[Congressional Record Volume 140, Number 68 (Thursday, May 26, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: May 26, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                HEALTH INSURANCE FOR THE AMERICAN PEOPLE

  The SPEAKER pro tempore (Mr. Fingerhut). Under the Speaker's 
announced policy of February 11, 1994, and May 23, 1994, the gentleman 
from Washington [Mr. McDermott] is recognized for 60 minutes as the 
designee of the majority leader.
  Mr. McDERMOTT. Mr. Speaker, I yield to the gentlewoman from Ohio [Ms. 
Kaptur].


                   united states-chinese toy industry

  Ms. KAPTUR. I thank the gentleman for being so kind as to yield this 
evening. I will not take a great deal of time.
  In listening to the previous speaker, the gentleman from California 
[Mr. Dornan], I can't help be reminded, as many of our Members travel 
to the 50th anniversary commemoration in Europe, that through the end 
of June of this year the United States Mint is selling commemorative 
coins that this Congress authorized, the proceeds of which will be used 
to construct a World War II memorial here in our Nation's Capitol on 
the central mall.
  This was a piece of legislation that moved through here not so many 
months ago. Over 7.5 million dollars' worth of coins have been 
purchased, and $3 million of that total to date has been used to build 
a memorial peace garden in Europe, in France, where many of our Members 
will travel.
  So many veterans have called our office and asked where they could 
purchase the coins. They would purchase them through the U.S. Mint, the 
Bureau of Printing and Engraving. Both of those offices of the U.S. 
Government can provide them with information on purchasing those coins 
that will help pay for the construction of the memorial here in our 
Nation's Capitol, a memorial that is long overdue.
  Mr. Speaker, this evening, I know the speaker that was so kind to 
yield to me, the gentleman from Washington [Mr. McDermott] is going to 
be speaking about the issue of health insurance for the American 
people.
  This evening my topic is different. I'm going to be talking about the 
proposed most-favored-nation agreement with China that will be debated 
very shortly here in this Congress. However, it is very clear to me in 
the remarks that I will be making this evening that one of the reasons 
it has been so very difficult for all Americans to receive insurance 
coverage is because so many of our corporations have moved offshore, 
putting millions of Americans out of work, and employing people in 
other countries like China at such low labor rates that in fact those 
people cannot raise their standards of living. Then those products are 
sent back here to the United States for our workers to buy, but the 
prices of those products do not go down.
  In fact, we watch over the last 20 years the wages of average 
Americans keep going down and down and down. Even as jobs are created, 
wages are not going up. It makes it very difficult to provide such 
important national needs as health insurance for all of our people.
  Mr. Speaker, as we debate whether or not to renew China's MFN status, 
it is often said that the United States can no longer afford to link 
our trade policy with broader concerns about political freedom and 
human liberty. It is said that the traditional U.S. policy of 
supporting human rights and caring how other countries treat their 
workers is an obsolete policy. It is said that U.S. workers will only 
benefit from a trade policy based on exports even while those same U.S. 
workers remain unemployed. It is said and said and said that the only 
way to change the way China treats its people is for the United States 
to wink and look the other way.
  I say, though, that this type of argument is not only spurious but 
dangerous. America was not founded on the narrow principles of 
economics as some would have you believe today. America was founded on 
the democratic principles that each individual had the right to life, 
liberty and the pursuit of happiness. In turn, these democratic 
principles have always been embodied in U.S. foreign policy. The force 
of American leadership in the world has always been grounded in the 
example that our country has set in keeping to these very same 
democratic principles.
  Now though, it would seem that our nation's democratic principles are 
slowly being replaced by an ``economics is king'' mentality. But I ask, 
who exactly is saying that America can no longer afford to hold by its 
principles? The current debate over the renewal of China MFN status is 
telling. Overwhelmingly, the pressure to delink our nation's trade 
policy with our concerns over how China treats its people is being 
pushed by a few U.S. corporations with huge investments in China. 
Investments in China which have expended by more than 1,000 percent 
since 1990 to reach $5.5 billion dollars in 1993. It is interesting to 
note that as United States investment in China has increased so has the 
United States trade deficit with China--reaching $23 billion last year 
alone.
  One of the most ardent supporters of delinkage and renewal of China 
MFN is the toy industry in the United States and China. Why? Mainly 
because of the United States toy industry's own ties--or link--to China 
by way of sales and investment.
  China is the single largest toy producing nation, making 
approximately 20 percent of the world's toys. Out of a world production 
value of $26 billion, China represents over 20 percent of world 
production. In 1990, China shipped approximately half of their 
production--2.2 billion dollars' worth of toys--to the United States. 
Conversely, the United States is the world's single largest toy market 
valued at $19 billion or 35 percent of all sales worldwide. We buy 55 
percent of our dolls and 40 percent of all other toys from the People's 
Republic of China. The United States toy industry is the link between 
the markets of China and the United States.
  There is a universal delight taken in toys. But the toys that we 
delight in are often produced under horrific working conditions for the 
Chinese toiling in United States-owned sweatshops. In a recent edition 
of Business Week, I found the sad story of Hong Biu Yun to be 
illustrative.

