3») if? LO NG E R » % % . , £RoPERT ‘*3 W ‘W’ .—. IE ‘IJ5 Umvemny 1 , 002.:-nr.~«ar.~1x: 3 .1 ‘ua‘v1 Lx 4_'.'< ;'" Vb,‘ ‘ ‘9.;§“"3§ f; 1 ' ‘*3 NOV 17 3989 Issue Brief % ST.L@Q&%iQQ. 1 aillwrriiww M ufflu 0 0 LIBRARY OF CONGRESS @mj1Myfifl@mH»iII»11 Ill! 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)