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NATIONAL HEALTH INSURANCE

ISSUE BRIEF NUMBER IB73015

% AUTHOR:
-Klebe, Edward

Education and Public Welfare Division

THE LIBRARY or cousnzss
CONGRESSIONAL RESEARCH SERVICE

MAJOR ISSUES SYSTEM

DATE OBIGINATED lgggggzg
DATE UPDATED Qggggggg

FOR ADDITIONAL INFORMATION CALL 287-5700

0326

CRS- 1   IB73015 UPDATE-03/25/80

l§§Q§-2§ElElIlQE

Over the past 30 years, Congress has considered a succession of
legislative proposals intended to alter substantially the role of the Federal
Government in providing personal health care services to the American people.
These measures are loosely classified as "national health insurance,“ and
include specific proposals having the endorsement of widely divergent groups
and representing a variety of philosophies. Each plan would give the
national government more responsibility, in varying degrees, for the
financing of care, the regulation of health providers, and, in some
instances, the organization of the health delivery system.

§é§§§§QQE2-éEQ.2QLl§Z-AlALZ§l§

The debate over national health insurance entails examination and
consideration of several interrelated issues and problems. There is, for
example, a great deal of concern about the spiraling costs of medical care
and about the economic burden resulting from such costs. There is also an
awareness of the difficulties that many Americans have in obtaining health
services even when finances are no problem. There is much discussion of the
strengths and weaknesses of the various ways of organizing the delivery of
medical care and developing additional health resources to meet the demands
of the public for more and higher quality health care.

Renewed interest in the subject of national health insurance has developed

. a growing climate of seemingly widespread public discontent with the
present status of the country's health system. Major sources of this
apparent dissatisfaction are: (1) sharply escalating medical care prices,
(2) incomplete and partial protection against medical care expenses paid for

by private health insurance, (3) inadequate protection against the costs of,

care associated with catastrophic illness or disease, (4) the uneven
distribution of health resources and services, and (5) the absence within the
health industry of incentives to improve the efficiency and effectiveness of
scarce health resources. Each of these issues is discussed briefly below.

In recent years, annual expenditures in the United States for health
purposes have reached astronomical proportions: $192.fl billion in CY78 (9.1%
of the gross national product), which represented per capita expenditures of
$863 for every man, woman, and child in the country. The national health
bill has risen so rapidly that in 7 years it has nearly doubled; in 12 years,
more than quadrupled; and, in the 28 years since 1950, increased more than
fifteen-fold. (See IB77066: Health Care Expenditures and Prices)

Traditionally, expenditures for health in the United States have been
financed from private sources.‘ However, beginning in FY67 with the advent of
the uedicare and Medicaid programs, the trend has been toward increased
public financing of health. As a result, the government (Federal, State, and
local) share of the Nation's health bill is now—u0.6%; in 1966, it was about
25%.

Although private health insurance has grown over the years, many Americans
still have relatively little, if any, protection. In 1976,  76.8% of the
civilian population had some form of private coverage against the cost of
in-patient hospital care. While 76% of the population had private coverage

CRS- 2 . IB73015 UPDATE“03/25/30

for the costs of in-hospital physician visits, only 58% were insured for
physician care rendered in the home or office. Some 70% had insurance for
out—of-hospital drugs, but only 33% were insured for any form of nursing home
care, and 21.8% for dental care. Although many persons not covered under
private insurance plans receive assistance for their health care expenses
through public programs such as Medicare, Medicaid, and the Veterans
Administration, an estimated 25 million people, or 12% of the American
population, have no health insurance protection underi either public or
private programs.

Consumer expenditures for private health insurance in 1976 totaled $39.u
billion in premiums and subscription charges. 88.7% of premium income in
1976 was returned in benefits, with 12.8% of the premium dollar going for
operating expenses and a net underwriting loss of 1.5% of premium income.

Despite the extent of participation in private plans, private health
insurance met only u6.3% of consumer expenditures for personal health care in
1976. In the case of hospital care, private insurance covered more -- 85.8%
of all consumer expenditures. But~ only 45.9% of consumer costs for
physicians‘ care and 9.6% of consumer expenditures for other types of care
were paid for by private insurance.