       Hunched over a school desk, Hong Biu Yun is clearly 
     exhausted as she sticks Mickey Mouse heads onto motorized 
     toys at a factory in Shekou, China. One of 12,000 mainland 
     Chinese employed by Hong Kong's largest toymaker, Kader 
     Enterprises Ltd. Hong typically works 14 hours a day, 7 days 
     a week to rush out toys for American kids.
       Recently, her hours grew even more oppressive. In order to 
     meet the holiday demand for Ghostbusters, Big Hauler Trains, 
     and Mickey Mouse dolls, the girls at the Kader plant were 
     ordered to put in one or two 24-hour shifts, with only two 
     meal breaks, each month.
       Hong looks about 12 years old but claims in a frightened 
     whisper that she's 17. That's the minimum legal working age 
     in Shekou, the best-managed of four special economic zones 
     set up by China to attract foreign investment. But to the 
     dismay of Chinese Communist leaders, the zones have spawned 
     twin horrors associated with old-style capitalism--child 
     labor and illegal working hours.

  Kader Enterprises Ltd., the factory that Hong works for, is one of 
the major subcontractors for such U.S. toy companies as Walt Disney, 
Coleco, Mattel, Tonka, and Hasbro. While these United States companies 
state that they have little control over the working conditions of the 
Chinese, millions of dollars are spent by major United States toy 
companies to invest in the continuation and expansion of the sweatshops 
in China.
  In turn, the Chinese workers are paid $10 to $30 dollars a month. In 
turn, the Chinese workers, like Hong, are forced to work under highly 
unsanitary and dangerous conditions. Factory fires alone have killed 
more than 170 people in the low-cost manufacturing base in Pearl River 
delta over the past 2\1/2\ years. In 1993, Beijing disclosed that work-
related deaths nationwide last year rose 3 percent from 1991 to more 
than 15,000 people.
  While the toy industry and other United States corporations with huge 
investments in China argue for delinkage of trade policy from broader 
issues such as human rights and labor standards, the true link often 
goes unmentioned. I would argue that the link which needs to be debated 
is the link between the labor practices of some United States 
corporations in this country/and the labor practices of those same 
United States corporations manufacturing in China. In other words, the 
true link is the U.S. corporations themselves. And more, the true link 
is the profits made by these United States corporations at the expense 
of Chinese and American workers.
  To realize the existence of the true link, one only has to ask: Why 
else would these corporations spend millions of dollars to lobby 
Congress to renew China's MFN status? Why else would these same United 
States corporations fire their United States workers to set up shop in 
China? The answer is simple. They profit immensely from doing so.
  Toys are fun. Toys are often given to exemplify the love one has for 
a child. But when buying a toy imported from China in the future, one 
must realize that the cute little teddy bear was made by a Chinese 
worker earning only a few cents an hour. One must realize that the 
teddy bear could actually be a product of the Chinese People's 
Liberation Army. That the cute little teddy bear may be unsafe. And 
finally, when buying that teddy bear for China, realize that there are 
many unemployed United States workers who used to make those very same 
teddy bears in our country but could never hope to purchase one now for 
their own children, because prices of teddy bears sure are not cheap.

