High Voltage Shareware/high1.zip/high1/DIR23/HREPORT.ZIP/CHAPTER1.TXT

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Chapter 1 -- WHY WE NEED REFORM




"You know, there's that old saying: If it ain't broke, don't fix
it...This system is broken and desperately needs to be fixed...If
I were talking about this as a patient, I would say that it is in
intensive care and we're not seeing the kind of vital signs that
would lead us to believe it will recover."

-A doctor at St. Agnes Hospital
Philadelphia, PA

___________________________


     In many ways, the American medical system represents our
nation at its best, pioneering in the most noble of human
pursuits, the healing of the sick. It is the result of five
decades of national investment - investment in research into
disease and prevention, training of doctors, nurses and
technicians, and construction of hospitals and medical schools.

     Today tens of thousands of dedicated health care
professionals apply their unmatched skills to the world's most
advanced technologies and procedures. They deliver some of the
best health care on earth.  No other health care system exceeds
our level of scientific knowledge, professional skill and
technical resources.

     But America's health care system also presents our nation
with one of its gravest challenges.

     Bring together any group of citizens and the dimensions of
the health care crisis emerge from their stories. Stories about
insurance coverage lost, policies cancelled, fear of financial
ruin, better jobs not taken, endless forms filled out. They are
stories of frustration and insecurity - and, too often, pain and
fear.

     Today, everything that is wrong with the American health
care system threatens everything that is right. That is the
reality that drives the call for fundamental reform, the reality
from which President Clinton's Health Security Act arises.


Rising Insecurity

     From the 1940s through the 1970s, the United States made
steady progress toward broader health care coverage.
Employment-based insurance and public programs expanded to reach
more people and offer more benefits. Beginning in the 1980's,
however, the number of Americans lacking health insurance has
increased steadily - while health care costs have increased at
ever-rising rates.

     The result: growing insecurity.  Today, according to
estimates prepared by Families USA,  more than two million
Americans lose their health coverage every month. Many get it
back within a few weeks or a few months, but every day a growing
number of Americans are counted among the more than 37 million
who go without health insurance - including 9.5 million children.
Millions more have health coverage so inadequate that a serious
illness will devastate their family savings and security.

     Unlike other nations that have made health coverage a right
of citizenship, the United States continues to treat it as a
"fringe benefit" of employment, something that can be given or
taken away. Over the course of any two-year period, one in four
Americans learns how easily that privilege can be taken away,
leaving them vulnerable to financial ruin.  Others watch
anxiously as their health benefits erode. Even those with the
best benefits wonder what will happen if they lose a job or
change jobs.

     Americans value what health care can do for them;
increasingly, many fear what the health care system can do to
them.
     At the root of the problem lies our health insurance system,
which gives insurance companies the right to pick and choose whom
to cover. Risk selection and underwriting - the practice of
identifying the healthiest people, who pose the least risk -
divide consumers into rigid categories used to deny coverage to
sick or old people, or set high premium rates.


___________________________

"The way the system works now, even employed, insured people are
just one major illness away from financial disaster."

K.P.
West Lafayette, Indiana
___________________________



     The result is a system that is stacked against individuals,
families and small businesses.  Millions of Americans have lost
their insurance when they got sick and needed insurance most.
People with pre-existing conditions - an insurance term for
medical conditions or diseases diagnosed before people apply for
coverage - either cannot obtain coverage or can often only obtain
it at exorbitant prices.  Many lose their insurance coverage when
a spouse dies or they divorce.

     Among the 37 million Americans who lack insurance, 85
percent belong to families that includes an employed adult.
Those who work part-time or are self-employed, often cannot
obtain group coverage. Fear of losing insurance locks millions of
Americans into jobs they want to leave; changing jobs or starting
a new business can mean losing health insurance. And many people
stay on welfare to get government health benefits they could not
obtain if they were employed in minimum wage jobs.

