The MacNeil/Lehrer Report; National Health Insurance

ROBERT MacNEIL: Good evening. The idea of a national system of health insurance has been a gleam in the eyes of all Democratic and at least one Republican president since FDR. It`s an idea that`s been flirted with and abandoned as too radical or too socialistic or too expensive ever since, although a start was made with Medicare and Medicaid in the `60s. This weekend President Carter unveiled his own long-delayed proposals, first promised in his 1976 campaign. The Carter approach is the result of a series of compromises, and it began drawing hostile fire even before it was officially announced on Saturday. Tonight, the Carter health proposals and the reaction to them. Jim?

JIM LEHRER: Robin, the President`s plan is not a specific nuts and bolts proposal for national health insurance, it`s a set of guidelines, principles on which a gradual phase-in of a national health insurance plan would be based. A final plan would be drawn and offered in 1980, with the expectation that it all take effect in 1983, The principles are these:

Assure comprehensive health insurance coverage for all, including catastrophic expenses;

Assure high-quality care for all, including the poor;

Guarantee freedom of choice in the selection of doctors, hospital; and health delivery systems.

It also must help control inflation through cost containment measures and be efficiently constructed to save money, offsetting the additional cost to the federal budget;

It should be phased in gradually, in light of economic and administrative conditions;

It should be financed jointly by government, employer-employee contributions, and by the consumer;

And private insurance companies should have a role in it. It should promote major health care reforms;

And finally, it should assure consumer representation in its operation.

Major criticism of the President`s plan came Friday from a coalition of labor and other groups; they call the plan Too Little, Too Late, and the leader of that coalition is Senator Edward Kennedy, Democrat of Massachusetts and the Congress` leading advocate of national health insurance. Senator, you`ve said the President`s plan is unacceptable. Why is it unacceptable?

Sen. EDWARD KENNEDY: Well, one of the factors that you listed is the phasing in of the program, Those of us of the coalition realize that there`d have to be a time for phasing in any program, there has to be flexibility given to a national administration, a president, to be able to tune the program to various factors; but one position which the administration took which was unacceptable is that the phasing in would be dependent upon certain economic factors. In other words, all of the factors that you mentioned at the outset of your program will take place "if," "perhaps," "maybe." And those conditions are dependent upon economic factors over which the beneficiaries have absolutely no control.

And so the words themselves have some nice sound and some nice meaning, but unless you know that they`re going to be achieved within a given period of time I think you`re still, in our society, not making the fundamental decision that health care is a right and not a privilege.

LEHRER: Do you feel that the President has not made that fundamental decision?

KENNEDY: They have not made that decision, as long you`re going to condition universality, comprehensiveness on the conditions in the economy. For example, why should the phasing in of health care benefits to elderly people depend necessarily on the escalation of food prices because of bad whether or a dock strike or some other factor? Are you going to go to the American people, which effectively the administration is doing, and saying, "Yes, you`ll have universality, you`ll have comprehensiveness, but we won`t if we`re going to have X in terms of consumer price index growth or Y in terms of the budget deficit." And as long as those are factors, when you`re speaking about a program that basically benefits the underrepresented people in our society, then it, I don`t believe, is achieving what I`m sure the President would like to achieve but which this program will not achieve.

LEHRER: Do you object to its also being tied to cost containment of medical costs?

KENNEDY: It has to be tied to cost containment. Unless we are going to have an effective cost containment program, then we`re going to continue to see the dramatic escalation of health care costs. Secretary Califano himself said on the one hand we need national health insurance in order to control costs; on the other hand he was saying we can`t afford national health insurance because of the escalation of costs. You can`t have it both ways. And what we`re saying is that it`s about time that the United States bit the bullet and said decent quality health care is going to be a right in our society and not a privilege. We`re the only industrial society outside of South Africa that doesn`t guarantee it to our people, and in the interpretation of those particular words in the phasing in program the administration was effectively setting a condition which would, I think, put serious doubts on the other provisions of the program.

LEHRER: Do you plan to go your own way now, ignore the President`s plan more or less and push for your own program?

