THE MEDICAL CARE DOLLAR

...Pennsylvania's Blue Shield drew Commissioner Smith's latest thunderbolt upon itself by applying for approval of a premium rate increase of 26.1 per cent and of a special surgical-medical insurance program for persons over the age of sixty-five...

...If, as Blue Shield contends, a proposed fee must be accepted when not contradicted by medical testimony, it would not be the insurance commissioner who would be empowered to approve or reject proposed fees, but rather, it would be the medical profession...

...Delivering a stern lecture on the medical profession's responsibilities and the state's broad authority in the matter, the commissioner granted a premium rate increase of only 21.3 per cent and said he would "defer action" on the requested fee revisions pending the submission of "additional substantiating data...

...Blue Shield officials admitted, Smith said, that the Pennsylvania Medical Society "told us what we should do" with regard to the fee schedule for the aged program and conceded that "persons or groups representing older people and other segments of the public were not consulted at all in the formulation of any aspect of the senior citizens' program...

...He left little doubt, however, that it would take quite a lot of "substantiating data" to convince him that the doctors are entitled to higher fees...

...SMITH: Well, Mr...

...The underlying principle of the insurance mechanism, he emphasized, is not only that the risk of medical costs is spread over a large number of people but that the doctors can afford to give their services "at lower than normal charges" because they are "sure of receiving their fees...

...The insurance program had not received a rate increase for about sixteen years, and it was plainly entitled to some relief in view of the rising utilization of services which had been forcing it for some time to dip into its reserves...

...LIPPMANN: My answer to that would be that you can't decide these questions of life and death for the world by epithets like appeasement...

...With the exception of diagnostic and emergency services provided in doctors' offices, practically all Blue Shield services are rendered in hospitals...

...Furthermore, I would doubt the readiness of many doctors to testify against the reasonableness of fees worked out by Blue Shield and committees of the State Medical Society...

...As the costs of medical care continue to skyrocket and force Blue Cross and Blue Shield to seek repeated premium rate increases, the ingredients that make up these costs are increasingly coming under critical public scrutiny...

...What must be corrected are the built-in imbalances in the existing pattern of voluntary health insurance that promote faulty utilization of medical services, excessive use of costly hospital facilities, and other abuses which needlessly inflate the bill...

...None of them is gone, and I don't consider Laos gone...

...I don't like warlike old men...

...If unnecessary hospital utilization is reduced, it should follow that a substantial amount of Blue Shield services would also be reduced...

...His comments in disapproving this plan are of particular interest in view of the vehement opposition of organized medicine to President Kennedy's proposal for a governmentoperated health insurance program for the aged tied to the social security system...

...Smith recalled in his ruling that Blue Shield was set u p by act of the state legislature primarily to provide people in the lower income brackets with medical services "at costs which they could reasonably afford" by contracting with physicians to furnish such services "for reasonable fees which doctors were certain to receive...

...But this has nowhere near enough been counterbalanced by low .charges to a substantial segment of patients...

...You have said you're in favor of negotiations over Berlin, which may involve making concessions to the Russians over Berlin...

...This fact alone, however," he said, "neither justifies nor contemplates that Blue Shield policy and operations be subordinated to the policies and programs of the State Medical Society...

...Even to pose these touchy questions is bound to raise the blood pressure of the medical profession, whose members have long considered the right to charge what they please as one of their most cherished prerogatives...

...Expressing concern over the fact that eighteen of the twenty-three members of the Blue Shield board of directors are doctors, Smith said he strongly felt that "there is room for more public representation" on the board...

...The Medical Care Dollar by SELIG GREENBERG Middle East, and I remember when people said Nasser made a deal with the Soviets about arms, and they said, "Ah, Egypt's gone"—then Syria was gone, and t^en Iraq...

...But according to the facts brought out at the Pennsylvania hearings, the State Medical Society rejected suggestions by the insurance organization that doctors agree to accept lower fees "which would have been reflected in premium reductions for older subscribers...

...Conversely," he added, "I direct that consideration be given to determine whether a totally revised fee schedule with generally lower fees reflected in lower subscription rates for full-service benefits can be developed for all citizens of Pennsylvania without regard to their age . . . Society's general acceptance of the doctor's privilege to charge high-income patients larger fees for a specific service is based upon society's expectation that doctors will charge low-income patients a much lesser fee for the same service...

