March 27, 1974
Page 8435
HARD CHOICES IN THE NATIONAL HEALTH INSURANCE DEBATE
Mr. HART. Mr. President, on March 25 my distinguished colleague from Maine, Senator MUSKIE, delivered the keynote address to the New England Hospital Assembly in Boston, Mass. Senator MUSKIE's address discussed four areas in which difficult choices will be posed in the debate on national health insurance.
Senator MUSKIE suggested that comprehensive health coverage for all Americans will only be possible if we make a commitment to devote additional national resources to health. He suggested that the financing system for national health insurance must be one which distributes costs equitably among the population, relying primarily upon the tax system. He called for new systems of reimbursing health providers, such as prospective budgeting. And he pointed out that we must begin today to improve our health delivery system to meet increased demand under national health insurance.
Senator MUSKIE's address provides a thoughtful framework for analysis of national health insurance proposals. I ask unanimous consent that it be printed in the RECORD.
There being no objection, the address was ordered to be printed in the RECORD, as follows:
KEYNOTE ADDRESS BY SENATOR EDMUND S. MUSKIE
I hope to point out today some of the hard choices that face us in fashioning national health policy. That policy will be shaped in large part by the debate on national health insurance. It is in that debate that the hardest choices will be presented.
The ultimate goal of national health policy should be to provide every American, regardless of geographic location or socio-economic status, with access to quality, comprehensive health care.
We have a long way to go to achieve that goal. Our system is a success in many respects: The medical professions have made great progress toward preventing and treating illness, injury, and disability.
Those who administer and support our health care system – health providers such as yourselves, and those in research, health financing, and Government – have shown initiative and dedication in giving good health care to Americans.
Many Americans, as a result, receive excellent health care, at a cost they can afford to pay. But too many Americans do not share that opportunity.
Too many Americans find that their private or Government health insurance does not cover some or all of their health bills – and as a result they suffer financial disaster or – in some cases – do without needed care.
Too many Americans are rebelling at the long-term inflation in health care costs, which our present system seems unable to control without causing inequities and dislocations.
And too many Americans find that, even when they can afford it, good health care is not available – because most communities do not have enough of the right kinds of doctors or other health personnel; or because they do not have adequate hospitals or other health facilities; or because the fragmentation of the health delivery system makes it too inefficient and complicated to provide complete care.
These problems of paying for personal health, bills, controlling health costs, and improving our health delivery system can only be solved adequately by a system of national health insurance.
It is gratifying that the need for national health insurance is no longer in dispute. The public, health professionals, the administration, and the Congress all agree that national health insurance is a top priority for America. But there is little agreement on the form that national health insurance should take.
We will go through a lengthy, spirited, and complex debate before national health insurance becomes a reality. And this debate will present a series of hard choices about national health policy:
Choices of the kinds and amounts of health cost coverage to include in national health insurance;
Choices of the mechanisms we use for financing those costs;
Choices about how to control health costs; and
Choices about how to develop a health delivery system adequate to our needs.
The choices most familiar to most Americans concern the benefits to be covered by national health insurance. For the most visible failure of our present system is its inadequate protection against health costs.
Over three-fourths of Americans now have private health insurance. About twenty-three million of the elderly have medicare coverage. And about twenty-seven million low-income individuals receive protection under medicaid.
But some Americans have no protection at all, for even the most basic kinds of care: thirty-eight million Americans under age 65 have no protection against hospital costs, and forty-three million have no insurance for medical care costs. National health insurance should at least provide coverage for those who now lack it completely.
A second standard for judging national health insurance coverage is the kinds of health services covered, and the amount of coverage for each service.
Most insurance now provides little or no coverage, for instance, for dental care, drugs, nursing services, home health, and other types of out-of-hospital care. It is no secret that services which contribute to early detection and treatment of illness, and avoid costly hospitalization, can lead to better health at lower cost but are usually not covered, and patients thus do not receive these kinds of care. So to provide the full range of health services Americans need, national health insurance should include comprehensive benefits for catastrophic, preventive, nursing, home health, and other out-patient care, in addition to adequate hospitalization and medical coverage.
To apply these standards to the benefit coverage, however, presents the first hard choice about national health policy: the extent to which we are willing to devote additional national resources to provide increased coverage where it is needed.