KENNEDY: Well, it isn`t my program, it`s the program of the elderly people, of the church groups, of the working people, of the farmers, who are basically excluded in so many instances from adequate and decent covering and who are bearing the enormous escalation in the costs. They believe that we ought to have a program that is going to do what the administration says that they want to do, but to give assurance that the job will be done, and then to let members of Congress stand on that issue, let them vote either aye or nay on that issue.

LEHRER: You are adamantly opposed to any health care program that is contingent at all on inflation or economic conditions...

KENNEDY: As a condition to realize the benefits, I`m unalterably opposed to that. If you`re talking about a program that would be passed that would give the flexibility to the President to make midterm corrections, that`s fine. But I`ve been around Congress to know who the over- represented groups are in the Congress of the United States, and what will happen is, as we can see what happened on the energy program, the Congress is going to swallow the least objectionable parts and then put a label on it that it`s an energy program. And that is not right in relationship to this issue; people have been struggling for it for a long period of time; and I think the worst of all things would be if we were going to pass something that had the label of unversality and comprehensive and health insurance, and not do the job and deny millions of Americans the right of decent health care. Every other society has been able to do it, and I don`t know a political party or a political leader who wants to turn back from some form of health coverage for the people in any industrial society of the world.

LEHRER: All right; thank you, Senator. Robin?

MacNEIL: One group with a long-standing interest in national health insurance is the American Medical Association. The AMA supports legislation which would establish mandatory health insurance plans through private companies. The federal government would subsidize premium costs for those not covered by employer plans. Dr. James Sammons is the Executive Vice President of the AMA. Dr. Sammons, is the AMA and your part of the medical profession, the doctors, happy with the principles the administration has come up with?

Dr. JAMES SAMMONS: Well, Bob, the President enunciated a number of principles, and out of the ten the majority of them are the same principles that we in the private sector have been espousing for years: the comprehensive coverage; the universality of coverage; the quality of care; the right to freedom of choice, which is a very important right, in our opinion. We are concerned over the cost of care; the AMA`s just had a commission on the cost of medical care that has labored for eighteen months on this subject. We`re deeply involved in the voluntary effort to control costs. We think that using the private insurance industry is a tremendously important part of this whole activity.

MacNEIL: Why is it so important to doctors that this be worked out through the private insurance industry?

SAMMONS: Well, for a number of reasons, not the least of which is that there are several hundred thousand people in the present insurance industry who are already very competent in the manner and matter of handling claims and making payments and adjudication of disputes. It seems to us it would be foolish to discard those for some other form of administration. All of our experiences with Social Security`s involvement in Medicare and Medicaid leave something to be desired. Senator Kennedy himself has proposed a role for the private insurers. I think we`re all beginning to see the wisdom of seeing the private insurance sector involved in the health care delivery system. So I think that most of the things that the President said on Saturday through Mr. Califano are principles that all of us agree to: the need for more primary care physicians, something the AMA has long advocated and something which, incidentally, is coming about. Better than half now of all graduates from medical schools go into primary care.

These things are happening. There are gaps in the system, of that there is no doubt. Those gaps need to be addressed. Most of the principles that the President has enunciated can fill in and can be applied to those gaps, as our bill applies to them, and we have by far the best proposal that the Congress has ever had given to it to address the matter of national health insurance, retaining all of those things which we in the private sector in this country believe to be fine.

MacNEIL: Are you concerned, as Senator Kennedy is, that by, as it were, pegging the introduction of such a system to inflation or a better record on inflation that the improvements you talk of will be very much delayed?

SAMMONS: Well, I think it depends on whether you`re talking about a whole system all at once or whether you`re talking about a phased in approach. In a phased in approach I`m not concerned about tagging it to the inflation rates or any other appropriate :formula that can be developed because I think the American people -- and they`ve demonstrated this time after time in the research that`s been done recently -- have said that they are very satisfied with the health care system. We don`t need any massive upheavals. At the same time there`s no question but that inflation is the number one problem in this country today...

MaCNEIL: A more important problem than the inadequacies in the present health care system?