Health care costs of a catastrophic nature are among the most difficult to
protect against. Although 75% of the population under age 65 is covered
under a major medical or comprehensive health plan, many of these plans
contain limits on maximum benefits per episode or per lifetime that prove
inadequate in the face of long term illness or the need for exotic medical
treatments. Persons without major medical or comprehensive coverage are even
more vulnerable to economic ruin in the face of such expenses.

The allocation and distribution of health resources in the United States
are most uneven. In some communities, virtually no hospital facilities are
available to serve the public. Elsewhere, there may be a surplus of beds and
other scarce manpower and equipment resources. many institutions are old and
badly in need of modernization or repair. In 133 counties of the United
States, there is no active physician engaged in providing care to patients.
Nearly half a million Americans reside in these counties. Generally
speaking, low—income inner city areas have relatively fewer physicians than
the suburbs, the rural areas less than the urban, and the poorer States less
than the wealthier.

The health industry is one of the largest in the Nation, and it is also
believed by its critics to be one of the most inefficient. Increasing
specialization and other factors have established requirements for greater
and greater numbers and kinds of manpower. There is concern over the

possibly excessive use of costly hospital resources to treat persons who ’

could be equally and more economically served in other ways. There has been
criticism that the methods used to pay for health care contain little in the
way of incentivies for the economical and efficient use of facilities,
manpower, and special services. I

vThe yarrayt of national health insurance proposals vreflect divergent
viewpoints as to what should be considered the priority problem areas to be

resolved under a national health insurance 'program. Host of the bills‘

concentrate on meeting the cost problem through improved and expanded publix
and/or private health insurance. other proposals incorporate provisions that
would reform and restructure the health delivery system.

CRS- 3 IB73015 UPDATE-O3/25/30
Several major policy questions have been raised:

(1) What is the proper role of the Federal Government in financing and
administering health insurance?

(2) What portion of the population should be covered under such a
program? i

(3) How should the program be financed+—through multiple public and
private sources, or through a single channeling of funds through the public
sector?

(4) What should be the nature and scope of benefits to be insured?

(5) To what extent should the private health insurance industry be
involved in the program?

(6) What is the potential effect of the program on the organization and
delivery of health services throughout the country?

In addition to these basic questions, other pertinent issues include such
matters as the reimbursement methods and cost controls to be devised for
providers of health services, provisions for consumer participation and
control, the need for quality-control procedures, and the role of competition
in the health industry.

Proposals likely to be considered by the 96th Congress will include
measures that would (1) entitle all Americans to comprehensive health
nefits, federally financed and administered; (2) make the Government

responsible for financing health care only for the high risks in society--the-

aged, poor, disabled, and persons experiencing catastrophic illness costs;
(3) provide federally financed economic incentives toward the purchase of
private health.insurance plans; or (Q) mandate employers to purchase adequate
private health insurance plans for employee groups. Proponents -of a

federalized health insurance approach maintain that the Government is not 2

only the appropriate, but perhaps the only institution through which
universal coverage and equitable financing can be achieved and leverage can
be exerted upon the health system to control costs and improve quality and
efficiency in services. Supporters of more decentralized approaches advocate
pluralistic financing and administration of health insurance, and would seek
to minimize Government intervention in the health system.

Several significant proposals have een introduced as bills in the 96th
Congress. On Mar. 27, 28, and 29, 1979, the Senate Committee on Finance held
hearings on catastrophic health insurance and medical assistance reform. On
Feb. 11 and 12, the Subcommittee on Health of the House Committee on Ways and
Means held hearings on the various national health insurance proposals.

Lg 9151.; 110::

Several national health insurance bills have been introduced in the 96th
Congress.

H.R. 21 (Corman et al.)  
Health Security Act. Establishes a federally financed and administered
health insurance program for the entire population, covering a comprehensive

CRS- 4 IB73015 UPDATE—O3/Q3/30

range of services with no cost-sharing by the patient. Provides financing
through a payroll tax on employers and employees, a tax on unearned income
and self—employment earnings, and by general revenues. Provides various
incentives for reorganizing the delivery of health services and would act to
restrain health cost increases through annual prospective budgeting on a
nationwide basis. Introduced Jan. 15, 1979; referred to Committees on way:
and Means, and Interstate and Foreign Commerce. Hearings by Subcommittee on
Health held Feb. 11-12, 1980.