...He suggested that the board either be enlarged voluntarily or that the law be amended to assure broader public participation...

...Blue Shield was directed to "submit until further notice to the insurance department quarterly reports, in written form, summarizing its activities under these directives...

...But what aroused Mr...

...Furthermore, I think the reasons for doing what I advocate are based on the soundest, strategical principle, and is this: T h e Soviet Union is not engaged in any of these places...

...Lippmann, you have been opposed to taking action, military, forceful action in Laos, or unilateral action in Cuba...

...To these physicians and a number of osteopaths and dental surgeons it paid out last year nearly $60,000,000 for services to subscribers...

...I think it's their business to try as best they can, by whatever wisdom they can find, to avert what would be an absolutely irreparable calamity for the world...

...I mean, putting in a government that suited us—and that is not possible...

...Other elements in the medical care dollar, notably the sizable share going for physicians' services, are now starting to come in for similar attention in what promises to develop into a stormy reappraisal of the medical profession's privileges and responsibilities...

...A crucial point to bear in mind is that although the medical profession has had to be pushed into participation in health insurance and continues to resist its expansion, the insurance set u p has actually improved and stabilized the income of physicians by guaranteeing them fees they might otherwise not have been able to collect at all from low-income patients...

...The Pennsylvania Blue Shield has two plans...

...Blue Shield's position, if true," said Smith, "would for all practical purposes deny me, as insurance commissioner, the express authority placed in me by the Blue Shield Regulatory Act {o approve all methods and rates of payments by Blue Shield to doctors serving its subscribers...

...I don't agree with the people who think that we have to go out and shed a little blood to prove we're virile men...

...To a large extent, health insurance has eliminated charity services, traditionally used by the profession to justify its charges to patients in the higher income level...

...And then behind that lies a very personal and human feeling—that I don't think old men ought to promote wars for young men to fight...

...In return for the broader coverage of Plan B, its premium rates are higher than those of Plan A. So are many of the Plan B fees, to compensate physicians for foregoing the right to charge extra for their services to an additional group of subscribers...

...The proposed "senior citizens" insurance program was rejected by Commissioner Smith on the ground that it failed to take into consideration the generally lower income level of the aged group and to provide it with lower premium rates through an agreement by participating doctors to charge less for older subscribers...

...In fact, he took the position that the existing Blue Shield fee schedule is probably ample to justify full-service coverage, without extra charges, for subscribers above the present income limits and that it may be possible to reduce both the fees and the premium rates for the lower-income groups...

...Spokesmen for the doctors have contended that the job of providing medical services for the aged is fully feasible under voluntary auspices and that the medical profession itself can be depended upon to help older people get the care they need at ax cost they can afford...

...If free voluntary effort through public-purpose organizations cannot meet this challenge, the future of free medicine in America is in danger . . . Blue Shield must identify itself clearly and distinctly in the public mind as the agency empowered and directed by the legislature to bring adequate health services to our people at prices they can meet within their budgets...

...As long as it isn't engaged, we mustn't be engaged...

...Blue Shield plans "face the greatest challenge in their history," the commissioner warned...

...In hitting out at the "subordination of initiative and policy" of the insurance plan to the wishes of the State Medical Society, the commissioner acknowledged that the enabling act establishing Blue Shield requires that the majority of the members of its board of directors be medical doctors...

...The official is Francis R. Smith, Pennsylvania's outspoken state insurance commissioner, who set the pace for his counterparts in a number of other states three years ago by cracking down on Blue Cross and the voluntary hospitals and ordering them to curb abuses and to institute a number of economy measures...

...But the issue is beginning to come to the fore in the mounting debate over present health insurance patterns and operations, and it has recently been raised with characteristic vigor by a state official whose concern for keeping down the costs of medical care is attracting national attention...

...If Blue Shield is correct, I could never reject any proposed fee until I, as insurance commissioner, had elicited and obtained medical testimony challenging its reasonableness...

...Or should such fees, involving as they do a commodity that can clearly be classified as a vital public utility, be subject to some public regulations...

...It is reported to have insisted instead that persons over sixtyfive be required to pay the standard non-group premium rates, which are considerably higher than those for group enrollment...

...What would be your answer to those who would say that this is a policy of appeasement...

