[Congressional Record Volume 142, Number 24 (Tuesday, February 27, 1996)]
[House]
[Pages H1305-H1308]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                WHAT WILL HAPPEN TO HEALTH CARE REFORM?

  The SPEAKER pro tempore (Mr. Taylor of North Carolina). Under a 
previous order of the House, the gentleman from Washington [Mr. 
McDermott] is recognized for 60 minutes.
  Mr. McDERMOTT. Mr. Speaker, 3 years ago President Clinton announced 
that he wanted to provide Americans with health insurance that can 
never be taken away. The congressional leadership has publicly bragged, 
in both bodies, that they killed health care reform. My concern tonight 
is, what is their alternative? Now, we have in the Senate presently, 
the other body, a bill languishing, the Kennedy-Kassebaum bill, that 
gives minimal protection, and yet not even that bill can get out of the 
other body, so the question is, what is going to happen? It seems to me 
that the history of this issue needs to be reviewed.
  As you may know, it was a mere 150 years ago that the first surgery 
was done under anesthesia at the Harvard School of Medicine. Perhaps 
that is a good place to begin this examination of where we have been in 
health care and where we are going.
  Many in my generation retain a deeply etched image of a painting 
depicting a physician sitting beside the bed of a small child while the 
parents huddled pitifully in the background. The title of the painting 
is something like ``Waiting for the Crisis''.
  Physicians 100 years ago could do very little beyond setting 
fractures, amputating, and administering a variety of empirically 
tested concoctions.
  Physicians were among the most broadly educated in the society and, 
as such, they were highly respected and expected to participate fully 
in the civic life of the society.
  Even earlier, one of the most prominent physicians in the American 
Colonies was Benjamin Rush; as a Member of the Continental Congress, 
Dr. Rush signed the Declaration of Independence.
  Eventually, he was defeated for re-election, but he spent the 
remainder of his professional career improving the lot of prisoners and 
the mentally ill in Pennsylvania. That was the last time a psychiatrist 
served in the Congress before I arrived in 1989.
  Maybe some of you see a moral therein.
  Advances in the diagnosis and treatment of disease between 1846 and 
1946 were painfully slow. Services were rendered to patients by 
individual physicians who were paid on a fee-for-service basis.
  Health insurance was a rare commodity, and thousands of people simply 
did without the treatment that was available because they could not pay 
for it. Others paid what they could when they could.
  There was no expectation of a societal response to the need for 
universal health coverage.
  I am speaking only of the United States here because you must 
remember that, in 1883, Otto von Bismark instituted government-
sponsored health care for German miners as a preemptive strike to halt 
the spread of socialism.
  The 1930's were, of course, a time of great turmoil in this country 
and, during that period, President Franklin Roosevelt proposed a system 
of universal health coverage for all Americans.
  He did so at the same time that he was proposing Social Security, and 
the political weight of the two programs proved too great.
  So he decided to separate the two proposals and to wait until the 
next Congress to complete his health care proposal. Unfortunately, the 
Second World War interfered with his plan.
  Meanwhile, in typical American fashion, the American people were 
beginning to develop their own responses to the lack of affordable 
care.
  For example, the Kaiser construction company was building dams in 
rural Washington State. Mr. Kaiser recognized the need to make doctors 
and hospitals available to his employees who were working at dangerous 
jobs in isolated areas.
  Thus were planted the seeds of prepaid health insurance.