     For small businesses, health security has become almost
impossible to achieve. Insurance companies charge small
businesses higher rates than they charge major corporations,
while refusing to cover some industries considered high risk.
Small business owners that want to provide insurance can find
themselves priced out of the market, leaving them unable to
protect their families or employees.


___________________________

"My husband and I own and operate a small business.  This year we
will make our employees pay for any increase in premiums and may
drop [some benefits] altogether.  Our company cannot shop around
for lower cost health insurance because I am uninsurable."

B.M.
Phoenix, Arizona
___________________________



     Prompted by ever-rising costs, employers of all sizes have
reduced health coverage benefits, raised deductibles, limited
coverage and switched to hiring more part-time and contract
workers in part to avoid paying health benefits.  Sometimes
without realizing it, workers  sacrifice wage increases for
health benefits, making a tradeoff between what they deserve and
what they need.  What many Americans fear most about losing a job
is losing their health insurance.

     Even for Americans employed by the largest corporations,
rising health costs present an increasing competitive
disadvantage, prompting renegotiation of benefits, reductions in
coverage, higher deductibles, limits on choice of doctors, and
attempts to shepherd employees into one health plan. As costs
continue to rise, these trends become more pronounced - and
increasing numbers of American families find health security
beyond their reach.

     This growing insecurity also has a great impact on older
Americans. Any pharmacist will tell you that thousands of elderly
people must decide every week between buying medicine and buying
food. Doctors who care for the elderly know that cutting down on
a dosage to stretch a prescription or skipping a refill has
become commonplace, particularly among the elderly who live only
a little above the poverty line.

     At the same time, a second and perhaps more daunting
challenge confronts us: the growing need for security against the
devastating costs of long-term care for the elderly and people
with disabilities. With the number of Americans over age 85
projected to double by the year 2010, the need for long-term care
is expected to rise dramatically as the next century begins,
affecting not only those who need care but their families as
well.

     In the past, the United States has attempted to remedy the
gaps in our health care system by expanding public programs or
adding new programs aimed to fill specific needs. Community
health centers, public health clinics, clinics for migrant
workers, and public hospitals - all add up to a patchwork of
services covering specific populations, but we have never met the
growing need for reliable and secure health coverage.
___________________________

"When my two sons were 3 and 6, Spencer and Evan were diagnosed
with cystic fibrosis.  In the blink of an eye, my two beautiful,
healthy boys became part of our worst nightmare.  We had to face
the fact that we could lose them to this dreadful disease.  We
live in constant fear of losing our medical coverage...
Without the drug coverage that we now have, it would cost us at
least $1500 a month for their medicine alone. These little boys
are virtually uninsurable...As mothers we need to protect our
children, and I don't want to feel frightened about this all my
life."

A.B.
Pleasanton, CA
___________________________
Growing Complexity

     American health care is choked by paperwork and strangled by
bureaucracy. Administrative costs are higher in the American
health care system than in any other country, and rising rapidly.

     Confusion, complexity and increasing costs stem from the
peculiarities of our health insurance system. Consumers
experience it around the office or the kitchen table, when they
are faced with piles of incomprehensible forms or when an
insurance company refers them to the fine print in a policy to
answer a question. A change in jobs or a move to another state
can mean deciphering a whole new set of documents and learning a
whole new set of rules.

_________________________

"While we go about our business caring for our patients, we are
being buried in paperwork.  Everyday, my mailbox is filled with
directives, new regulations and papers to sign.  The truth is, if
I read all my mail, there would be no time left to see my
patients."

Dr. Jules Zysman
___________________________


     For small businesses, too many health care dollars go to
administration not to actual care. Firms with fewer than five
employees face administrative costs that absorb as much as forty
cents of every premium dollar, compared to about five cents for
larger companies - one reason why many small businesses do not
have health insurance.

     The sheer number of insurance companies and health plans
also adds costs. Hospitals, clinics, doctors and other health
providers must deal with hundreds of different insurance plans,
each with its own benefit package, exclusions and limitations -
and mountains of forms, rules, rates and payment procedures to
follow. Each insurance carrier, federal program and type of
policy - be it health insurance, auto insurance, or workers'
compensation - has its own requirements. Hospitals have been
forced to establish whole departments, create new occupational
categories and hire special clerks to handle the paperwork.

