Rx FOR HEALTH CARE:
Arnold, Mark R.
Rx FOR HEALTH CARE MARK R. ARNOLD Runaway health-care costs are a central problem ...
...illnesses or accidents rather than the more inclusive In testimony before the House Ways and Means Combenefit packages that only a relatively few weeks ago mittee April 24, Casper Weinberger, Secretary of Health, seemed within Congress' grasp...
...both plans are heavily laden with deductibles and co- The Kennedy-Mills plan has some of the same shortinsurance requirements-thus retaining one of the worst comings...
...Your actual bills insurance industry's package of tax incentives for com- may be considerably higher, since approved services panies and industries to purchase government-approved exclude such expenses as routine physical exams, and private policies, and others...
...preoccupation with impeachment of the President or economy...
...to go far enough to relate benefits to income...
...and employers an additional 3 percent in payroll taxes It is exactly the opposite of a rational health insurance on the first $20,000 of wages...
...This year, two things happened...
...Runaway health care costs prices in the next fiscal year if controls continued...
...The Long-Ribicoff measure, which has 24 radical...
...of luck...
...cans have no health insurance at all...
...As the Federation of American Scien10 percent ceiling, and one with income of $75,000 tists noted in a recent newsletter devoted to health would have a 2 percent ceiling...
...And inflation is eroding the delicate balance of Both these approaches have their failings...
...But to keep costs down, year...
...derby, of course: The American Medical Association's Second, the legislation doesn't count just any medical "Medicredit" plan, providing federal refunds for volun- bills in figuring whether you've reached the deductible tarily purchased private health insurance...
...Hospitals will be repremiums would have paid virtually all medical care quired to engage in prospective budgeting for reimcosts without deductibles and co-insurance...
...and, even if it weren't, would probably prove highly But essentially the government would take over their inflationary...
...State and federal from the wrong end," says Stan Jones, Kennedy's top funds would pay premiums for the poor...
...obstacle to enactment of comprehensive position of wage-price controls in mid-1971, the health national health insurance this year may not be Congress' industry was the most inflationary sector of the U.S...
...pensated for "reasonable charges"-a term that came "Hell, millions of Americans have better coverage to mean whatever the traffic would bear...
...Its catastrophic feature cuts in sooner, at features: An Employe Health Insurance Plan for work- $1,000, but likewise carries some exclusions and limers and their families...
...doctors' fees will be set by peer that measure, the Health Security Act, had little sup- review panels (Professional Standards Review Organport in Congress, it did have the wholehearted backing izations or PSROs) and, in theory anyway, monitored of organized labor...
...It carries a more liberal $300 per family defeatures of the present health care system: its tendency ductible (two persons must run up bills of $150 each to ration medical care by income...
...But Congressional Democrats That's tough medicine...
...health staffer and former director of health manageUnder Kennedy-Mills, a revamped Social Security ment policy at HEW...
...The Demo- premiums and benefits on which their promise depends...
...But all had drawbacks, and adult dental care, and limits reimbursement for mental none went very far toward controlling costs or encouraging more rational health-care delivery systems such as health maintenance organizations...
...percent hike the following year...
...S.3 is politically unrealistic mentary policies, covering deductibles and co-insurance...
...Federal Health Care Benefits program for the elderly, Covered services in both plans are, it should be replacing Medicare but - unaccountably - carrying added, fairly comprehensive...
...Companies could offer supple- way, have shortcomings...
...ing schedule...
...to process claims on a cost-.reimbursable basis as it All the proposals, in the view of this reporter anydoes with Medicare...
...From seeing that Tennesseans pay less for identical quality then on we will resume our normal weekly publishservice, take steps to control their costs...
...First, in February, the White House unveiled its Comprehensive Health Insurance Act (CHIP), a vastly improved package over the Administration's 1971 entry...
...Only slightly A couple of caveats are in order...
...for their own health insurance offering-the CatasA word about financing: Here the difference be- trophic Health Insurance and Medical Assistance Retween the Nixon plan and the joint proposal are form Act...
...The former might miums to claims experience, could discourage employ- be fortuitous, the latter tragic...
...a better system, it's a worse system...