  And during the war, more and more employers, eager to maintain a 
healthy and reliable workforce, began to offer health coverage.
  At the end of the war, a wage and price freeze was imposed on the 
American economy.
  But smart and thoughtful labor leaders found a way around this 
constriction on wages by inventing a concept called a benefit package, 
which was primarily a health insurance program to pay for doctor visits 
and hospitalizations.
  Nonunion companies suddenly realized that if they did not also 
provide a benefit package for their employees, they soon would have 
union organizers working the floors of their plants and offices. So, 
they, too, provided a benefit package.
  Emerging around the same time as employment-based health insurance, 
the prepaid coverage seeds sown by Kaiser were sprouting among groups 
of citizens who believed that only collectively could the costs of 
health care be met and contained.
  In Seattle, a group of teachers and a few doctors began Group Health 
Cooperative of Puget Sound.
  Group health was considered worse-than-radical; it was socialism, and 
the healthcare establishment repudiated it totally.
  Because the doctors of group health rejected the concept of fee-for-
service payment, they were denied membership in the Washington State 
Medical Association.
  A lawsuit that eventually ended up before the State supreme court was 
necessary to force the association to admit group health practitioners.
  At the same time, a similar group care program evolved in New York.
  As it entered the post-war era, then, the United States was pursuing 
two major approaches to health care delivery and financing.
  One system, financed by employers, offered no guarantee of continued 
coverage either during employment or certainly after leaving 
employment. Only union contracts in certain cases guaranteed coverage 
during employment.
  Nonunion employees had no protection whatsoever.
  The other system of delivery and financing was an adaptation of the 
cooperative movement that emphasized control by the recipients of the 
system's services.
  Keep in mind that the insurance industry did not leap willingly into 
the mix and only reluctantly accepted the risk of insuring the health 
of individuals. They were hesitant, I expect, because they had no 
experience on which to base their rates.
  It is against this historical backdrop of health care delivery and 
financing that we must view the medical developments of the postwar 
period. It was an era in which medical science and technology literally 
exploded. What is possible today was hardly conceivable to even the 
most imaginative scientist after the war.
  Antibiotics revolutionized both infectious disease treatment and 
postoperative infections. Kidney dialysis laid the groundwork for 
transplant therapy. Noninvasive imagery such as CAT scans and MRI's 
made diagnosis more precise, and complicated surgeries more likely of 
success.
  Bone marrow transplants and other cancer treatments made certain and 
speedy death from cancer less likely. Antipsychotic medications recast 
the treatment of the severest mental disorders.
  When I walked into the ICU recently to visit my 90-year-old father, 
it struck me that nothing in that area of the hospital existed when I 
graduated from the University of Illinois Medical School in 1963. Only 
the human body remained essentially the same, except, of course, the 
hip and knee replacements and the cardiac bypass surgeries and the 
heart valves.
  If you consider even briefly all of this rapid and turbulent change, 
you will appreciate the trepidation with which employers and the health 
insurance industry viewed the modern landscape of health care delivery 
and, especially, financing.
  Health care delivery in this country has been conducted primarily by 
individual providers paid through a fee-for-service system.
  As more treatment and procedures have been developed, the costs of 
care have risen exponentially.