                              {time}  1820

  I thank the gentleman for yielding to me this evening. I will be very 
interested in his remarks about the related issue of health insurance 
for all of our people, including those who are out of work in this 
Nation.
  Mr. McDERMOTT. It is a pleasure to yield to my colleague, the 
gentlewoman from Ohio. She is a great advocate for the consumer and 
somebody who we have a lot of respect for.
  Mr. Speaker, tonight I intended to talk with you and others about the 
whole issue of health care quality, and as I was thinking about this 
issue I had a discussion with one of my colleagues from Massachusetts, 
Mr. Olver, who suggested that he would like to come out and talk about 
some issues that he is very concerned about.
  I yield to the gentleman from Massachusetts, Mr. Olver.
  Mr. OLVER. Mr. Speaker, I thank the gentleman from Washington for 
yielding. First I want to congratulate and commend the member from 
Washington for the valiant fight that he has been putting forward and 
is continuing to put forward to make certain that we end up this year 
with a comprehensive system of health care for every American, one that 
will provide affordable and quality health care for every American 
citizen. So I say to the gentleman I really want to thank him for that, 
and also to thank him for yielding and scheduling the time tonight to 
discuss what I think is a very important aspect of health care reform; 
namely, the involvement of health insurance plans in the determination 
of care.
  The role of the insurance companies in health care goes straight to 
the heart of what people in my district are saying and writing to me. 
They are asking me to ensure quality and choice.
  We talk about those words of quality and choice, but what do they 
really mean? There are so many aspects, so many ways you could define 
quality and choice. One major component of quality and choice depends 
on who controls our source of care, and who controls what kind of 
treatment we get.
  Quality care means, to me at least, having a well-trained health care 
provider who delivers appropriate and thorough care, and health care 
providers must be allowed to deliver the care that they believe is 
necessary. That is what quality means to me.
  Choice means not just being able to choose an insurance company, but 
to be able to choose a doctor, or a counselor, or a chiropractor, or a 
nurse, or other health professional. Choice should not be limited to a 
list of doctors who belong to an insurance plan, and I doubt many 
people realize how much insurance companies control both the quality 
and the choice we have in our current system. Insurance companies 
routinely restrict care by their refusal to cover some kinds of care.
  The idea that an insurance company can alter the care that your 
physician recommends should send every American into the streets in 
outrage. But instead, we seem to be buying into that concept of 
restrictions on care.
  What is the first thing we ask when we are in the hospital and we 
need to stay an extra day: Does the insurance company cover another 
day? When you are sick do you or your family really want to have to ask 
that question: Does the insurance company cover another day? This is 
not quality health care. This is cost containment based on the profits 
to the insurance companies.
  Investors obviously want profit. Any for-profit insurance company has 
built-in incentives that contradict what I have just defined as quality 
and choice, and that is true for free-for-service plans, PPO's and 
HMO's alike.
  But I would like to spend just a minute talking about managed care in 
particular. About 40 million Americans belong to health maintenance 
organizations, HMOs. The majority of those HMO's are nonprofit, and I 
am sure most of the people in those HMO's and under those plans are 
receiving quality care. But what about the rest? Remember, the purpose 
of for-profit, managed care in our current financing structure is to 
control the amount of money spent on each member of the plan and, 
therefore, to make profit. The stronger the control, the larger the 
profit that is going to be made.
  Mr. McDERMOTT. It is interesting the gentleman raised that question 
of how managed care works in the nonprofit sector. The original managed 
care started in the State of Washington when they were building the 
Grand Coulee Dam back in the 1930's, and Henry Kaiser saw that he had 
workers out there in the desert building this damn, and he needed to 
have doctors there so they had a healthy work force. So he got the 
original HMO together because he wanted to provide health care for his 
workers. He then took that idea and went to the shipyards during the 
Second World War, because he needed his shipyard workers to be healthy, 
so he provided doctors. That is really how Kaiser Permanente started. 
It was a way to deal with the needs of the workers in the most 
effective way, and it was a way done not for profit. It was simply that 
he saw that if he provided good health care to his workers it would be 
in the best interest of the workers and in the best interest of the 
company. And that idea has now been taken, as you are suggesting, by 
the insurance companies.

  I think that is a good distinction for people to understand. A not-
for-profit managed care operation versus one that is done by an 
insurance company where the bottom line is for them to make money out 
of it.
  Mr. OLVER. It is interesting that you are going back and describing 
exactly that process, because that was to provide the broadest possible 
necessary care for a working populations at a reasonable price. Now 
what we have instead is we have developed a problem. We have MBA's that 
are making decisions that M.D.'s or Ph.D.'s or nurses at least ought to 
be making as health providers. And the insurance profits that have been 
built out of this system now have built skyscrapers on the skylines of 
every major city in America.