...the Nixon plan leans toward state may take more than a veto-proof Congress to undo the control, which has long been weak in the insurance damage...
...Though bursement purposes...
...Summer Sebedule "If it costs less to deliver a certain standard of health care in Tennessee than in New York, why should we In keeping with the usual practice, Commonweal insist that it cost the same...
...economy expired April 30...
...tures...
...First, the $450 deless anathema to many lawmakers was the fact that it ductible is deceptive...
...prices may leave policy-makers no choice but to either The problem in a nutshell is this: Prior to the im- scale down benefits still further or raise their proposed schedule of premiums to finance the programs...
...Private insurers are Health, Education, and Welfare: "When you take away seemingly more interested in protecting against sickness these stabilizers you generate pressures to over-use the than in trying to keep people well...
...less than half those As the Administration's Dr...
...Under But, retorts Fine, most insurance isn't compulsory...
...The Nixon plan's reliance on come down to a mixture of versions--or a Senateestablished insurance principles, such as pegging pre- House deadlock yielding nothing at all...
...Dental, eye, and ear care up to age 13, prenatal The problem with the Health Security Act-aside care and family planning services would not be subject from its financing through the already overburdened to the deductible...
...benefit package would work: One appealing feature of the Kennedy-Mills plan is A family would pay a minimum of $450 in medical its implicit encouragement to preventive care for chil9 August 1974: 424 dren...
...The rule is that a family is eligible would deal a death blow to the private health insurance for the plan's 75 percent co-payment only after three industry...
...Better that New Yorkers, August . 23, September 6 and September 20...
...With financing and administration through the family members have run up bills of $150 per person...
...They'll pay the bulk ahead of supply...
...left...
...Both the lid and the cost-sharing requirements for the poor, disabled, and high medical risks...
...Senator Kennedy's labor-backed "cradle-to-the-grave" Thereafter the plan's "catastrophic" feature would pay health insurance scheme...
...field, and state-approved premium and fee reimbursement levels that will make for continued disparities in medical care costs from one state to another...
...summer...
...rise and to encourage more visits...
...Once their needs began to be icans-incomes $9,000 to $20,000-who will bear the financed, demand for health care jumped still farther brunt of the new program's costs...
...Withare stripping the luster from real national health in- out controls, they're now adding 5 percent to their surance, making comprehensive protection both more health inflation calculations, for a total inflation rate necessary and less affordable with every upward lunge boost of 15 percent...
...In return, no one covers and pay 75 percent of the premiums...
...It's the middle-income Amer- health care needs...
...Doctors, who are only human, find it all too though employers would have to offer it to their work- easy to put in charges freely, to let 'customary charges' ers, no one would be forced to buy in...
...vides them and a third party pays for them...
...Cost is the name of the health insurance game...
...Yet there's also something to be said for the argues it is better to pass no bill this year than a Administration's argument that cost-sharing-by giving half-a-loaf version...
...Social Security system, private carriers would simply If one family member runs up an $800 bill, you're out be done out of a job...
...Fine's group, like the AFL-CIO that supports it, Both the Nixon and Mills-Kennedy plans have safefavors Kennedy's old S.3, which at considerably higher guards against medical inflation...
...federal standards...
...Between the $450 figure complete coverage of all health care costs...
...This was followed a few weeks later by an alternative-the Comprehensive Nation Health Insurance Act-pulled together from the Nixon plan, Medicare, S.3 and other sources by Kennedy and Wilbur Mills, the powerful Ways and Means Committee chairman who is the House's key figure on health and tax legislation...
...Premiums would be based on the Medical care reformers heap scorn on the Longexperience of the work group...
...Long-Ribicoff does nothing about those...
...The for lower-income families: those with roughly $7,500 reason was simple enough...
...better his expenses should exceed $1,500...
...They would also pay for noncovered services, so your family's total provide help that millions now lack in paying for health bill may go considerably higher than $1,500 a treatment below the ceiling...
...From There were other entries in the health-insurance then on, the plan will take over the payments...
...Next year's "veto-proof" Demo- consumers a stake in minimizing medical chargescratic Congress can then proceed to enact S.3...
...Nor are the ceilings insurance: adjusted in any way to take account of family size and "The effect of these two programs (Medicare and thus of other demands on income...