[[Page H1306]]

  Employers and insurers began to seek ways to provide coverage to 
employees while simultaneously controlling expenditures. Unfortunately, 
they sought cost controls in a system with no incentive whatsoever to 
limit expenditures. After all, the system suggested, if a treatment for 
a given condition is known, shouldn't everyone with the condition 
receive it?
  To further complicate the mosaic which we call our health system--I 
would call it a nonsystem--in 1965, the Federal Government entered the 
scene to provide coverage to two groups not covered by the private 
sector because they are not employed.
  The programs created to cover these two groups are Medicare and 
Medicaid.
  They were designed to address the health needs of the elderly, the 
disabled, and poor women and children.
  Neither the governmental nor the employer-based system had any 
agreed-upon definition of what constituted adequate care, or who should 
pay what portion of the bill for whom.
  Thus, we have, in this country, a hopeless maze of health care 
delivery and payment schemes. The extent and quality of the health care 
you receive depends upon your age, where you live, for whom you work, 
the race or ethnic group to which you belong, and finally, your 
economic status.
  The inconsistencies within our present system are truly mind-numbing, 
and the call for reform of both delivery and financing comes from all 
quarters.
  As the cacophony of voices for reform began to rise, thoughtful minds 
examined other models of health care delivery and financing.
  Because the cooperatives had been relatively successful in delivering 
good care at reasonable cost, they attracted the attention of those 
who, on the one hand, wanted to continue to provide health coverage to 
their employees but, on the other hand, worried increasingly about the 
costs of doing so.
  Stories began to appear in the press, noting, for example, that the 
Chrysler Corp. was spending more on its payments to Blue Cross of 
Michigan than it was for the steel in its automobiles.
  The cooperative model of health care delivery was very democratic; it 
gave a large role to its consumers both in defining the scope of 
benefits and in the selection of providers. The doctors were salaried 
and the organizations were run by executives responsible to a consumer 
board.
  It was a functional structure, but one that did not correspond to the 
political views of most employers in this country.
  Yet, another significant factor contributing to the present crisis in 
health care financing is the gradual globalizing of the economy.
  The United States emerged from the war in 1945 as practically the 
only functioning, productive nation in the world.
  But the World Bank, the International Monetary Fund, the Marshall 
plan, and countless other economic initiatives restored economic 
stability and prosperity to many countries.
  As these nations regained strength, they became America's vigorous 
competitors. By 1980, the United States had lost its dominance of many 
spheres within the economic universe.
  A widely held view insisted that production of competitively priced 
goods and services required curtailment of health care costs.
  Plans fully paid by employers began to disappear. Deductibles, co-
pays, and restrictions on the scope of services became commonplace as 
employers tried to control the costs of the health care benefits they 
offered.
  Where labor and management once had squabbled only rarely over the 
costs of employee health benefits, they now saw these costs gradually 
becoming a source of ongoing friction and escalating conflict.
  Today, reduction of existing health benefits is the single most 
common cause of strikes by American workers.
  As the quest for cost control became more urgent employers began to 
scrutinize the activities of insurance companies.
  In a booming economy, insurance companies took employers' premium 
payments, paid employees' claims, and paid dividends to stockholders.
  They gave relatively little attention to cost control, in part 
because employers were not pressing for it, and in part because the 
insurers could simply overcome losses with the next year's inevitable 
rate hike.
  But when the economy tightened, this traditional casual dismissal of 
cost controls no longer worked.
  Multistate companies became exasperated with varying State 
legislative mandates and the inquiring eyes of State insurance 
commissioners; many began to opt for the self-insurance alternatives 
offered by ERISA legislation.
  Small and medium-sized employers became increasingly agitated as 
their health care costs spiralled and their profit margins shrank.
  They began to do one of two things: As they were not required by law 
to provide health insurance to their employees, some simply dropped 
coverage; and others began to complain to their insurers.
  Employer-based health insurance peaked in 1980; it has been declining 
steadily since.
  All of these factors led to the shrinking coverage that now leaves 40 
million Americans without any health insurance whatsoever. A majority 
of these people belong to families in which at least one person works 
full-time.
  As employers continued to drop the health insurance policies that 
covered their workers, insurers understandably sought ways to satisfy 
the cost and coverage concerns of their departing policy holders.
  Eventually they seized upon a system of cost-controlled health care 
delivery known as the health maintenance organization, or HMO.
  Let me take a moment here to define what I mean by HMO: A health 
maintenance organization is a healthcare delivery system in which every 
subscriber pays a fixed monthly fee that is used by a fixed group of 
salaried healthcare providers, mostly physicians, to provide a 
guaranteed package of benefits to the subscribers.
  Although HMO's had existed in this country since the 1940's, they 
tended to be small cooperatives, not-for-profit entities controlled by 
the consumers they served. HMO's offered managed care, that is, a 
predetermined range of medical services for a predetermined charge. Of 
course, they were considered suspect by the traditional medical 
establishment.
  Now back to our narrative: Insurance companies gradually recognized 
the lucrative potential of HMO's adapted to the for-profit free market.
  So they devised a new type of HMO to deliver health care to 
policyholders and profits to stockholders. To do so, they scuttled the 
old cooperative approach of consumer control and doctors' participation 
in the program's structure.
  In its place, they constructed a system of managed care designed 
primarily to yield generous profits.
  Accountants took the place of physicians and consumers, and managed 
care has come to mean a tightly controlled arrangement in which 
profitability determines the availability of care.
  This decision of the insurance industry to fashion a scheme of 
coverage and payment that excluded involvement of both consumers and 
providers set us on our present course.
  Insurers have created a system designed to maximize industry profits 
by incorporating financial incentives that discourage providers from 
giving appropriate-but-expensive patient care.
  For-profit managed care has proved so lucrative that it now is 
offered by companies created to do nothing else.
  Ironically, we have yet to see any demonstrable evidence that managed 
care actually produces the cost savings it promises.
  What is clear, however, is that managed care as practiced by the 
insurance industry is simply an arrangement to redistribute health care 
dollars from the delivery of care to administrative functions. In 
California and Florida, for example, the papers are full of stories 
about managed care companies denying care to their enrollees or using 
as much as 30 percent of their premiums for overhead or profit. 
Clearly, these plans are designed to enroll only the healthy--and 
inexpensive, while leaving the sick to taxpayer-funded programs.
  Now the Congress is trying desperately to revise both Medicare and 
Medicaid to enable private insurers to cover the healthy enrollees of 
these programs but to relegate the seriously 