                              {time}  1830

  The profits have launched multi-million-dollar ad campaigns to get 
our business, but none of this necessarily means better health care.
  The health care debate would be better, it seems to me, if we could 
separate our discussion of health care financing from that about health 
care delivery.
  I strongly support--as you do, and this is how we have come 
together--a single payer system for financing of our health care 
system, and the Congressional Budget Office, our CBO, has estimated 
that that would eliminate no less than $67 billion in administrative 
waste and require everybody to pay their fair share.
  Now, I want to use this chart that we have here that describes in a 
composite kind of a way what the general private insurance system, and 
really it is our private insurance system and the whole of our public 
insurance system; I think we could say all of the systems that we have 
in this country, how they operate, what portion is administration, what 
portion is health care spending, and what a single payer system would 
be. Now, this chart shows under the system as we function with it 
marked ``private'' administration spending of 20 percent and health 
care spending of 80 percent. That means essentially that in all the 
spending that we have in this country, in 1994 we will spend $1 
trillion, $1,000 billion, but this chart is showing that, $200 billion 
of that is broadly what could be called administrative spending. It is 
a combination in that 20 percent that becomes profits and marketing 
costs and lobbying and advertising and all of those things.
  Mr. McDERMOTT. And all the paper-shuffling.
  Mr. OLVER. And all the paper-shuffling, all the real administration 
that is necessary, and all the paper-shuffling in the system. The other 
$800 billion is our actual health care spending.
  What the chart shows by comparison is the kind of administrative 
expenditure that goes into the single-payer systems in the various 
countries that have single-payer systems, where there is only 3-percent 
administrative cost, because you eliminate the paper-shuffling, you 
eliminate the profit, and you eliminate all the marketing costs.
  I will have a little bit more to say about that in a few minutes.
  But I think what we need to go back to to really drive this home is 
the fact that here in the $1 trillion we are spending $200 billion on 
these items, and under a true single-payer system we would be spending 
about $30 billion out of that $1 trillion on those administrative 
issues, which leaves us with this much. That is a difference of $170 
billion that we now are spending in our system as it functions on all 
of those items that we could be spending on health care, on providing 
health care for American citizens who do not presently have health 
insurance, providing health care for elders who need long-term care, 
providing mental health care for people who have very poor systems, 
very poor programs of coverage for mental health and need a better 
coverage for mental health. All of those things that $170 billion could 
be used for.
  Mr. McDERMOTT. Basically what you are saying, if I hear you, is that 
everybody, when they see a television commercial on television with 
Harry and Louise on it put on by a insurance company is basically 
coming out of that 20 percent?
  Mr. OLVER. Right out of here.
  Mr. McDERMOTT. Yes. It is wasted. When people pay their premium 
dollar, they do not realize that the first 20 percent, or first 20 
cents, goes for all of this other stuff that is unrelated to health 
care; whereas, in Canada, actually the Canadian provinces are at 1 
percent of the dollar goes for administration; 99 cents goes to pay for 
health care.
  It is amazing, if people really understood and really came to really 
understand this, we would not have any question at all that single-
payer would be the bill that everyone would want.
  Mr. OLVER. I would think that would be the case.
  I cannot imagine why we would want to expend the marketing costs, the 
sales costs, the advertising, the lobbying, and all of that along with 
all of the paper-shuffling and all of the profits in the system as it 
functions when we could be using those dollars to provide health care 
for our citizens and do it in a manner such as that lower chart. No.
  The CBO's, the Congressional Budget Office, estimate of a potential 
of $67 billion is really a very conservative estimate. These represent 
the numbers on average of what the whole of our plans, both private and 
public in this country, produce versus what single-payer systems 
produce in other places.
  And all of that saving can be realized. However, creating that kind 
of single-payer system for financing should not be mistaken as creating 
a single way to deliver the care.
  For example, your bill, the Health Security Act, H.R. 1200, 
specifically allows the formation of community-based nonprofit HMO's.
  Organizing doctors into groups such as this gives a good delivery 
system. In fact, it should actually improve the quality of care. These 
organizations allow doctors to communicate and confer with each other. 
Incompetence is perhaps less likely when the peers are looking on. The 
single-payer system would eliminate the for-profit element of the 
current financing system and, therefore, it would eliminate the 
conflicts of interest built into the control mechanisms where the 
insurance companies decide what kind of care to give on the basis of 
how much profit they can make and put the control back in the hands of 
doctors and nurses.
  Utilization review policies at for-profit HMO's are written by those 
who have a direct stake in the amount of those profits of those health 
care organizations, and they are written by the nonclinical managers of 
the for-profit plan.
  It is this for-profit element of the current system that is absorbing 
billions of dollars that should be used to provide care. To illustrate 
this, I want to give one more example, and it actually both explains 
and elaborates on the upper line here, and it goes a little bit beyond 
that.
  I want to read some pieces and make a couple of comments, from a 
press release that was issued by the Wellpoint Health Networks, a large 
California for-profit managed-care company, and I will quote two pieces 
from this. I could quote the whole thing, but the others really do not 
add much.
  The press release starts out, and it is a press release on Wellpoint 
stationery with Wellpoint heading on the top. This one happens to be 
dated February 24, 1994. It gives the media contact for further 
information, and it is titled, ``Wellpoint reports 1993 fourth quarter 
and annual results,'' and it opens from Woodland Hills in California.