...The commissioner directed the insurance plan to make a comprehensive review of its entire fee schedule and to "consider the feasibility of extending full-service benefits to greater numbers of our citizens...

...Smith noted that the present fee schedules "cover substantially more than eighty-two per cent of doctors' normal charges," even though they are allowed to levy supplementary fees on those patients earning more than $6,000 a year...

...He specifically ordered the insurance organization to set up a utilization division and to collaborate with medical societies and hospital medical staffs in the establishment of admissions committees in all Pennsylvania hospitals to check on unnecessary or excessively long hospitalization...

...There is a growing realization that the insurance framework is not merely a provision for spreading the costs of health care services but has other far-reaching effects whose overall result is a steady pyramiding of these costs...

...This is too serious a business for that kind of thinking, and in regard to Cuba, my feeling was not only that it was illegal for us to do it, and we cannot go into the business of violating treaties...

...In a far-reaching decision which appears to leave the door wide open for state-imposed controls on physicians' incomes, Smith has not only turned down a Blue Shield request for increases in its fee schedule but has strongly indicated his conviction that many of the program's subscribers are now being charged too much and that fees should be reduced rather than raised...

...It is not without irony that while the medical profession has been fighting a last-ditch battle against Federal government encroachment on its business, the regulatory power of the states has been making itself increasingly felt through the back door of voluntary health insurance...

...There is ample latitude," Smith said, "for Blue Shield to do much more than it has in cooperating with Blue Cross plans, medical societies, hospitals, and the public in lessening unnecessary utilization of Blue Shield services...

...That challenge is to provide ever-broadening medical care to citizens at costs which they can afford...

...To enforce his views, the commissioner directed Blue Shield to cooperate with Blue Cross and the state and county medical societies in devising steps to curb "unnecessary utilization of hospital and medical services" and control other abuses which now needlessly raise the cost of health care...

...If we get ourselves involved in a Korean war in Indo-China, and all our reserves begin flowing that way, or get ourselves involved in a thing we can't finish in Cuba, because the guerrilla war may go on forever, then we will weaken ourselves for what is really the issue, which is to keep the balance of power between ourselves and the Soviet Union intact...

...Rejected "summarily" by Smith was a Blue Shield contention that when its fee schedule committee has recommended adoption of a fee and this has been approved by its board of directors, "such fee is entitled to be regarded as appropriate in the absence of medical testimony to the contrary...

...SHOULD DOCTORS be the sole judges of the fairness of the fees they charge for their services to patients covered by health insurance...

...According to Blue Shield's own estimates, the higher fees sought would have cost the insurance plan an additional $1,262,600 a year...

...One of the largest insurance plans in the country, the Pennsylvania Blue Shield has more than 4,200,000 subscribers and about 13,000 participating doctors...

...In view of this, he said, Blue Shield should "determine whether the income limits under both Plan A and Plan B could be raised without any further adjustment of fee schedules...

...He has now caught up with Blue Shield, the surgical-medical insurance program controlled by the medical societies, and in doing so he has inevitably run head on into the question of the propriety of letting the doctors themselves decide what they should charge...

...Here the commissioner put his finger on one of the basic facts about voluntary health insurance—that unless it is rigidly controlled, it can become little more than a collection agency for the doctors...

...It hasn't sent its troops anywhere...

...Laos is not going to be what we rather foolishly, I think, two or three years ago, tried to make it—an American satellite, whatever you like to call it...

...Plan B guarantees full coverage for persons earning up to $4,000 a year and families with incomes of up to $6,000...

...We're not that kind of country...

...T h e insurance commissioner, who represents the public, can properly inquire and, in fact, is obligated to inquire under the law, whether the Blue Shield rates paid by our low-income citizens are providing doctors with fees which only persons with substantial incomes would normally be charged...

...Plan A provides for fullservice benefits for individuals earning less than $2,500 a year and families with earnings of less than $4,000 a year...

...It certainly does not justify or contemplate that policy decisions will be made for Blue Shield by the Medical Society and summarily passed on to the Blue Shield for implementation...

...Involved in the picture is much^ more than the increased utilization of health services with the lessening of the economic barrier to needed care...

...Smith's ire was the proposal for raising a number of the fees which constitute full payment for services rendered to subscribers within fixed income limits...

...Already being subjected to close examination are the manner in which our hospitals are functioning and the diverse opportunities for greater economy in their operation...