H.B. 2969 (Dellums et al.)

Health Service Act. Creates a U.S. Health Service, an independent
Federal agency to deliver health care throughout the United States. The
Health Service would be financed by a Trust Fund containing receipts from a
special health service tax on individuals and employers and from general
Federal revenues. Would provide, without charge, a full range of medical,
dental, and mental health services, as well as occupational, home health, and
health education services. Drugs and medical services would be furnished
without charge. Community health boards chosen in community elections would
plan the delivery of primary and preventive health services, hire community
health workers, and assume responsibility for all community health services.
District health boards, regional health boards, and a National Health Board
would have specified responsibilities in administering the program.

Introduced Mar. 14, 1979; referred jointly to Committees on Armed
Services, Banking, Finance and Urban Affairs, the District of Columbia,
Education and Labor, Interstate and Foreign Commerce, the Judiciary, Post
Office and Civil Service, Veterans’ Affairs, and Ways and Means. Hearings by
Subcommittee on Health held Feb. 11-12, 1980.

H.R. 5740 (Ullman et al.)

Health Cost Restraint Act. would amend the Internal Revenue Act tL
impose a limit on the tax-free premium that employers could contribute to
employee health plans, and to require employers to offer either a low-cost
health plan with consumer cost-sharing or HHO options, as an alternative to a
full-benefit comprehensive option, with the employee entitled to receive a
cash rebate of the difference in cost for choosing the low-cost option.
Hould also amend the Public Health Service Act and the Social Security Act to
encourage enrollment in health maintenance organizations, and to establish
demonstration projects to determine the effect of marketplace competition on
the medicaid program. Introduced Oct. 30, 1979; referred to Committees on
Interstate and Foreign Commerce, and ways and Heans. Hearings by
Subcommittee on Health held Feb. 11-12, 25, 1980.

H.R. 6405 (Martin et al.)

  medical Expense Protection Act. Establishes a Catastrophic Automatic
.Protection Plan (CAPP) providing every American with protection against the
costs of catastrophic illness. Program would assist individuals and families
with meeting large medical expenses after they had incurred out-of-pocket
medical expenses equal to a certain percentage of familyk income. Provides
tax and other financial incentives to encourage employers and employees to
purchase "qualified" health plans, which would have to cover the cost of CAPP
covered services without coinsurance afterw the individual or family had
incurred out—of-pocket medical expenses of $2,500. Benefits providedi would
be similar to those currently provided under Medicare. Amends Medicare to
eliminate the hospital coinsurance under Part A and remove the limit on th’

. number of hospital days. Introduced Feb. 4, 1980; referred to Committees on

Ways and Means, and Interstatel and Foreign Commerce. Hearings by
Subcommittee on Health held Feb. 11-12, 1980.

CRS- 5 IB73015 UPDATE-03/25/&0

S. 350 (Long et al.)

Catastrophic Health Insurance and Hedical Assistance Reform Act.
Creates a catastrophic health insurance program to be made available to all
".5. residents through either a federally administered public plan or private
_lans allowed as an option to employers and the self-employed, who would be
required under the bill to pay the full cost of catastrophic protection  for
their employees. Replaces Hedicaid with a uniform national program of
medical benefits for low-income persons. Provides for a voluntary Federal
certification program for basic private health insurance to encourage private
insurers to make such basic coverage (supplemental to the catastrophic plan)
available in all areas of the country at reasonable rates. Introduced Feb.
6, 1979; referred to Committee on Finance. Hearings held mar. 27-29, June
19, 21, 1979. Markup held June 28, Nov. 1, 6-7, 1979.

S. 7H8 (Danforth, Dole, and Domenici)

Catastrophic Health Insurance and Hedicare Amendments Act of 1979.
Improves basic benefits under Medicare by providing unlimited hospital and
home health coverage and expanded skilled nursing’ facility and mental
benefits. Provides certain benefits after a specified catastrophic
deductible is met: elimination of coinsurance for medical services and
limited outpatient drug benefits.