       Wellpoint Health Networks, Inc., New York Stock Exchange 
     letters WLP, one of the Nation's largest publicly traded 
     managed health care companies, today announced results for 
     the fourth quarter and the year ended December 31, 1993.

  Now, the really, really telling paragraph, and I am going to quote, 
and I will quote,

       Premium revenue increased 9 percent to $603 million in the 
     fourth quarter of 1993 compared with premium revenue of $553 
     million for the same period in 1992. The company's medical 
     loss ratio was 71.8 percent in the 1993 fourth quarter 
     compared with 73.5 percent for the same period in 1992.

  Now, that tells the whole story, because here is the press release by 
this for-profit managed care company which goes out to show people what 
a good investment it is for the investors, because the profit is going 
to be good and worth their investing in the New York Stock Exchange in 
WLP as it goes across the Big Board.

                              {time}  1840

  And they came, and they proudly tout that their medical loss ratio 
has been reduced from 73.5 percent to 71.8 percent.
  Now, for those who do not know what that means, that means, unlike 
this chart, that they have gotten this, what we would call the 
administrative part of it, up to 28.2 percent, meaning that of $1 of 
premiums paid, that they are actually only buying health care with 71.8 
cents out of that dollar and they are using 28.2 cents in this broad 
area of administrative spending.
  Now, the rest of this chart, the actual financial tables that they 
gave with their chart, shows precisely where that 28.2 percent goes. 
And if you look at the percentages of what would be their real 
administrative costs and their profits and their selling, marketing, 
advertising and lobbying costs, what you come down to is that the 
selling expense, their marketing expense, is a little bit more than 6 
percent of the total and their general administrative expense they 
claim to be the real administrative expense, to be 12 percent and their 
profits to be about 14 percent.
  That is where that 28.2 percent is coming from. And that compares 
with a single-payer system which the gentleman has so eloquently 
advocated for, and at least 90 Members have joined in advocating, that 
compares with the single-payer system in which there is no profit, that 
14 percent is saved, and in which there is no marketing, no selling, no 
advertising, no advertising costs and no lobbying costs, which is 
another 7 percent. So that goes back.
  When you put those two together--the 14 percent profit that can be 
saved and the 6 percent of selling and marketing costs--that brings you 
to 20 percent of the premiums, and that comes very close to the 
difference here, just to bring this thing full circle. That comes very 
close within the margin of error in the 17 percent difference that we 
started out discussing by showing this chart.
  By the way, it is not my chart. It is a chart that the gentleman from 
Washington had provided me today.
  Mr. McDERMOTT. That chart actually we developed, and that is an 
average chart. The insurance companies range between 14 and 24 percent. 
The gentleman from Massachusetts has one here with 28, which is even 
beyond any range I was using.
  But what is absolutely stunning is to realize this company took in 8 
percent more money, but they increased their profits and clearly they 
are not giving it back. They are giving it back to the stockholders.
  Mr. OLVER. They are certainly not providing better care. By the way, 
I want you to have a copy of this because this is an example of the 
company itself, one of the largest managed-care for-profit companies 
touting, in order to show what a good investment it is for the 
investors. What does that do for health care? It does nothing for the 
quality of health care, and it certainly does not improve our choice.
  Mr. McDERMOTT. The gentleman is talking about the whole business of 
managed care. What do insurance companies add to the health care mix? 
Well, absolutely nothing. If we took insurance companies out of the 
mix, there would be nothing lost in the present health care system 
because every other country operates without insurance companies and 
delivers health care to everyone with no problem, good-quality health 
care. And yet we pay up to, as the gentleman says, 67. The CBO numbers 
that they gave us said up to $100 billion a year in administrative 
costs, and we get absolutely nothing for it.
  Really, if we could save that $100 billion or the $67 billion, we 
could cover everybody who does not have health insurance. In our bill 
we give everybody long-term care. We take away co-pays and deductibles. 
We give a very generous benefit package with that $100 billion that 
people are already paying today.
  It is, in my view, incredible that people will continue to tolerate 
this, that insurance companies are going to take 14 percent profit off 
sickness. The idea that you would make a profit off people's illnesses 
seems to me a pretty hard thing to accept when it is 14 percent. They 
should make something, but 14 percent is way more than anybody should 
be entitled to off sickness.