     In an attempt to control costs and improve quality, private
insurance companies and government programs require doctors and
other professionals to seek approval before providing treatment,
and submit case records for reviews.

     For example, a government program or insurance company
considering a $30,000 hospital bill has no direct knowledge of
the case or the services delivered. Reviewers want evidence that
the care was necessary, that it was delivered, and that the bill
is accurate and justified.
     Every doctor's office and hospital must hire staff to
document every service delivered, enter record codes, send out
bills, and process other paperwork. They must determine whether
an individual qualifies for health coverage, which company
carries the primary policy, whether the services are covered,
whether another policy covers the same care, how much each
company is willing to pay, and how forms need to be filled out.
Those staff then spend hours on the telephone with insurers
arguing about what's covered and what's not. In many cases, these
steps are only the beginning; receiving payment can take weeks.

     Doctors, nurses and other professionals feel frustrated by
bureaucracy, and worry that outside controls compromise their
ability to make decisions about treatment. The relationship
between doctors, nurses and their patients cannot help but be
strained when the "hassle factor" and paperwork drain time and
energy away from the delivery of care.


Rising Costs

     Between 1980 and 1992, American health care spending rose
from 9 percent of Gross Domestic Product (GDP) to 14 percent.
Without reform, spending on health care will reach 19 percent of
GDP by the year 2000. If we do nothing, almost one in every five
dollars spent by Americans will go to health care by the end of
the decade, robbing workers of wages,  straining state budgets
and adding tens of billions of dollars to the national debt.

     American workers already feel the impact of rising health
costs in their paychecks. Had the proportion that health care
makes up of workers' wages and benefits held steady since 1975,
the average American worker would be making $1,000 a year more
today. If current trends continue, real wages will fall by almost
$600 per year by the end of this decade.

     For every American family and business that purchases health
coverage, the real cost of health care is substantially higher
than most of us realize. We pay insurance premiums, deductibles
(the amount we pay each year before insurance kicks in), plus
whatever co-payments or co-insurance (the amount we pay that
insurance doesn't cover) our policies require. And ll those
payments include a hidden 10 percent surcharge - in the form of
higher bills - to cover the more than $25 billion in care that
hospitals and doctors provide every year to people who cannot
pay.  Finally, we pay a payroll tax to cover the cost of
Medicare, and other local, state and federal taxes to support the
safety net of public programs that help fill in the gaps.

     For America's employers, these costs put us at a
disadvantage in international competition. Health costs in the
United States, for   example, add about $1,100 - about twice as
much as in Japan - to the cost of every car made in America.

     Rising health care costs deal the same blow to government
budgets that they do to workers, families and businesses. If
current rates continue, health spending will consume as much as
111 percent of the real increase in federal tax revenues during
this decade.  The same holds true at the state and local level,
where increasing demands for public spending on health care,
threaten state budgets and drain resources. For the first time in
our history, state spending on health care now outstrips spending
on education. Health care will consume a third of projected real
increases in state and local budgets during this decade.

     Rapidly escalating costs are particularly threatening to the
security of two population groups - Americans older than age 65
and the severely disabled - for whom we decided decades ago to
extend health security under the Medicare program. But with
growth in Medicare spending running 23 percent higher than the
rate of inflation over the last decade, calls to cut Medicare
have become commonplace.

     The excessively high cost of health care is not the result
of forces beyond our control. Other advanced countries provide
coverage for all their people at lower and more stable costs and
with higher levels of consumer satisfaction (and, in some cases,
life expectancy). The American health care system consumes enough
money to provide health security to every citizen and legal
resident over time. As in other countries, the financial
discipline needed to make care affordable can also keep health
costs in line with the rest of the economy.

     The fundamental problem in America is not that we spend too
little for health care. It is that we don't get good value for
the billions of dollars we spend.