Requires employers to offer employees a health plan that provides
protection against the costs of catastrophic illness. Under this provision,
employers with large increases in payroll expenses are eligible for a tax
credit and employers not offering the required protection would be penalized.

For low-income persons, provides catastrophic coverage for persons
ligible for Medicaid. Allows States to buy private insurance to meet this
-equirement. For low-income -persons not eligible for Medicaid and not
covered by an employer's plan, requires the Federal Government to subsidize
premiums to help them purchase their own catastrophic coverage. Introduced
mar. 26, 1979; referred to Committee on Finance. Hearings held Mar. 27-29,
June 21, 1979. Markup held June 28, Nov. 1, 6-7, 1979.

S. 760 (Long)

Creates a catastrophic health insurance program. Similar to S. 350
described above except that instead of financing the program through a 1%
payroll tax on employers and administering it through the Federal Government,
the new bill would require employers to provide their employees with
catastrophic protection. Provides tax credits to small employers for the
cost of the program and allows those who do not have permanent full-time
employment or do not qualify for Medicare or Hedicaid to receive partial tax
credits for the purchase of catastrophic policies. other parts of the bill
dealing with the federalization of Hedicaid and the Federal certification of
basic private health insurance are similar to parts of S. 350. Introduced
uar. 26, 1979; referred to Committee on Finance. Hearings held Bar. 27-29,
June 21, 1979. Markup held June 28, Nov. 1, 6-7, 1979.

S. 1968 (Durenberger et al.) /

Health Incentives Reform Act of 1979. Designed ito encourage both
competition in then health insurance industry and "the provision of
catastrophic health insurance by employers. Requires employers to offer a

oice to employees of at least three health benefit plans that meet certain
basic requirements. Unless the requirements are met, employees lose the
benefit of excluding employer contributions from taxable income. The
employer's contribution remains the same, yregardless of the employee's

CRS- 6 IB73015 UPDATE-03/25/80

choice; the employee who chooses an economical plan keeps the savings while
the employee who chooses a more expensive plan must pay the additional cost.
All health benefit plans would be required, as a minimum, to provide at least
the same types of services covered under Medicare, as dwell as catastrophic
expense protection. Introduced Nov. 1, 1979; referred to Committee on
Finance. Hearings held by Subcommittee on Health Mar. 18, 1980.

S. 1590 (Schweiker et al.)  

Comprehensive Health Care Reforn Act. Requires large employers to offer
employees at least three competitive health insurance plans, at least one of
which would have to contain provision fbr patient cost-sharing for hopital
services, in order for the business expense tax deduction for employer
contributions to be allowable. Provides for a minimum level of catastrophic
health insurance protection for all Americans by utilizing a combination of
(1) additional prerequisites for tax-deductible employer-based health
insurance plans, (2) State—administered insurance pooling arrangements, and
(3) increased Medicare benefits. Encourages preventive health care by
requiring that any tax deductible health insurance plan must contain a
prescribed level of preventive benefits. Introduced July 26, 1979; referred
jointly to Committees on Finance, and Labor and Human Resources.

S. 1720 (Kennedy et al.)/H.R. 5191 (iaxman et al.)

Health Care for All Americans Act. Provides for a national health
insurance program covering the entire population, financed through
employer—employee wage-related premiums, Medicare payroll taxes and premiums,
State payments for the poor, and Federal general revenues. The program would
be administered primarily by certified private health insurers and Hnos, with
the Federal Government continuing to administer medicare. A national budget
would be established for all services covered under the program, with
increases limited to rates of increase in the GNP. Introduced Sept. 6, 1979
S. 1720 referred jointly to Committees on Finance, and Labor and Human
Resources. H.R. 5191 referred jointly to Committees. on Interstate and
Foreign Commerce, and ways and Means. Hearings on H.R. 5191 held by
Subcommittee on Health and Environment Nov. 29, 1979, and by Subcommittee on
Health Nov. 29, 1979, and Feb. 11-12, 1980.