[[Page H1307]]
sick and needy to the residual State and Federal programs.
  This deliberate attempt to deplete the insurance pool of people who 
are unlikely to need expensive, protracted care simply is exacerbating 
cost escalation and reinforcing the image of Medicare and Medicaid as 
incompetent, wasteful, and ripe for overhaul.
  By now, you may ask, quite rightly, ``What is the answer to this 
mess?''
  The only sensible answer is a single-payor system to finance--not 
deliver--health care in the United States.
  As I say this, I see the spines stiffen and the jaws tighten.
  Let me assure you that I am proposing an American single payor 
system, not the 112-year-old German system, or the 50-year-old British 
or Canadian systems.
  Throughout the world, each nation's single-payor health care system 
reflects historical factors present at the time of that system's 
creation.
  So an American single-payor system must be developed in the current 
context.
  If I asked each Member of Congress to define a single-payor system, I 
probably would receive 400 different responses.
  So that we might have a reasonable meeting of the minds on this 
subject, let me propose that we use the following definition, which I 
have borrowed from Professor Tsaio at Harvard:

       Any single payor system has these two characteristics:
       (1) a defined set of benefits guaranteed to all citizens; 
     and
       (2) a global budget to pay for the health services 
     provided.

  Let me clarify here that the term ``global budget'' refers to the 
fixed total amount of money that will be spent for 1 year on a given 
set of benefits offered to the entire population.
  Nothing in Dr. Tsaio's single-payor definition prevents the private 
practice of medicine or restricts application of a variety of 
treatments, provided that all Americans receive the same access to the 
treatments, and that it is paid for out of the global budget.
  Mr. Speaker, how can we justify not having a system of universal 
health care available to all citizens in the wealthiest, most creative 
democracy on earth?
  This brings us to the first decision we must make--and which we so 
far have avoided: Is affordable, high quality health care a right of 
all Americans, or is it a privilege subject to all the vagaries of the 
age, race, income, and residency differences in our society?
  I categorically assert that, like fire and police protection, like 
common school education, and like myriad other services available to 
all Americans, such as highways and air traffic control, Americans 
should have universal access to health care insurance.
  Every industrial society around the globe has found the ways and 
means to do this.
  And, I might note parenthetically here that successful single payor 
systems have been developed by virtually all of our most vigorous 
trading partners. And I can assure you that none of these savvy 
competitors is contemplating replacement of its popular and cost-
effective single-payor system with America's chaotic, wasteful approach 
to health care.
  In no other civil society can a citizen be bankrupted by illness, 
accident, or injury.
  If you are unemployed and, coincidentally, your house catches fire, 
we do not deny you the services of the fire department even though you 
cannot afford fire insurance.
  Why, then, do we allow your economic future to be destroyed if you 
develop leukemia and do not have health insurance?
  Is an automobile accident that leaves you with long-term disabilities 
and huge medical bills somehow less worthy of a societal response than 
a house fire?
  My answer is an emphatic ``no.'' In all of these situations, random 
events strike individuals citizens with overwhelming force that can be 
counteracted only by the collective action of the society.
  If we, as a society, cannot agree that health care must be addressed 
on an all-inclusive basis, we are accepting the present lottery-like 
nonsystem which truly personifies Darwin's description of ``survival of 
the fittest.''
  If we can agree that health care financing can be addressed only on a 