     Much research has demonstrated the waste and inefficiency of
the health care system - as any doctor, nurse, patient or
consumer can verify.  First, we train too few doctors who provide
the basic health care that most Americans need. Second, we
neglect the basics of good medical care - such as preventive
services - while investing too much in expensive, high-tech
equipment that sits idle. Experts also estimate that health care
fraud drains more than $80 billion each year from legitimate
needs.

     The incentives built into our health care system have also
led to striking variations in the cost and frequency of medical
treatments.
       ____________________________________________________

"Solutions must be found for spiraling health care costs that are
eroding the competitiveness of U.S. companies in international
markets and causing lower wages, higher prices for goods and
services, and higher taxes here at home."

Kenneth L. Lay,
Chairman and CEO of Enron Corporation

Working at the Dartmouth Medical School, one research team
compared how often patients covered by the Medicare program went
into the hospital. The team discovered that elderly patients who
lived in Boston were 1.5 times as likely to be sent to the
hospital as those in New Haven. As a result, the average cost of
care for Medicare beneficiaries living in Boston was twice as
high as for those living in New Haven. But the researchers found
no evidence that Medicare patients were any healthier in one city
than in the other.

     Other studies have documented similar variations. A study
published recently in The New England Journal of Medicine found
that after adjusting for differences in age and sex, Medicare
payments for doctor care for patients varied from $822 in
Minneapolis to $1,874 in Miami - with no discernible difference
in health to justify the difference in cost.  The current system
offers few incentives to probe why these variations occur.

     After years of attempting to slow the frightening rate of
increase in health care costs by tinkering with the existing
system, it is clear that only comprehensive reform will work.
Only a fundamental change of direction - a change that reduces
the waste and bureaucracy and turns today's upside down
incentives right side up - can bring about the savings needed to
make the promise of security real. States and communities across
the country are proving that it can be done; now we must set the
entire nation on this positive course.

Decreasing Quality

     While the American health care system features some of the
world's best quality care, the constant improvements in quality
are now threatened.  Today, we have no clear sense of what
treatments work best and which treatments should be used in
different situations.  And our neglect of preventive care means
that we are not as healthy as we could be.
     Traditionally, Americans have assured medical quality by
setting standards and then sending regulatory agencies to search
for those who fail to meet them. In its oldest form, federal and
state laws require health professionals and institutions to
satisfy minimum criteria for licensing and certification. But
while these procedures are necessary to protect consumers from
substandard care, they have done little to improve quality or
reward excellence.

     Government and private sector regulators have written
thousands of pages of rules governing everything from the
qualifications of nurses' aides to the square footage of hospital
rooms. Review agencies require doctors, nurses and hospitals to
document each step in treatment and scrutinize case records. For
many health professionals, quality assurance has come to mean
nothing more than outside reviewers poring over records in search
of errors. Too often quality programs just mean interference and
punishment.
___________________________

"The duplication of documentation, the authorization forms, the
insurance claims forms and all of the complicated and often more
contradictory instructions devised by the more than fifty
insurance plans we accept are all overwhelming."
Dr. Lillian Beard
Pediatrician
Children's Medical Center
Washington, D.C.
________________________

     Traditional quality systems have not produced the
information that would be most valuable to doctors, nurses or
consumers. Doctors and health care managers are frequently
unaware of what happens where they work - for example, how often
surgeons perform various operations, at what costs and with what
results. They are even less likely to know how their performance
compares to that of other professionals in the same community,
much less across the country.

     Since doctors and hospitals don't know how they measure up,
patients are in the dark on most medical decisions, unaware of
risks and benefits of alternative treatments or settings.
Information that would allow them to make meaningful comparisons
does not exist. Making this information available would give
consumers a way of knowing that the care they receive is high
quality and cost-effective.


Declining Choices

     Free choice of doctors and other health care providers cuts
to the core of the American health care system and the center of
the doctor-patient relationship. For patients, the ability to
keep seeing their doctor - someone familiar with their medical
history and their family - can mean the difference between a good
experience and a frightening one, sometimes even the difference
between successful and poor outcomes.  Perhaps no issue is more
important to patients.