We now spend 7.7% of our gross national product on health. But that proportion must rise if we are to provide adequate overage of health costs under national health insurance.
Part of the increase would be needed to expand health services, to meet the extra demand national health insurance would generate. And part of the increase would be needed for the cost of expanded coverage itself. Some of it could be offset by cost control measures included in a national health insurance system. But the net increase must be met by increasing our national health budget.
Making that commitment to an increased national health budget will be a difficult but necessary choice to make if we are truly to provide all Americans with comprehensive coverage of health care costs.
National health insurance must include not only increased health coverage, but also reform of health financing. As health providers, you are all too familiar with the present financing system – dominated by the complicated and overlapping structure of "third party payments" some provided by the Government, some by private companies; each with their own set of forms to fill out, and each with their own regulations to meet. Streamlining that system must be one goal of National Health insurance, to lessen the bureaucratic burden on patient and provider alike.
Another goal, however, is to insure that the financing system for national health insurance distributes the burden of health care costs equitably.
Each of the 80 billion dollars we spent on personal health care in fiscal year 1973, for instance, came originally from the private resources of the American people – $30 billion, or 38 per cent, from Federal, State, and local taxes channeled through government programs; $21 billion, or 26 per cent, from insurance premiums paid out in benefits by private companies; and $28 billion, or 35 per cent, in direct payments by individuals.
Each of these sources of funds – the government, private insurance, and direct payments – distributes health costs differently among the population. The burden of government taxes, of course, is spread among most citizens based roughly on income – more or less progressively and equitably. Insurance premiums spread health care costs equally among those who pay premiums to each insurance plan. And direct payments are assessed solely on the basis of consumption of health care – in other words, the consumer pays all of these charges, but only when sick or injured. Direct payments thus can impose the most inequitable burdens on patients.
Each proposal for national health insurance uses a different combination of these sources to finance health coverage. And for health care available today, each of the proposals would change the existing distribution of health costs among the financing sources.
Changing the proportion of costs paid by direct payments, insurance premiums, and tax revenues presents the second set of difficult choices in the national health insurance debate.
I had the opportunity to study some of these choices when the Senate Subcommittee on Health of the Elderly, which I chair, held hearings this month of the effect of the administration proposal on health programs for the elderly. The administration plan – known as "CHIP," for Comprehensive Health Insurance Program – does include some increased benefits for the elderly, such as coverage of catastrophic costs and out-of-hospital prescription drugs beyond a $50 deductible. But "CHIP" would actually increase the out-of-pocket costs for most of the elderly, by raising deductibles and coinsurance for hospital stays of less than sixty days.
The net result for the elderly under "CHIP" is an unwise trade-off – the increased benefits for the aged who get catastrophic and drug coverage would be financed in part from increased direct payments by the aged for hospital stays. Thus, some of the burden of financing expanded coverage would be placed on those who can ill afford it.
This trade-off represents exactly the wrong approach, I believe, to the choices about financing presented in the national health insurance debate.
The Nation has a responsibility to provide good health care to all Americans, regardless of need. Our responsibility includes an equitable financing system for that care. And an equitable financing system must rely primarily on the tax system.
Increasing the Government's share of health care expenditures will be a difficult choice to make, but one I believe essential to ensure fair distribution of health costs among the population.
I know that this audience has strong views on a third set of choices in the national health insurance debate: controlling health costs.
Cost control in the health industry is made especially difficult by the structure of the financing system, with its reliance on third-party payments. Such a large portion of charges are reimbursed on the basis of actual cost by these third parties (and not by the patient directly) that normal "free market" forces provide no effective restraint on cost increases. And the resulting inflation has been met with heavy-handed direct federal controls.
Throughout the period of controls, hospitals and the entire health industry have in general taken a responsible attitude toward controlling costs. The rate of hospital price increases, while still high, has steadily declined over the past five years, to a rate of under 10% last year. Hospital administrators from Maine and elsewhere have written me about their sincere concern for controlling inflation in their industry as well as in others.
At the same time, your objections to the current economic stabilization program as applied to the health industry have been heard loud and clear in Washington. And you have made evident your opposition to the administration's proposal to single out the health industry for continuation of controls beyond April 30, when the Economic Stabilization Act expires.