national basis rather than the present stupefying panoply of programs, 
we then are prepared to begin the design of the American single-payor 
system.
  I suggest we call it Unicare.
  We have only two questions to resolve and our job will be finished: 
First, what benefits shall all Americans be eligible to receive from 
Unicare?; and second, how shall we pay for it?
  Experience has taught me that defining the benefits is perhaps 
difficult, but it is infinitely easier than deciding how to pay for the 
program.
  I contend that the benefit package must be very broad and very 
generous because anything else will build the inequities of our present 
system back into the new plan from the start.
  Let me explain: If we establish a narrow range of benefits for all 
Americans, we immediately create a market for secondary insurance to 
cover all those treatments that some may need but that are not covered 
by Unicare.
  Individual economic circumstances instantly come to the forefront as 
the varying capacity of people to purchase supplemental benefits 
insurance gradually divides us into those who have and those who do 
not.
  This is the situation we have today.
  Creating a limited guaranteed benefit package simply will perpetuate 
the present system in a different form.
  So I propose that we begin right now the national debate on a 
comprehensive package including pharmaceuticals, long-term care, and 
mental health services.
  I do not want to take any more time here arguing the content of the 
benefit package beyond the issue of comprehensiveness, but there are 
two corollary issues about actual delivery of the benefit package that 
merit attention.
  Although our coinage proclaims ``e pluribus unum,'' we are, in fact, 
many different communities in this country.
  So, I believe, in the maxim of the great progressive Senator of the 
1930's, Robert LaFollette of Wisconsin, that State legislatures are 
``the laboratories of democracy.''
  I see great practicality in letting individual States decide how best 
to deliver the guaranteed benefit package.
  HMO's may be the preferred delivery mechanism in some States, while, 
in others, a negotiated fee schedule for private practitioners might be 
the method of choice.
  We can all agree, I am sure, that all wisdom in these matters does 
not reside in Washington, DC.
  I also am convinced that to make a system work, its providers--
primarily doctors--should be at some risk financially; at the same 
time, however, they must be allowed--encouraged--to participate in the 
design of that system.
  Actuaries, accountants, and lawyers cannot be expected to recognize 
the elements of medical cost escalation and control that are evident to 
physicians eager to protect both their patients and themselves.
  Failure to recognize this fundamental fact is the single most telling 
blunder of recent health reform efforts.
  Exclusion of physicians' participation in the design of a health care 
system is a sure prescription for disaster. Evidence of this already is 
appearing in the press.
  Time magazine's cover story in its December 23d issue details the 
ethical dilemma physicians confront when they try to practice 
responsible medicine in a system they had no part in designing.
  Lest you think this is purely a theoretical challenge, consider that 
I recently attended grand rounds at Children's Hospital in Seattle.
  For 2 hours, I discussed with a dedicated group of seasoned 
physicians and new practitioners the ethical questions inherent in 
trying to deliver appropriate care to children within the restrictions 
imposed by profit-driven managed care.
  As more and more physicians attempt to practice good medicine within 
managed care schemes that do not allow them to do so, the very 
significant shortcomings of our present unworkable system will become 
only more glaring. Good medical care will become scarce, indeed.
  Let me turn now to the second major decision that must be made about 
our Unicare Program for all Americans: how to finance it.
  It is estimated that, in 1995, we in the United States consumed 950 
billion dollars' worth of health care. 

[[Page H1308]]

