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son to 10 percent for hospital expenditures and 4 percent for surgical expenditures of $200 or more per year).
In contrast to physician services, even “basic" protection against the cost of medicines is not generally available from existing health insurance organizations. The importance and special nature of this problem was recognized by Senator McNamara in the bill he introduced in the previous Congress (his current proposal does not include provisions for medicine benefits).
This bill should also provide for modest medicine benefits from the start.
The cost of this could be kept small and strictly controlled by restricting the benefit to those medicines which are both expensive and lifesaving and by authorizing a minimum cost per prescription and a total annual maximum cost per person. After a few years, more liberal medicine benefits might be possible when experience had been accumulated on how best to administer such benefits and when the overall financial status of the program had become clearer. E. Deductibles-Elimination of options with deductible provisions (p. 13: 1-19;
p. 14: 2, 19–25; p. 15:1–25; p. 16: 1-24; p. 17:1-2; p. 37: 13-18; p. 75: 17-19) This bill now contains provisions which permit the individual to choose one of three different types of hospital coverage. One option is 45 days of paid-infull hospital service; the second is 90 days of hospital service with a deductible of $10 a day for the first 9 days, minimum deductible of $20 ; the third is 180 days of hospital service with a fixed deductible equal to 212 times the average cost of 1 day of hospitalization. The choice between the three options must be made when the individual becomes eligible and cannot be changed thereafter.
These three options are intended to be of equivalent financial value to the individual. They are not of equivalent medical or social value. Ordinary individuals are not equipped to evaluate such a highly technical matter and they should not be required to make an irrational choice, particularly, when once made, the choice can never be changed.
Deductibles are used in other insurance programs to lower cost (while giving the unsophisticated the impression of large benefits) and to discourage abuse. The cost problem can be dealt with as effectively and more honestly by cutting the number of partially paid hospital days to the financially equivalent number of paid-in-full hospital days. As for the abuse problem, years of experience with health insurance has not provided any evidence to support the view that deductibles are effective in this respect. On the other hand, deductibles do encourage delay in seeking needed care and, in the long run, result in increased cost because of the greater amount of care required by neglected illness.
Such views were strongly voiced by the American Hospital Association and other liberal professional witnesses at the hearings of the Ways and Means Committee, July 1961. In the last Senate debate on this subject, Senator Wayne Morse gave an excellent presentation of the case against deductibles (Congressional Record, July 16, 1962, pp. 12728–29).
The McNamara bill offers only 45 days of paid-in-full hospital service. It also eliminates the $20 deductible for diagnostic outpatient services, although it does not cover such services if they do not total $20 or more. The Javits bill offers only one of the three Government options in the King-Anderson bill (90 days with the sliding deductible) as well as a private health insurance option that may or may not have the same deductible provisions.
This bill should not contain the medically and socially unsound deductible provisions. Although the option of 45 days of paid-in-full hospital service would not be as helpful to the unfortunate few patients who would require hospitalization for a longer period of time, it would be more helpful to the greatest number of individuals as it would cover the complete hospital service costs of more than 90 percent of the hospitals stays of those over 65. Elimination of the options with deductibles would make the program easier for everyone to understand, simpler to administer, and more conducive to prompt and, thereby, better medical care. F. Nursing home standards-Strong endorsement of latest version (pp. 20, 22)
and of program for increasing good nursing homes (p. 27) Most nursing homes, unlike hospitals, are private businesses devoid of professional leadership. Although States licensure laws set forth minimal requirements, adequate patient care in nursing homes is the exception rather than the rule. Moreover, some nursing homes have little or no concern for the welfare of their patients and are solely interested in exploiting the financial resources of aged and chronically ill individuals. To make Federal funds available
to these types of nursing homes would only perpetuate and expand inadequate nursing home care.
This would be virtually impossible under the standards for a skilled nursing facility now included in this bill particularly, the requirement that the nursing home be either affiliated or under common control with an approved hospital. In contrast, all previous versions were unacceptably weak and brought forth sharp criticism from the American Public Health Association, the Physicians Forum, and others.
However, it should be understood that the practical effect of these high standards will be no nursing home benefits for most people for a number of years. This does not mean abrupt or wholesale closings of existing nursing homes or depriving patients of nursing home care they now receive. It does mean that Federal funds would not finance poor nursing homes but would stimulate the development of good nursing homes. This latter requires a companion program for substantially increasing good nursing homes, including an expansion of the Hill-Burton grants for construction of nonprofit nursing homes. This point is specifically recognized in the new paragraph of this bill which requires a study of the best ways to increase good skilled nursing facilities.