S. 1812 (Ribicoff et al.)/H.R. 5000 (Rangel et al.)

National Health Plan Act (Administration proposal). Provides for (1) a
Federal insurance program (to be known as Healthcare) providing comprehensive
coverage for the aged, disabled, and poor, and offering insurance against
major medical expenses to other individuals and small employers; and (2) a
system of mandated employer-based coverage for workers and their families
through approved private insurance plans. Healthcare would incorporate
Medicare and acute care portions of Medicaid. Introduced Sept. 25, 1979. S.

1812 referred jointly to Committees on Finance, and Labor and Human.

Resources.w H.R. SQOOI referred jointly to Committees on Interstate and
Foreign Commerce, and Ways and Means. Hearings held by Subcommittee on
Health Nov. 29, 1979, and Feb. 11-12, 1980. 1

HEARINGS

U.S. Congress. House. Committee on Interstate and Foreign Commerce.
Subcommittee on Public Health and Environment. National health
insurance and health care. Hearings, 93d Congress, 1st and 2d
sessions. Washington, U.S. Govt. Print. 0ff., 197a. 593 p.

Hearings held Dec. 10-1H, 1973; Feb. 1 and 2, 1974.

CRS- 7 IB73015 UPDATE-O3/25/80

0.3. Congress. House. Committee on Ways and Means. National health
insurance. Hearings, 93d Congress, 2d session. Washington,
U.S. Govt. Print. Off., 1974. .
Hearings held Apr. 24-July 9, 1974.

U.S. Congress. House. Committee on Ways and Means. Subcommittee on
Health. National health insurance.. Hearings, 94th Congress,
1st session. Washington, U.S. Govt. Print. Off., 1975.
Hearings held Nov. 5-7, 10-14, 17-20; Dec. 2-5, 1975.

----- National health insurance. Field hearings, 94th Congress,
2d session. Washington, U.S. Govt. Print. Off., 1976.
Hearings held Feb. 26-27 (Chicago, Ill.), Har. 18-19
(San Francisco, Calif.), May 6-7 (Salem, Oreg.), Hay 20-21
(New Orleans, La.), July 23, 1977 (Knoxville, Tenn.)

----- Panel discussions on national health insurance;
prepared statements of panelists on the subject of the role of
government in American health. Hearings, 94th Congress, 1st
session. Washington, U.S. Govt. Print. Off., 1975.
Hearings held July 10, 11, 17, and 24, 1975.

U.S. Congress. Senate. Committee on Finance.
Catastrophic health insurance and medical assistance reform.
Hearings, 96th Congress, 1st session. Washington, U-S.
Govt. Print. Off., 1979.
Hearings held Mar. 27-29, 1979.

----- National health insurance. Hearings, 93d Congress, 2d session.
Washington, U.S. Govt. Print. Off., 1974.
Hearings held May 21-23, 1974.

U.S. Congress. Senate. Conmittee on Human Resources.
subcommittee on Health and Scientific Research. National
health insurance, 1978. Hearings, 95th Congress, 2d
session. Washington, U.S. Govt. Print. Off., 1978.

Hearings held Oct. 9, 10, and 13 (Washington, D.C.);
Oct. 23 (Detroit, Hich.); Oct. 27 (Osage, W.Va.);
Nov. 28 (Chicago, Ill.); Nov. 29 (Denver, Colo.);
Dec. 14 (Queens, N.Y.); Dec. 15, 1978 (Garden Grove, Calif.).

E5!‘-3QE$§. 5211.3. 0N§B.l3.§.§lQ.ll.A_l-.-QQ§Q...EE.'1.'§.

U.S. Congress. House. Committee on Ways and Means. National health
insurance resource book. Revised edition. Washington, U.s. Govt.
Print. Off., 1976. 505 p.

u.s. Congress. House. Committee o Ways and Means. Subcommittee on
Health. Basic charts on health care. Washington, U.S. Govt. Print.
Off., July 8, 1975. 67 p.

At head of title: 94th Congress, 1st session. Connittee
print. P

Summaries of selected health insurance proposals and
proposals to restructure the financing of private health
insurance. Washington, U.S. Govt. Print. Off., Feb. 11, 1980.
47 p.

CRS- 8 IB73015 UPDATE-03/R5/80

At head of title: 96th Congress, 2d session. Committee
print.