  One of the things about this whole discussion, though--and usually 
when we talk about managed care I often wonder if people understand how 
they get that kind of profit--one of the interesting things about 
managed care is to understnad--and there was an article in Nation 
magazine this month called ``Managed Care: The Denial of Care.'' They 
way it is done is that you hire a physician, someone like me, to be 
what is called the gatekeeper primary care physician, and he signs a 
contract with the managed care organization that he will see so many 
patients a day and he will get paid X amount, let us say $1,000, if he 
makes 50 referrals during the next month. But if he only makes 25 
referrals to specialists, he will get $1,500. Or if he makes 10 
referrals during the month he will get $2,000.
  Now, you can understand, anybody can understand, that incentive that 
the primary care physician, when you come to see me and you have a 
problem, I am going to say to myself, ``I am going to do anything I can 
to not refer Congressman Olver to anybody else. I am going to keep him 
right in my office. I will make more money.''
  Now, if your problem gets worse and worse and worse, then I am going 
to say, ``Well, now, this is a mess. I am going to have to refer 
this,'' and make a referral too late. That is why we have the report 
from the General Accounting Office talking about the bone marrow 
transplant as a treatment for chronic myelogenous leukemia in which 
they found that there are 6 single-payer countries in the world where 
you get better treatment for chronic myelogenous leukemia than you do 
in the United States simply because of our insurance practice in this 
country. We have the best technology. But the question is how do you 
get through me to get that technology? If the system is set up for me 
to deny care to make more money for the HMO, for the managed care 
operation, then you are going to have a hard time getting past me to 
get the care you really need in a timely fashion.
  People do not understand how that works except they have the 
experience of going in and being held off from the physician whom they 
used to see. That is why on the question of choice, the gentleman 
raised the issue of choice and quality. Lots of times in this slogan 
era of health care--everything is in slogans on television--people say 
``you get more choice.'' What they mean is choice of health plans, not 
choice of all the physicians. Only in our plan do you get a card that 
you can hand to any doctor in any hospital any place in this society, 
if you want treatment, you can get it.
  In a managed care operation, you go in and you come to me, and if you 
do not want to go to me but you want to go to somebody else, it is 
going to cost you 20 percent more. For a lot of people, that 20 percent 
more means they will be cut off from seeing their pediatrician or 
gynecologist or the cardiologist they are accustomed to seeing.
  That is where the quality goes down and the profits go up. The 
profits go up in direct relationship to how much care you can squeeze 
out of the system. That is what that graph really says, is if you take 
20 percent out for profit, you are going to get less health care. It is 
just that simple.
  Mr. OLVER. It is just that simple.
  Mr. McDERMOTT. Yes. But, you know, there is one thing the gentleman 
and I were talking about before we came into the well, and that is the 
question of when people talk about health care reform, they are talking 
about access, universal coverage, and they are talking about cost 
control. The gentleman raised the next issues, which is the issue of 
quality of care.
  Now, I do not know if the gentleman has some other things, but there 
is one issue I want the gentleman to talk about at some point, and that 
is the business of the academic health centers. The managed care 
operation does not want to have anybody referred to an academic medical 
center.