...Controls lowered the increase in medical care even the fact that organized labor, long the wellspring of prices from an annual rate of from 6.3 to 7.1 percent such legislation, would prefer to await the election of a a year (1967-71) to an annual rate of 3.4 percent possible "veto-proof" Democratic-dominated Congress (November 71-January 73...
...The Nixon and Kennedy-Mills plans are role, and only a handful of the largest companies would politically appealing but retain several regressive feabe able to survive in the health-insurance business...
...Medicaid), enacted in the mid-sixties was to stimuBoth plans have income-related premium provisions late an extraordinary inflation in health costs...
...for covered services) before its 25 percent co-insurance The Nixon plan is actually three separate plans with feature-identical to that in the Nixon plan-comes identical benefit packages but different cost-sharing into play...
...will tend to dampen pressures for health care inflation...
...In the beginning there was S.3- percent of additional charges up to a limit of $1,500...
...resigned to allowing a 10 percent hike in health care The big obstacle is inflation...
...Neither MARK R. ARNOLD is congressional correspondent for The Na- prospect is likely to be warmly greeted by workers who tional Observer...
...And they foresee a similar 15 of the Consumer Price Index...
...and a are scaled down for persons of lower income...
...up to age 13, and a host of other services such as For the sake of simplicity, this discussion will focus prosthetic devices, X-rays, and laboratory tests...
...For time, given current ers from hiring older or handicapped workers...
...For the two new plans that and Republicans alike lined up solidly against continu- have revived- hopes for enactment of national health ation of any economic reins, so the controls package insurance appear on close inspection to offer considerably died-and with it Dunlop's hopes of moderating the less in the way of benefits than many Americans have rate of inflation in medical care and hospital charges come to expect from all the talk about national health pending enactment of permanent cost constraints as protection in recent years...
...Cost considerations will continue to inhibit many families from Ideology or Economics seeking good medical care...
...By rewarding high health-care costs cost borne by the average worker earning $10,000 through federal reimbursement, "it attacks the system would cost him about $125 a year...
...Rx FOR HEALTH CARE MARK R. ARNOLD Runaway health-care costs are a central problem The major...
...The self-employed program...
...Moreover, Dunlop If health sector inflation fulfills the predictions of even argues, the numbers may understate the actual increase the usually timid Nixon Administration economists, we if health care providers scramble to establish a higher may have to settle for a stripped-down program offering base price in anticipation of a cost hold-down under little more than a shield against so-called "catastrophic" health insurance...
...High payroll taxes, not catastrophic coverage...
...Secure in the under union contracts now," scoffs Max Fine, execu- knowledge that their patients wouldn't have to pay the tive director of the Committee for National Health whole bill, their charges rose...
...health services...
...only one out of four will have ex- Of course, part of the problem was that reimbursepenses sufficient to derive any benefits, according to a ment was on a cost-plus basis...
...an Assisted Health Insurance Plan itations...
...Senate co-sponsors, would raise Social Security taxes CHIP-the Administration plan-would require by 0.3 percent for employer and employe alike-$30 employers to provide group health insurance for work- a year for the average worker...
...Increasingly," says of them won't be sick enough to get any of it back...
...Insurance ered by Social Security would have to pay more than would be purchased from private companies meeting $2,000 a year in medical and hospital bills...
...in November rather than support the kind of legislation Now those costs are soaring again...
...of the premiums...
...Federal Cost-of-Living Education, and Welfare (HEW), acknowledged: "If we Director John Dunlop, the Government's wage-price are hit by annual increases in the range forecast by the traffic cop, had hoped to keep a lid on volatile health Cost of Living Council, our current cost estimates for sector prices even after controls over the rest of the any (emphasis added) plan would be far too low...
...Doctors were comKennedy staff calculation...
...Mills began hearings on health insurance in April, A $10,000-a-year worker would pay $100 more in originally aiming for House passage of a bill by midSocial Security than he does now...
...Its chief and the $1,500 in out-of-pocket expenses, the plan drawback: An astromomical $80 billion price tag that would pay 75 percent of costs for covered services...
