt and yet benign, and that is to remove certain artificial legal restrictions on innovation in the health care sector that have strangled that sector for so many years. I said this morning that licensure in some way has amounted to granting a monopoly to one particular profession. I reiterate that. This method of licensure is not necessarily optimal from society's viewpoint, I would like to see a much more diverse set of entry points into our health care system. I would like to see, for example, legislation establishing independent paramedical practitioners. But clearly that is something you can consider independently from a National Health Insurance bill. Indeed, I would not wish to see you couple it with a National Health Insurance bill. It is merely something you ought to keep in mind.

Mr. CORMAN. We have done precisely in that proposal what you have laid out. We did avoid that latter point for very sound reasons. Dr. FREYMANN. I am not familiar with all the details of your bill, Mr. Corman, but agree that given the choice between that approach and the catastrophic approach, there is no question in my mind which is preferable, namely, the Kennedy-Corman bill.

I agree with my colleague that National Health Insurance would indeed free the public from financial fear, but I would like to make an appeal. I address it not to you but to the Congress as a whole. Please avoid the implication that there is a connection between National Health Insurance and saving money on health care. I know of no evidence that any health insurance system has saved money.

I would like to point out that we have been here all day discussing purchase of a product, but we have not defined what that product is.

Now, if we were representatives of the Defense Department, I am sure that long since you would have made us tell you how many tanks, how many aircraft carriers, and how many missiles we are talking

about.

Even if we were representatives of another service industry such as education, I hope you would have been able to get us to tell you how many students we were going to produce. In other words, you would have insisted that we quantify the product.

Yet, in this entire discussion neither we on the panel nor anyone in the committee has tried to define what we are buying. I think this is why the economics of the health care are so peculiar. We talk about what we are going to spend, not what we are going to buy.

Mr. Corman, but I agree that given the choice between that approach have access to the services of those who the States have licensed to take care of their health needs.

Is that sufficiently definitive?

Dr. FREYMANN. That does not answer the problem. As Dr. Fein pointed out earlier this morning, the provider is not always a physician. There are the other health care providers. But beyond all these is a social demand that certain health resources must be available.

I return to dialysis as an example. There is a social demand to make available to all people who have end-stage renal disease, unlimited resources to keep them alive. This social demand has actually been incorporated into Federal statute.

Mr. CORMAN. Do you know how that came about?

Mr. FREYMANN. Not in detail.

Mr. CORMAN. The detail is that 25 people would die if they didn't have it and they sat right where you are sitting.

If you could bring me 25 of anybody with anything and let us look at them, I can promise you that we will take care of their problem. It is the unseen ones that are difficult to take care of.

Dr. FREYMANN. I am not surprised, and I sympathize with you in facing that dilemma.

The point I am trying to make is that, if we are talking about national health insurance to free people from the fear of being wiped out financially, that is laudable and I am all for it. But we cannot say that and also say we are going to save money and hold down costs. There is no connection between the two.

The costs of keeping people alive are going to increase because our population is getting older and older, and our technology is getting better and more expensive.

We are going to be spending more and more money at the lifepreservation end of the health care spectrum unless we define (to use the title of Victor Fuchs' book) "Who Shall I Live." When I say "we," I mean society, not the health professions nor the medical profession. Who shall live? That, I believe, is the crucial question which will determine how much we spend for health care. Until we answer it we will be unable to control what we spend because we will not have defined what we are going to buy.

Mr. CORMAN. Dr. Wynder, did you have any comment?

Dr. WYNDER. There is nothing that I can add which has not already been said. The bill that includes the basic premise to provide effective health care at a price we can afford should be the right of every citizen in our country.

The point just made in terms of kidney dialysis and the marketing problems we have had in preventive medicine prompt me to say I cannot marshal here even four people who are so delighted they are healthy that they will come here before you, because if we are healthy we take it for granted. Once we become sick, we worry about the sickness that we then have.

Any bill has to make certain that physical restraint is being maintained by whatever health care system operates.

If you give upper limits, you can be certain that that upper level will be spent. Such fiscal restraint must certainly be contained in any bill.

Dr. Freymann stated that perhaps as we get older we will cost our society more in terms of some disease.

I am not that pessimistic. As I pointed out, I do not believe we have to die of ill health. There are, of course, other problems that we can deal with in terms of our aged. I would hate at this point to mention nursing homes but certainly nursing homes, if well run, are a far better and cheaper way of dealing with some of our problems relating to age than hospitals. Hospitals happen to be one of the most expensive ways in which we operate our medical care delivery system.

I do hope that as the weeks come, you will have witnesses from different branches of the health care system. I hope you can ask them how they can reduce the cost of their operations and how they could utilize perhaps some of the bed space now becoming empty for ambulatory and preventive care services.

Mr. CORMAN. Mr. Chairman, on that note I would just indicate for the record that panel 1 has opted for H.R. 21 and I won't ask anybody any more.

Mr. ROSTENKOWSKI. We have to get the votes and talk about the dollars budget.

Gentlemen, it has been most enlightening. The comments, as I said earlier in the back room were just fantastic. You have really begun our discussions and our investigation of the possibility of health insurance on a national scale on a real sweet note.

Professor Fein, did you want to say something?

Mr. FEIN. On behalf of the panel, and I am sure my colleagues would agree with me, I would want to make a comment to you, Mr. Chairman, that if this is the way the Congress always works, then the image that some Americans have of the congressional process is faulty.

If this, on the other hand, is not the way the Congress always works, then, by golly, it should work this way.

Mr. ROSTENKOWSKI. Well, thank you.

Mr. FEIN. Because I am sure we do feel, all of us, that this was a most useful day to us as well as to you in the opportunity to leave feeling that we had an opportunity to share ideas with you and that these ideas then will be accepted or rejected but will be weighed as you debate.

It is a nice feeling to have.

Mr. ROSTENKOWSKI. Professor Fein, this is a new concept. I would like to continue this approach of having the subcommittee really

geared to a dialog, conversational dialog, with our witnesses. I think the advisory panel that we put together, and you are members of it, are certainly going to help us frame legislation that will ultimately mean a great deal to this country.

I would like to say one thing to Dr. Fein. You talk about health education for the young, that it is not all bad.

Well, it is nice to note that you have made the observation that we are not all bad up here, Professor Fein, because we get that all the time, comments on how bad Government is run.

Dr. WYNDER. Mr. Chairman, may I add a final comment.

Some time ago in Japan I was called upon to give a toast. I said, "May a country's greatness in the world not be measured by the height of the gross national product, but rather by a health care service that has in a most effective manner lead to the healthiest people in it."

I hope some day that Congressmen and that Senators would be receiving the most votes from constituents who have successfully labored for a better health care system in America.

Mr. ROSTENKOWSKI. Thank you. This committee will stand in recess until 9 o'clock when we will take up the testimony of the Government's role in national health insurance.

[The subcommittee recessed, to reconvene at 9 a.m. of the following day, Friday, July 11, 1975.]