                              {time}  1850

  They do not want to pay for people to go there because those are high 
cost hospitals, and so they are cutting off the patient base for all 
our academic health care centers, all the university medical schools, 
and, therefore, there is no patients for medical schools to teach the 
next crop of doctors, the next series of doctors, because medical 
centers are in serious problems because of the way managed care 
operates. They try everything they can, not to have anybody go into an 
academic health care center, and I know that the gentleman sat on some 
committee that dealth with this whole issue, and I would be interested 
in his feeling about it.
  Mr. OLVER. Well, I had the honor to be on the First Lady's task force 
on quality assurance, and obviously this is what the gentleman has 
described as one of the issues of quality assurance because it is our 
medical health centers, our academic health centers, which have 
produced the great advances that have been the byline of American--of 
quality care in the American health system, and we should be concerned 
directly, as people, from myself coming from Massachusetts where 
several of the major academic health centers are, but also everywhere 
else those large teaching hospitals are that are producing the health 
advances for the future in technology, and in biotechnology and all the 
things that go along with it, and what the gentleman describes as the 
process of reducing the patient base by under-managed care at least, 
which is so much the indications for proposals that are before the 
Congress, other than the single payer proposal, that ends up, as the 
gentleman put it quite correctly, reducing the patient base, and the 
academic health centers depend so much on taking the very ill in and 
dealing with them at those medical centers, and that is how they manage 
to do the teaching that is necessary now to produce the doctors that 
are going to be available for truly high quality care in the future.
  Now actually the administration, the Clinton administration, the 
First Lady's task force, understood that there was a problem inherent 
in the way the incentives would be then given to strip away the kind of 
patient base that would be important to allow them, the academic health 
centers, to continue to function in the way that they have, and they 
tried for a considerable time at the very end of their deliberations. 
They did create, late in the game, at the 11th hour, a working group on 
the academic health centers, but they really did not come up with a 
very clear answer to how they were going to be able to keep the 
academic health centers up at very high quality, and I just would like 
to point out that this kind of problem disappears under the single 
payer system.

  The single payer eliminates the problem. Our plan, the gentleman's 
plan, and that that is sponsored by 90 other Members of the House of 
Representatives----
  Mr. McDERMOTT. I ask the gentleman, Why don't you say ``our plan''?
  Mr. OLVER. Well, our plan. I want to say our plan, all 90 of us, the 
gentleman and I, but also, recognizing the very solid leadership that 
the gentleman provided in this for months and months and months. Our 
plan recognizes that these centers of excellence are the jewels in the 
crown of our health care system, and our plan allows that patient 
choice to continue so that the people who will be the patients, that 
have a variety of different kinds of problems, that get into the 
academic health centers, can feed those centers and allows us to train, 
are truly high quality physicians for the future, that they will still 
be there.
  And we certainly need to make certain that, whatever plan comes 
through this Congress, that the academic health centers are preserved. 
The ones that exist in Seattle, WA, with the great university there, 
and in Chicago, and Philadelphia, and Atlanta, and Dallas, TX, and 
Boston, and New York, and the other places where those large academic 
centers are that really produce the high quality physicians for the 
future----
  Mr. McDERMOTT. As the gentleman knows, one of the ironies is that the 
people who attack the single payer system, they say ``You're going to 
ration care, and you are going to reduce the quality,'' but in fact it 
is the single payer system that protects the academic health care 
centers that have provided the high quality of care that is in this 
country.
  I had a discussion with Mrs. Clinton very early on about this whole 
issue because I said to her:

       I know the University of Washington and how it's financed, 
     and if you take and change the way you finance it, and push 
     everybody into managed care, and the managed care insurance 
     companies don't want to send anybody to a medical school, 
     they are not going to have any money.