U.S. Congress. Senate. Committee on Finance. Comparison .
of major features of health insurance proposals. Washington,
U.S. Govt. Print. Off., 1979. 29 p.
At head of title: 96th Congress, 1st session. Committee print.

----- Health insurance proposals. Washington, U.S. Govt. Print.
At head of title: 96th Congress, 1st session. Committee print.

09/25/79 -— S. 1812 and H.R. 5400, the Administration proposal,
introduced by Senator Ribicoff, and Representativem
Rangel et al. S. 1812 referred to Committee on
Finance, and Labor and Human Resources. H.R. 5400
referred to Committees on Interstate and Foreign
Commerce, and ways and ueans.

09/06/79 - S. 1720 and H.R. 5191, the Health Care for All

Americans Act, introduced by Senator Kennedy et al.,
and Representative Waxnan et al. S. 1720

referred to Committees on Finance, and Labor and
Human Resources. H.R. 5191 referred to Committees
on Interstate and Foreign Commerce, and Ways and
Means.

07/26/79 - S. 1590, the Comprehensive Health Care Reform
Act, introduced by Senator Schveiker et al., and
referred to the Committees on Finance, and Labor
and Human Resources.

07/12/79 -—-S. 1485, the Health Incentives Reform Act of 1979,
introduced by Senator Durenberger et al., and
referred to the Finance Committee.

03/27/79 -03/29/79 -— Hearings held on S. 784 and S. 260
A by Senate Finance Committee.

03/26/79 -— S. 760, to create a catastrophic health insurance
program, was introduced by Senator Long, and referred
to the Committee on Finance. 3

03/26/79 -e-S. 748, the Catastrophic Health Insurance and
  Hedicare Amendments Act of 1979, was introduced by
Senators Danforth, Dole, and Domenici, and referred
to the Finance Committee.

03/14/79 -'H.R. 2969, the Health Service Act, was introduced
by Representative Dellums et al., and referred to several

cns- 9 1373015 UPDATE-03/25/30
committees.

02/06/79 —- S. 350, the Catastrophic Health Insurance and
Medical Assistance Reform Act, was introduced
by Senator Long et al., and referred to the Finance
Committee.

01/15/79 - »H.R. 21, the Health Security Act, was introduced
by Representive Corman et al., and referred to several
comm itt ees .

.1.1.2.12l._92£Q1.?.A.L--.1.3.lE..1Z.E§E§.3§-§.QLIl.i.§E§

Health Insurance Institute. Source book of health insurance
data 1977-78. 80 p..

U.S. Dept. of Health, Education and Welfare. National health
expenditures, fiscal year 1977 [by Robert M. Gibson
and Charles R. Fisher]. Social security bulletin,
July 1978 : 3-20.

--——- National health insurance national outreach report.
December 1977. [Washington] U.S. Department of Health,
Education and Welfare. 89 p. (LRS 77-20017)

National health insurance proposals, provisions of bills
introduced in the 9uth Congress as of February 1976,

by Saul Waldman. U.S. Department of Health, Education
and Welfare, Social Security Administration, Office of
Research and statistics, DHEW Publication No. (SSA)
76-11920. (LRS 76-7019)

-—--- Private health insurance in 1975: coverage, enrollment
and financial experience [by Marjorie Smith Mueller].
Social security bulletin, June 1977: 3*21.

U.S. Library of Congress. Congressional Research Service.

How can the health care of U.S. citizens best be improved?

A collection of excerpts and bibliography relating to the high
school debate topic, 1977-1978. Washington, U.S. Govt.

Print. Off., 1977. zuu p. (95th Congress, 1st session.
Senate. Document no. 95-39) (Available from comm or doc rm)

----- National health insurance: a summary of major legislative
proposals introduced into the 9Qth Congress [by] Kathleen Cavalier.
Washington, 1976. 60 p.

cns Report 76-9 ED (LTR 76-158)

Resolved: that the Federal Government should enact a program of
. comprehensive medical care for all United States citizens;

a collection of excerpts and bibliography relating to the
intercollegiate debate topic, 1972-73. Washington, U.S. Govt.
Print. Off., 1972. #18 p. (92d Congress, 2d session. House.
Document no. 92-375)