SAMMONS: Well, yes, because there are avenues that are available for health care in our country today to any and everyone. And some ninety percent of the people in this country are already covered under group plans or private insurance; that other ten percent causes us a great deal of concern, and they are not necessarily all poor. Those are gaps that can be addressed. We have had a project for the last year of trying to get state legislatures to address those problems. Some changes need to be made to allow them to address the problems.

But these are things that can be done cooperatively, and that can be addressed cooperatively between government and the private sector. We don`t have to choose up sides and have a fight about this; we can address these issues on a cooperative, concerned basis, we can come to meeting of the minds on many of these problems and resolve them without any massive upheavals. And in the present state of the economy and the affairs of the nation, this makes a great deal more sense to me and to us than to have a full-blown massive restructuring of some sort where, really, when you talk about projected costs, it`s almost like you believe in the tooth fairy.

MacNEIL: Okay. Jim?

LEHRER: Another group directly affected by the President`s proposal and all others on health insurance is the private insurance industry. Their trade organization is the Health Insurance Association of America; its president is Robert Froehlke. What do you think of the President`s principles, Mr. Froehlke?

ROBERT FROEHLKE: Well, it`s a little early to say you are unequivocally for or against. These principles are, as principles must be, very general. Having said that, I think it`s a good start. He is for quality health care for all Americans; he`s for freedom of choice of physicians, hospital and health delivery systems; he`s for cost containment -- these are all very worthwhile objectives and we certainly agree with him. I think I disagree with Senator Kennedy on his phased in program. I think he has no choice. Something as complicated as a health care program, it`s very difficult at this stage to envision what would happen to even the best of programs as we look down ahead at the economy, and I think we must have certain stops along the way where we ask the very important question: this is what we wanted to achieve, are we achieving it?

And I am afraid I also disagree, I think we must look at the economy, because it isn`t only health care that this nation is looking at, we`re looking at a lot of other important expensive programs like national security. And unfortunately, I think our economy does dictate. In addition, the program does recognize there are budget considerations, it does recognize that our present taxpayers are overburdened. And it won`t surprise you to know that we also like the fact that he did announce there must be a significant role for the private insurers.

LEHRER: I had a hunch that would please you. Let me ask you about that; why is that important, other than the fact that it keeps you and your colleagues in business, more or less?

FROEHLKE: And of course that`s important but it isn`t the main reason by any means. We are experts in the insurance business. We have been working this role for many, many years, and it`s been my observation that government has never done better what the private sector has been trained to do; and the main reason that we believe the insurance industry should have a role is we are the experts in that business where competition takes over, and when you have government doing the job, competition does not take over.

LEHRER: Do you feel that the President`s proposals, his principles, constitute a victory for your industry in this whole legislative and political battle over national health insurance that`s been going on for years now?

FROEHLKE: Well, for a couple of reasons, no. First of all, it`s way too early to say winners and losers. Secondly, I don`t like that term "winners" or "losers" because Senator Kennedy and Jim Sammons and I all have the same objectives: we want quality health care for the American public. Where we disagree is on how do we achieve it. And therefore, the objective...

LEHRER: On that question, of how do we achieve it, do you consider the principles as laid out by the President favoring your position that you`ve held up till now?

FROEHLKE: I will say this: that certainly our program, the program that we have been for since 1970, would very neatly fit into those principles.

LEHRER: All right, thank you. Robin?

MacNEIL: Coming back to you, Senator Kennedy, part of the nub of the argument seems to be over what role inflation should play, and Dr. Sammons said to me that as far as the AMA is concerned inflation is a more important consideration at the moment than whatever inadequacies may be identified in the health care delivery system; and I take it you don`t see it that way.

KENNEDY: Oh, I do very much see the problems of inflation being a key factor in this whole debate and discussion. You know, my two friends here, in spite of the fact that they say that we`ve relied on the private sector and we`ve relied on the doctors over the period of these last several years, basically we have costs out of control. There has been very little that the insurance industry has been able to do, quite frankly, and there`s been very little that the AMA really has done in terms of controlling costs. So now we are spending 9.4 percent of our gross national product on health care, and climbing. Make no mistakes about it: as the Congressional Budget Office has pointed out, we`re going to be spending $250 billion by 1981. I say one of the principal reasons for health insurance is to get control on costs.