The Javits bill includes the new high standards but the McNamara bill lacks the one crucial requirement mentioned. G. Membership of the Advisory Council—Increase in mandatory representation
of the health professions (p. 41:20-23) The medical significance of the proposed program requires strong and diverse professional leadership on the 14-member Health Insurance Benefits Advisory Council. This is not possible with the membership formula now specified ; namely, that not less than four shall be outstanding in the hospital and health fields. The McNamara bill specifies that the Council include at least three persons with hospital administration backgrounds and three with health insurance backgrounds.
This bill should be changed that not less than six of the Council members should be persons outstanding in the hospital and health fields and that of these, not less than two should be physicians. H. State and local advisory councils-Addition of new provisions (p. 43: 3)
State and local advisory councils could play an important role by giving the public and the health professions an established method for suggesting desirable individualized approaches to local problems, for coordination of this program with other local health and medical services, and for checking on the local effectiveness of the program. Although such decentraization is not typical of most Federal activities, it has been of considerable value in some Federal and federally aided health and medical services.
This bill should have provisions establishing State and local advisory councils with membership similar to that of the Advisory Council at the national level. I. Grievance machinery-Addition of new provisions (p. 43:13)
Section 1713 establishes a mechanism to review determinations by the Secretary of Health, Education, and Welfare concerning the eligibity of an individual for health benefits generally or specifically. Section 1710 (b) (2) establishes a procedure whereby the Secretary can terminate an agreement with a provider of services; this procedure could include a hearing if so required by the regulations.
These two provisions are not adequate for dealing with the many and varied mistakes, misunderstandings, and disputes that are bound to arise in a program which provides individualized personal services and involves matters of health and life and intricate relationship between patients, providers of services, and administrative agencies.
Adequate representation on the policymaking bodies, though essential, is not sufficient to protect fully the rights, the feelings, and the dignity of the individual, whether he is the recipient or the provider of service. There should be a definite, fair, and simple method for the individual to express his views, and obtain reparation, as appropriate, for any injustice that may occur. The need for such grievance machinery is all the greater if private organizations are to undertake some of the day-to-day administration and thus, on behalf of the Federal Government, deal with individual patients and providers of service (discussed in the next section).
This bill should have provisions establishing local impartial hearings officers and appeal tribunals which can receive, investigate, evaluate, and redress
individual grievances in accordance with policies and procedures set forth in the regulations. It should be required that grievances involving matters of professional practice or conduct should be evaluated by a hearing body which includes appropriate, competent, and disinterested professional health personnel. J. Use of private organizations for certain administrative functions—Acceptance
of latest version (pp. 45–48) This bill now contains provisions for using Blue Cross and other private organizations designated by a group of hospitals or other providers of services for determining routinely the amounts to be paid to these providers of services, for transmitting such payments to these providers of services, and for performing certain other administrative functions.
Such arrangements are permissive on the part of Federal Government and on the part of the private organizations and even on the part of the individual provider of services should the Federal Government and a private organization enter into an agreement which applies to the individual provider of services. In view of this permissiveness and the apparent political need for these provisions, a full critique of the role of private organizations in the administration of Government programs seems expendable in this particular frame of reference. K. Choice of benefit plan-Evaluation of private plan option in Javits bill (pp.
42-50) The only choice the King-Anderson bill offers the individual concerns the type of hospital coverage (already discussed in sec. E). The Javits bill (S. 849), in contrast, contains provisions which permit the individual at the time he becomes eligible for health benefits to choose a private health insurance benefit plan instead of the Government benefit plan. The conditions governing the use of this option, particularly the specifications which the private benefit plan must meet, are such that few individuals could be covered by private benefit plans.
Although this option has little practical significance for the aged, it could be opposed on the ethical grounds that it would be misleading and confusing to them and on the principled grounds that any implication that private health insurance might be able to provide basic health insurance for the aged is inconsistent with the fundamental rationale of the social security approach.
Of far greater value than the private benefit plan option in the current Javits bill to both the individual and the private health insurance organizations is the option of two significantly different Government benefit plans contained in the bills submitted to the previous Congress by Senator Javits (S. 2664) and by Senator Saltonstall (amendment 7–9–62 to H.R. 10606). An option of the kind in these bills would enable the individual to choose the one of the two Government benefit plans which would duplicate least the private health insurance he was carrying or which, for some other reason, would meet his needs better. This kind of option would mean the private health insurance organizations would have fewer adjustments to make in their policies in order to offer those which would best complement one or the other of the Government benefit plans.
However, since the second Government benefit plan would include some physician services, the administrative and political problems are greatly increased. It is not surprising, therefore, that this feature was not retained in the current Javits bill. L. Health insurance benefits for individuals not covered by OASDI—strong
endorsement of latest version (pp. 54-57) This bill now contains provisions which grant health benefits to individuals 65 and over who are not now covered by OASDI. This is an excellent addition and an important step in the direction of a fully coordinated governmental approach to health care of the aged. Such an approach is needed in order to minimize the undesirable medical, social, and administrative features of the existing separate programs, even though different modes of financing continue for many years.