  That is why, I think, they probably put that task force together.
  It is interesting to hear the gentleman say that they studied it, and 
struggled with it, and could not come up with an answer. The answer is 
single payer. Maybe we should go back and offer them a solution to the 
problem because I do not think it is their intention to do in the 
health care centers. But if we hand managed care, if we hand the whole 
of this country's health care to the insurance companies, and all they 
are interested in is taking 20 percent out, and have no concern about 
whether we maintain the academic research that goes on in this country, 
we are going to have a problem in terms of maintaining the quality that 
Americans expect out of our health care system. It is a real problem of 
managed care that they have really not solved.
  Mr. OLVER. Well, there is that problem that is solved, and then we 
can go back and bring it again full circuit. It solves the problem of 
getting the choice, truly the most comprehensive plan of benefits 
available, but also the choice of medical providers, in a way that is 
not true of other systems that are being talked about because there is 
total choice for providers, whoever that person may happen to be, and 
it manages to get at this burden, this administrative burden, that is 
in our present system that is so dramatically shown on this chart, this 
average chart, but even more dramatically shown in the data that I had 
quoted from, the for-profit managed care company in California, one 
that has premiums of several billion dollars and entrants in their plan 
of several million people, the kind of level of overall administration 
taking into account--putting into administration profits, and the 
marketing costs, and the true required administration costs, and ending 
up with 28 percent of the premiums that are paid to that company going 
other than to provide health care. That is a most inefficient system.
  Single payer-system retrieves most of that money and allows one to 
put it into health care, preserve the choice for individuals and their 
families of what kind of providers they want, and it manages to leave 
us with a system that will still keep our academic health centers there 
producing the quality physicians for the future.
  Mr. McDERMOTT. As the gentleman knows, there is another phenomenon 
that managed care has created that my colleagues may not be aware of. 
It would be interesting to talk to the Members of the floor about this 
whole issue, and that is that in Washington, DC right now, as there was 
in Seattle--we have already had this phenomenon in Seattle: The Blue 
Cross-Blue Shield plan set up a health care proposal for sale that uses 
only 30 percent of the doctors in Seattle. They sort of selected 30 
percent, said, ``You people are in, and the other 70 percent, you're 
out,'' and suddenly 70 percent of the doctors are not in the plan being 
sold by the biggest insurer in Seattle.
  One can imagine what they think when they know that their patients 
are going to go and say, ``Well, my doctor isn't in there anymore. I 
guess I'll have to change doctors,'' or, ``How am I going to pay for it 
if my insurance company doesn't pay my doctor?''
  This is going on in Washington, DC right now. The Washington, DC 
Medical Association just got a proposal out of the Blues in this city, 
and again they have got a large number of doctors who are excluded from 
it.

                              {time}  1900

  So when patients who have a card from their insurance company, they 
used to be able to see any doctor in Washington DC, now they find that 
the panel they are limited to are the people that are on some list 
decided by the insurance company. Nobody knows what the criteria are 
except that probably they are the cheapest doctors or something. They 
do not put out a list and say, ``This is how we selected those 
people.'' But you have to think that if they wanted to make more money, 
they probably have selected the doctors who have the lowest fee 
schedule so that they can gather up more money and save money.
  So not only do they deny care but they go and select doctors, only 
the cheapest doctors. That process again takes away choice from people 
who have had a lifelong relationship with a doctor and a Blue Cross-
Blue Shield card. Suddenly they look at their card and they cannot go 
and see Dr. Johnson that they have seen all these years because he is 
no longer on the panel.
  That kind of think is happening in every city across the country. The 
American people are going to get angry about that. We are going to hear 
about it as are the other Members of the House on this issue as we move 
forward.
  That is why the single payer is so good. It gives people a card and 
that card entitles them to see any doctor, go to any hospital they want 
to see.
  Mr. OLVER. I think that the issue of choice there is just so critical 
that it ought to be the person making the choice on the basis of what 
their relationship is with their health provider and not something that 
is defined by the insurance companies.
  Mr. McDERMOTT. It sort of reminds me of the old motto that started 
this country of taxation without representation. These people who have 
paid their insurance premium then do not have the right to choose who 
is going to treat them. To me, that is the seeds of real rebellion. If 
we put a bill out of here that in any way restricts people's rights to 
see whoever they want to see, we are going to hear from the people on 
that. That is why I try to discuss with my colleagues and, Mr. Speaker, 
with you the whole issue of why the single payer system is very 
important. I really appreciate your coming and having this discussion 
with us tonight, because not everybody talks about quality of care. It 
is very often people want to talk about access, and they want to talk 
about cost but they do not get down to talking about quality. That is 
what the American people are worried about, is the quality of what they 
get. It is not any good to just have access to something if there is no 
quality in it.
  So I think it is very important that the gentleman raised this issue.

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