And in spite of all the nice words that you`ve heard from my good friend Dr. Sammons, who we worked very closely with last week in sponsoring the first national conference on health promotion and disease prevention, the AMA has refused to take a strong position with regards to cost controls. And that is absolutely essential if we`re going to be able to deal with this issue or problem. And I think that that is an essential factor in dealing not only with the equity of the issue but on the cost controls; and there`s been very little that the industry itself has been able to do. Basically you have a risk-selection policy and you have experience rating, which means that the competition is on who will be the healthiest group in our society, and then permit the insurance companies to compete on that. But you find me a person, an individual who`s had a heart attack and trying to go to any of the organizations that my good friend represents, or has a mentally retarded child and ask him what the premium is going to be, and it`s non-existent. And that, I think, gets back to the fact: are we as a society going to say that health care is a right? Because I think, as Mr. Froehlke and others have pointed out, when you have that final question -- say you bring in the first phase, the easy one; Congress has bitten the bullet, put a big label out; all the members of Congress have put out their press releases that we`ve finally got health insurance -- and then it comes to the National Security Council, the domestic conference. Are we going to put that three billion dollars or four billion dollars for this phase, or are we going to have a new aircraft carrier? Who do you think`s going to win?

MacNEIL: Let`s ask one of these gentlemen: who`s going to win that? Dr. Sammons.

SAMMONS: Well, I`ll have a shot at it, Bob, and I must disagree with the Senator right off the bat, of course. The AMA is terribly concerned about this cost; we have done very positive things. The rate of escalation in hospital costs is down by three percent over last year and is rapidly approaching now the rate of growth of the gross national product. There really isn`t anything wrong with nine percent or ten percent or eight percent or any other percent of the gross national product going for health; it depends on what it`s buying. And yes, there are problems with costs, there are always going to be problems with costs unless and until inflation in this country is brought under control.

MacNEIL: But Senator Kennedy says the only way to control the escalation of costs in medicine is through a national program...

SAMMONS: Well, I suggest to the Senator that since most hospitals -- and that`s where the biggest chunk of the cost escalation is -- since most hospitals have about sixty percent going out in labor costs and an other ten to fifteen percent going out in energy and food costs, that that first eighty-five percent of the dollar that comes into the hospital is subject to inflationary pressures over which no one has control. And I am not in favor of reducing the pay scale of hospital employees. I am not in favor of putting a rationing -- and that`s what`s being talked about now; let`s carefully understand the language. We`re talking here about using a national health insurance program by regulation for the purpose of rationing care; that`s really the crux of the matter.

MacNEIL: Is that the crux of the matter, Senator, as you see it?

KENNEDY: Of course it`s not the crux of the matter.

SAMMONS: (Laughing.)

KENNEDY: Take Canada, for example. 1968, 6.8 percent of their GNP on health care; this past year, seven percent. 1968, U.S., 6.8 percent; this year 9.4 percent. Now, the fact of the matter is, Dr. Sammons mentions in his earlier comments about how the AMA had promoted a commission to make recommendations on cost containment; one of the recommendations they made was for the fact that expensive equipment that was going to be in doctors` offices should fall under the health planning, the health service agency, the certificate of need. That was the recommendations with eleven physicians on it. Last week on the floor of the United States Senate the AMA strongly opposed that factor. Now, we`re talking about twelve percent increase on health matters in our society.

What we`re basically saying, look, let`s get a health inflator and put the cost on it, but let`s live within that budget. Every family lives within the budget, let`s provide and live within that budget. Health is the only social program in our society where it`s open-ended. We put a limit on national defense, you put a limit on crime, you put a limit on education; we say let`s put a limit and let the doctors live within that particular limit. We do it in every other aspect, and there`s no reason whatsoever that we can`t do it. They`ve got a limit on it in terms of Canada, they`ve got a limit on it in other industrial societies; and the eighty-four percent of the Canadian people strongly supported their national health program, strongly supported it. And it isn`t all quite the way that Dr. Sammons provided it. The Black Medical Society, for example, is divided with the AMA; the Black Medical Society supported Medicare two years before it actually passed. And you know, so it isn`t quite that way.