The McNamara bill, in contrast, covers those 65 to 72 only if retired, and all individuals 72 and over.
Much more can be done to eliminate those distinctions made at the point where health services are rendered which are based on differences in the financial resources of the individual or the source of payment for his health care. However, progress in this direction involves other Federal and State legislation to such a degree, that this bill is not the most suitable vehicle for the necessary legislative action.
27-166_64— pt. 5
M. Studies—Expansion of scope of studies (p.75–19)
This bill directs the Secretary to study certain questions: the adequacy of health care facilities covered by the program, alternatives to inpatient hospital care, the feasibility of additional types of benefits, and the effects of deductives.
Such studies are certainly needed, but any health care program concerned with maintaining and improving the quality of its services must devote effort and money to appropriate research and quality-raising activities. The scope of studies called for in this bill should, therefore, be expanded. [Recommended changes on pp. 9, 11, 12, 13, 14, 15, 16, 17, 20, 23, 24, 25, 27, 31, 37, 41, 43, 75]
(H.R. 3920, 88th Cong. 1st sess.] A BILL To provide under the social security program for payment for hospital and related services to
aged beneficiaries Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the “Hospital Insurance Act of 1963”.
TABLE OF CONTENTS Sec. 2. Findings and declaration of purpose.
TITLE I-HOSPITAL INSURANCE BENEFITS FOR THE AGED
TITLE XVII-HOSPITAL INSURANCE BENEFITS FOR THE AGED
(a) Inpatient hospital services.
(f) Arrangements for certain services.
id) Benefit period.
(i) Additional skilled nursing facilities.
for providers of services.
of services with conditions of participation.
(a) Requirement of requests and certifications.
(g) Payment for services prior to notification of noneligibility.
Sec. 1719. Designation of organization or publication by name
(a) Definition of wages.
(e) Average monthly wage. Sec. 105. Technical amendments.
(a) Suspension in case of aliens.
TITLE II–A MENDMENTS TO THE INTERNAL REVENUE CODE OF 1954
(a) Self-employment income tax.
(d) Effective dates. Sec. 202. Increase in tax base.
(a) Definition of self-employment income.
(f) Effective date. Sec, 203. Technical amendment.
TITLE III-RAILROAD RETIREMENT AMENDMENTS
(a) Hospital insurance benefits for the aged.
disability, and health insurance systems.
Insurance Trust Fund.
TITLE IV-MISCELLANEOUS PROVISIONS Sec. 401. Studies and recommendations.
FINDINGS AND DECLARATION OF PURPOSE SEC. 2. (a) The Congress hereby finds that (1) the heavy costs of hospital care and related health care are a grave threat to the security of aged individuals, (2) most of them are not able to qualify for and to afford private insurance adequately protecting them against such costs, (3) many of them are accordingly forced to apply for private or public aid, accentuating the financial difficulties of hospitals and private or public welfare agencies and the burdens on the general revenues, and (4) it is in the interest of the general welfare for financial burdens resulting from hospital services and related services required by these individuals to be met primarily through social insurance.
(b) The purposes of this Act are (1) to provide aged individuals entitled to benefits under the old-age, survivors, and disability insurance system or the railroad retirement system with basic protection against the costs of inpatient hospital services, and to provide, in addition, as an alternative to inpatient hospital care, protection against the costs of certain skilled nursing facility services, home health services, and outpatient hospital diagnostic services; to utilize social insurance for financing the protection so provided; to encourage, and make it possible for, such individuals to purchase protection against other health costs by providing in such basic social insurance protection a set of benefits which can easily be supplemented by a State, private insurance, or other methods; to assure adequate and prompt payment on behalf of these individuals to the providers of these services; and to do these things in a manner consistent with the dignity and self-respect of each individual, without interfering in any way with the free choice of physicians or other health personnel or facilities by the individual, and without the exercise of any Federal supervision or control over the practice of medicine by any doctor or over the manner in which medical services are provided by any hospital; and (2) to provide such basic protection, financed from general revenues, to those persons who are now age 65 or over or who will reach age 65 within the next several years and who are not eligible for benefits under the old-age, survivors, and disability insurance or railroad retirement systems.
(c) It is hereby declared to be the policy of the Congress that skilled nursing facility services for which payment may be made under this Act shall be utilized in lieu of inpatient hospital services where skilled nursing facility services would suffice in meeting the medical needs of the patient, and that home health services for which payment may be made under this Act shall be utilized in lieu of inpatient hospital or skilled nursing facility services where home health services would suffice.
(d) It is further declared to be the policy of the Congress that no individual who receives aid or assistance (including medical or any other type of remedial care) under a State plan approved under title I, IV, X, XIV, or XVI of the Social Security Act shall receive less benefits or be otherwise disadvantaged by reason of the enactment of this Act.