     But today even patients who have good private coverage
increasingly have restricted choices. Almost every practicing
doctor has had patients call the office upset because they had to
transfer to another physician when their employer or a job change
caused them to switch them to insurance carriers. And doctors
often find themselves discouraged from joining all the health
plans in which they want to participate, separating them from
some of their patients.

     Faced with rising costs, many American employers
increasingly limit the health care choices workers once took for
granted. Today only one in three companies with fewer than 500
employees offers its workers a choice of health plans.
Increasingly, the one plan available may  limit choice of
doctors, often disrupting valued relationships.

     In one other sense, choices are limited in today's health
care market.  When the elderly or disabled need long-term care,
they generally have only one place to go if they want coverage:
the nursing home.  Despite the fact that many would rather
receive care in their homes and communities --- a choice that is
usually less expensive than institutional care --- they are
blocked from using federal health care dollars for such care.
These peculiar rules and wrongheaded incentives single out for
punishment those groups that deserve the security of guaranteed
care.

Growing Irresponsibility

     Irresponsible behavior in our current system begins with
those who profit the most: insurance companies that search for
only the healthiest people to cover  while excluding the sick and
the elderly; and pharmaceutical companies that sometimes charge
Americans three times what they charge citizens of other nations
for prescription drugs.
     The medical malpractice system also fosters irresponsible
behavior. Although the direct costs of medical malpractice are
not great - experts estimate that they account for no more than 2
percent of health care spending - the threat of frivolous
lawsuits breeds distrust and fear  among doctors and other health
providers. Procedures that doctors and hospitals perform to
protect themselves from lawsuits adds billions more in
"defensive medicine" to our bills.

     This lack of responsibility can be seen throughout the
system.  Many people pay nothing for their health care, and in
turn, contribute to skyrocketing costs. In the United States
people who have no health insurance or who have inadequate
coverage still receive care - but often it's the most expensive
type of health care delivered in the most expensive place: the
emergency room.  Doctors, hospitals and clinics are forced to
pass those costs along to everyone else - leading to what's known
as "cost shifting" - which contributes to rapidly rising health
spending.

     Take the example of two businesses in a small town, a gas
station and a car wash.  Ever since he opened his business, the
gas station owner  has provided good health insurance coverage
for his employees. Down the street, the owner of the car wash
wants to provide insurance coverage, but he does not because he
can't get a reasonable rate from an insurance company.

     Not having health insurance doesn't protect the employees of
the car wash from injury, of course. So when one of them gets
hurt in an accident, he or she goes to the emergency room. The
doctors provide treatment and the hospital sends the bill knowing
full well that the patient cannot pay all or, in some cases, any
of it. In turn, the hospital raises its rates for other patients
to make up the difference. In effect, the gas station owner and
his employees are paying for the health care of the car wash
owner and his employees.

     The bottom line is simple: every American pays when a
company or individual fails to assume responsibility for health
coverage or when insurance companies price people out of the
market. Those who pay for health coverage end up paying for those
who can't or don't. Restoring responsibility is vital to
providing health security for every American.


An American Challenge

     Like a patient denying the symptoms of serious illness, for
decades America has put off confronting the crisis in health
care. Comprehensive health care reform has long seemed so
formidable, complex and costly that we have denied the threat
that continuing on the same course poses to our own lives, the
lives of our children, and the course of our nation.

       The cost of doing nothing far outweighs the cost of
reform. One of every four Americans stands to lose health
coverage at some point in the next two years.  By the year 2000,
one of every five dollars earned by Americans will go to health
care.  The average worker will sacrifice more than $600 in annual
wages to pay for health care coverage. Rising costs will force
firms to cut back further on benefits and scale back choices.


     Despite its many achievements, America's health care system
is threatening millions of people each year, undermining
security, the ability to compete, and economic strength. The
challenge of health reform is to alter that course, to reverse
the harm while improving the quality of care, to replace fear
with guaranteed security.