For the health industry as well as for other sectors of the economy, current economic conditions allow us no choice but to maintain an active federal role in controlling inflation. For most of the economy, that role should be one of gradual decontrol, allowing the free market to correct the dislocations which developed under the administration's helter-skelter imposition of phases and freezes since 1971. But this policy of orderly decontrol must be evaluated on an industry-by- industry basis.
The special problems of health cost inflation deserve their own unique solutions. These must include a continuation of some cost control measures to avoid an unconscionably large "inflationary bulge" which would result if controls were ended all at once. But controls on the health industry must not impose an inequitable share of the burdens of inflation. The controls must be made more flexible.
Controls should be responsive to the persuasive arguments I have heard that the current Cost of Living Council regulations are so complex that they impose almost impossible administrative burdens on the small hospitals; that the currently allowed 7.5% rate of price increase is, in many cases, insufficient to cover rising costs; and that the uncertainty, and unresponsiveness, of the
wage and price control bureaucracy in Washington has stifled responsible planning for needed hospital expansion.
The frustration of Maine's hospital officials is acute, to say the least. It is well illustrated by the comment of one administrator who wrote me recently:
"I am completely convinced," he said, "that the bureaucracy in Washington cannot respond effectively to our problem. It simply has grown too big, too unwieldy, and too consumed with its own internal paper shuffling, red tape, and 'busy work' to respond."
In the long run, however, the problems of inflation in the health industry can only be solved by including in national health insurance an effective system for making health providers directly accountable for cost control. Effective control reform represents the third set of difficult choices in the national health insurance debate – choices on which your cooperation, and willingness to accept change, will be essential.
One hard choice will involve the degree to which national health insurance includes strong prospective budgeting provisions, or other new systems of reimbursement. Prospective budgeting, for instance, would make hospitals and other health providers responsible for planning, in advance, how to provide the most effective care within available resources. Such new approaches to reimbursement are the only alternatives to continued outside constraints on health management decisions.
Another hard choice will be what role private insurance companies play under national health insurance. Private insurance companies must be removed from their role as a buffer between health providers and fiscal reality.
These choices will be presented – and resolved – in the national health insurance debate. Their resolution will be most successful only with the full participation and cooperation of you and others in the health industry.
The final set of choices in the national health insurance debate concerns reform of the delivery system itself. Some needed reforms will include the development of new or neglected kinds of health services – such as HMO's, home health care, and paramedical manpower. Many of these reforms will involve changing and integrating institutional and professional structures – such as adding extended care to hospital services and expanding outpatient facilities, and integrating mental health and social services with primary health care.
On the need for most such reforms there is little dispute. And whether they will be encouraged by national health insurance will in large part be determined by the choices we make about coverage, financing, and cost control.
That brings me to one additional set of hard choices to make if reform under national health insurance is to be effective: Choices about whether we are willing to devote the resources, today, to develop the improved health delivery system we will need when national health insurance begins.
These hard choices will be presented as Congress considers the Federal health budget for fiscal year 1975. Here are some examples of how the administration's proposed budget would resolve those choices:
Eliminating support for education of allied health and public health professionals, and reducing health manpower funds generally by $320 million;
Eliminating funds for regional medical programs and comprehensive health planning; and
Again attempting to eliminate new Hill-Burton funds, and cutting all health facilities assistance by $170 million.
Overall, the administration requests that the Federal health resources budget be cut almost in half-from $1.5 billion this year to $790 million in fiscal year 1975.
I hope that we will choose a different course this year – and decide to give full Federal support to building an improved health delivery system now, while the national health insurance debate proceeds.
We face many challenges in attaining our goal of providing assured, accessible, high quality health care for all Americans. Hard choices lie ahead:
Choices about committing the additional national resources necessary to provide comprehensive care for all;
Choices about changing the distribution of funding sources for national health care, to insure that costs are spread equitably among the population;
Choices about cost controls, this year, and changing the reimbursement system, under national health insurance; and
Choices about how to begin to build, today, an adequate health delivery system.
Making these choices and others – while fashioning a sound national health insurance system – will be a difficult process.
But I am confident that America can meet that challenge.