...see the purchasing power of their paychecks shrink Commonweal: 423 week by week as a result of today's "double-digit" in- and hospital bills in any year (400 for a two-person flation...
...In ad- inflationary trends, is national health insurance's real dition, the Democratic plan opts for federal regula- enemy...
...Leaving aside for deductible in the Nixon plan, $1 per prescription cothe moment the question of financing, here's how the payment under Kennedy-Mills...
...It for reimbursement...
...Outon the Employe Health Insurance Plan-the program patient drugs are subject to a separate $50 per person that would affect most Americans...
...As Rashi Fein, the noted Harvard medical economist, observed in a recent news- Such complaints are dismissed by many liberals as paper article examining the Nixon proposal: smacking more of conservative ideology than of medi"A working family with income of $7,500 would cal economics, but the notorious early experience of have a maximum liability of 20 percent of income [$1, the medicare and medicaid programs would seem to 500], while one with income of $15,000 would have a bear them out...
...Social Security tax-lies partly in its price tag ($70 There's no question that either of the plans would to $80 billion in 1975), and partly in its effect on benefit millions of Americans...
...It is 9 August 1974: 426...
...these circumstances virtually no market mechanism is The Kennedy-Mills plan is...
...Each delay, by making a comprehensive package tion and a unifom national benefit payments standard more costly, also makes its realization less likely...
...They include unlimited higher cost-sharing requirements by beneficiaries than hospital and physician care, preventive care for children Medicare does now...
...system, which results in larger bills and brings down Nevertheless, both plans can be faulted for failing demands for greater governmental regulation...
...AFL-CIO chief George Meany closely...
...Forthcoming issues will be dated prices with their premiums...
...Its central feature: Virtually all costs for covered services...
...And the escalation in health part of national health insurance...
...made it anathema to most lawmakers...
...What you're The F.A.S...
...family) before qualifying for any benefits, then 25 Let's back up a bit...
...Some 25 million Ameri- the demand for medical services...
...is again appearing on alternate weeks during the "Why should Tennessee subsidize New York's high summer months...
...Stuart H. Altman sees under 65 are protected against catastrophic costs and it, "a system without deductible and co-insurance isn't almost none of those over 65 have such protection...
...would pay a 2.5 percent tax on $20,000 of income...
...what it has shown it can't handle private insurance premiums, would bankroll the sys- are the basic medical expenses that are killing the tem, with employes paying an additional 1 percent working man...
...study concludes that the larger the doing [in these programs] is adding $600 to the average third party share of the health care payment, the family's bills in premiums, knowing full well that most higher the cost of the service...
...The Nixon plan is not...
...the study, "one party gets the services, one party proTrue enough, but that's the way insurance works...
...cratic plan, by levying a huge new tax on payrolls, With Long and Mills wedded to rival approaches to would make the overburdened Social Security tax more national health insurance, in the end it will probably regressive than ever...
...The old and the poor conin family income in the Nixon program, $8,800 in stituted an enormous pool of previously unfinanced the Kennedy-Mills plan...
...Commonweal: 425 The negative side of the cost-sharing requirement, as also the reason that Louisiana's Russell Long, Chairman we have seen, is that it rations medical care utilization of the Senate Finance Committee, and committee memby income so long as the cost-sharing itself is not ber Abraham Ribicoff of Connecticut are still fighting truly progressive...
...Adds Altman, Moreover, most plans typically exclude preventive ser- who oversees health planning in the Department of vices, outpatient services, and drugs...
...Adds cradle-to-the grave advoAdministration, reporting to the President, would serve cate Max Fine: "The private health industry can handle as the nation's health insurer...
...asks HEW's Stu Altman...
...Moreover, even if your bills for apBoth new plans would place a roof over medical and proved services qualify you for benefits, the plan won't hospital bills for most Americans...
...Long's timetable is less advanced, but he too With the government providing the insurance, Ken- has pledged to report a bill in time for Senate passage nedy-Mills would use insurance companies primarily this year...
...The 25 percent premium Ribicoff plan...
...Insurance, a labor-backed lobbying group...
...the health -only those for "approved" services...
...Economists were dependent on a Nixon signature to become law in 1974...
Vol. 100 • August 1974 • No. 18