MacNEIL: Okay. Jim?

LEHRER: Senator, back to you: you`ve accused the President of demonstrating a lack of leadership on this issue...

KENNEDY: I ought to give Dr. Sammons a chance ... (laughing) to make a comment on it. And I`ll come back to the other one before we leave, if he wants. (Laughing.)

LEHRER: Okay. Dr. Sammons?

SAMMONS: (Laughing.) Yes, Jim.

LEHRER: Do you want to respond to Senator Kennedy`s last response to yours?

SAMMONS: Yes. I would make a comment about his comparison to the Canadian system. I`ve just returned from Canada within the last six or eight weeks. We studied this system quite thoroughly, and it isn`t all peaches and cream. As a matter of fact, there is beginning to be rationing in Canada, just as there is rationing in those other industrialized nations that Senator Kennedy`s talking about; there are beginning to be queues in Canada; there is beginning to be felt in the research and the educational community a very deep pressure against the system; and it is a rationing system. When you tie a national system to a federal budget -- and this is where our program differs so markedly from some of the others -- then the federal budget, in being cut and being dried and using taxes for levy, there is rationing of all services. We still believe that an appropriate place to determine the contributions of employers and employees is across the bargaining table. And our bill provides that opportunity for continued bargaining above basic minimum limits.

LEHRER: Senator, I am going to get back to you in a moment on this; there`s a political question I wanted to ask you. But Mr. Froehlke, where does the insurance industry come down on this argument between capping the costs and not?

FROEHLKE: We agree with Senator Kennedy that there is a health care cost crisis and that something must be done. Must be done because it is seriously affecting the American public and because whatever is done will take some time. I think the doctors and the hospitals should be complimented on their voluntary effort. I disagree with my friend Jim Sammons, that I don`t think we could rely entirely on that in spite of the fact that the evidence thus far indicates they`re doing very well; but I don`t know if we have the time. I think we must do other things such as state prospective hospital budget control, which will limit the budget or control the budget of the hospitals because the medical care system, as good as it is in this country, doesn`t recognize the normal competitive factors in the marketplace. And we must recognize that and do something to instill those factors if we can.

LEHRER: In other words, you agree with Senator Kennedy on that.

FROEHLKE: I agree there`s a crisis. I hope he agrees with me that one of the answers is prospective hospital budgeting.

KENNEDY: ...agree.

LEHRER: Senator, on my political question: you criticized the President for lack of leadership on this. What do you think is his reading of the political realities in the Senate and elsewhere that caused him to go this particular route? You`ve been talking to the White House throughout this.

KENNEDY: That`s right. But I think you have to really ask the President or the spokespeople for the President. I wouldn`t presume on that factor.

LEHRER: What did they tell you?

KENNEDY: They feel that the President prefers a single bill but that he understands the phasing aspects as have been described earlier in the program. And I think this is the fundamental question, you see. I think, first of all, that it`s a philosophical question whether we are going to free the American people from the fear and the burden of health care costs. That really is basically ... we can devise our system; we`re prepared to build on the private sector. I think the overwhelming majority of doctors want to see that established as well. And I`m absolutely convinced that without a comprehensive program that is going to be passed, if we want to change it then, put the burden on those that want to alter it and change it.

LEHRER: Without the President`s support, Senator, is national health insurance going to be passed any time soon?

KENNEDY: Absolutely; I believe that it can be and that it must be, because basically it`s the people that are going to demand it. I think people were quiet during this period of time because they felt they were going to get strong leadership on this issue. And now they know that they`re going to have to fight for it; I think they`re going to send a message to the members of Congress and Senate. I think it is inevitable that it`s going to pass. The question really is the time, and under whose leadership it`s going to pass.

LEHRER: All right; thank you. Robin?

MacNEIL: Yes; that`s our time for this evening. Thank you, Senator Kennedy, Mr. Froehlke; and thank you, Dr. Sammons. That`s all for tonight. Incidentally, we did try to get a member of the administration or some official, to take their point of view, and all of them refused. That`s all for tonight. We`ll be back tomorrow night. I`m Robert MacNeil. Good night.