  That is almost 50 percent per capita more than either Germany or 
Canada spent, and the health statistics of those countries are better 
than ours.
  In case you share my difficulty in truly comprehending the purchasing 
capacity of such huge numbers, consider this: In 1994, the 
Congressional Budget Office estimated that, with a single-payor system 
in place by 1997, it would be possible to offer a very generous benefit 
package, including prescription medications, nursing home care, and 
home health care, and still be able to apply $100 billion to deficit 
reduction within 5 years.
  But these are estimates of the costs involved in running a single-
payor system in this country.
  How shall we get the revenue to finance the system?
  Right now, employers pay all or part of their employees' health care 
premiums, and employees pay some part of the premium, plus a Medicare 
tax to provide health care to senior citizens, plus general taxes to 
finance Medicaid for disabled persons and poor women and children.
  Employers also pay taxes to cover injured workers' medical expenses, 
and all citizens contribute general tax moneys to finance medical care 
for veterans and for members of the military and their families. In 
addition, we all pay indirectly for medical coverage related to auto 
accidents.
  Health care finance has become a specialty unto itself, and it is no 
wonder that people struggling to understand this mess are hopelessly 
confused.
  Let me offer a simple, straightforward alternative: The ideal funding 
mechanism for the new Unicare plan would be a single, dedicated source 
of revenue that is stable and predictable. So I propose an employer 
payroll tax of 8.4 percent and an individual payroll deduction of 2.1 
percent.
  At these rates, about three-fourths of those Americans whose health 
coverage is connected to their employment actually would spend less on 
medical care than they do today, parceling out money to pay for all the 
different programs I mentioned a moment ago.
  And, as most businesses presently spend more than 10 percent of 
payroll to meet their health care costs, they, too, would enjoy an 
actual reduction in spending.
  Now, assuming that the Congressional Budget Office's estimates are 
correct--they usually are--you very reasonably might ask, ``Why has the 
single-payor idea not been adopted?''
  How could the Congress reject a proposal that provides an affordable, 
generous health care benefit package and reserves control of health 
care treatment decisions to health care providers and their patients?
  The apparent answer lies in the economic power of the medical-
industrial complex to resist proposals that threaten to encroach on the 
$950 billion pie.
  But, to be honest, the real obstacle to universal health care 
financed by a governmental mechanism is the American public's deep 
distrust of its Government's ability to operate a large--nondefense--
program successfully.
  This simmering sense of doubt and suspicion has been fanned to an 
explosive level by a decade-and-a-half of Presidential proclamations 
that ``Government is the problem,'' and that all challenges within our 
society can be overcome by ``getting the Government off the backs of 
American citizens.''
  Only in such a climate could the insurance industry's $100 million 
advertising campaign so completely undermine President Clinton's 
valiant attempt to reform health care financing.
  So--the options before you and the American people basically are two.
  First, either invite the health insurance industry to maintain its 
control of healthcare finance at the expense of quality in care. Allow 
the industry to continue to ignore the valid criticisms leveled by 
providers and their patients at a system designed to benefit insurers 
and their stockholders.
  Second, or change the system to one in which doctors accept some 
financial risk but regain significant satisfaction in the practice of 
medicine because they reclaim responsibility to make the treatment 
decisions they believe to be best for their patients.
  Ewe Reinhardt, the James Madison professor of political economy at 
Princeton University, recently observed that ``The way things are 
going, all doctors may become serfs of insurance companies by the year 
2000.''
  That is a bleak prospect and one with which I do not disagree. But I 
also remain optimistic. Why?
  Because I concur with the sentiments of Winston Churchill, who, when 
asked what to expect from the Americans, replied, ``You can always 
count on the Americans to do the right thing--but only after they have 
tried everything else.''
  It is time to do the right thing. We have tried everything else, and 
we are in far worse condition today than we were when President Clinton 
began his historic reform effort just a few years ago.
  Health care is a societal necessity that does not conform to free 
market pressures.
  It is foolish and useless to expect our economic system to mirror the 
fundamental social precepts of the country.
  Our present shambles of a health care system is intrinsically unfair. 
It is cruel, it is discriminatory, and it is appallingly wasteful.
  These qualities have no place in a democracy. We simply must 
restructure our health care system to the single-payor framework. And 
we cannot wait any longer.
  We already know that market reforms will not work in the health care 
financing arena.
  They do not work because they can not. Market reforms are not driven 
by the considerations of fairness, compassion, and adequacy that must 
define our health care system if we wish to declare ourselves a decent 
and sensible society.

                              {time}  1930

  Mr. Speaker, I call upon you to bring the Kennedy-Kassebaum bill to 
the floor, so that we can at least start this debate. We can no longer 
wait and let this issue go on. It is one of the fundamental reasons why 
people are concerned about their economic security.
  All across this country, we have people who are losing their health 
care coverage. One million people working a year lose their health care 
coverage, and that is simply not acceptable in a democracy with the 
wealth and the creativity we have. We must begin on this problem today.

                          ____________________