HIV AIDS Resource Guide/HIV-AIDS Resource Guide.iso/STAT/PROP_FED/HSAREPOR.ASC

Text File | 1993-01-14 | 96KB | 2,006 lines

Foreword -- Hillary Rodham Clinton

      Together, we stand at a unique moment in history.  In the
coming months, we have an opportunity to accomplish what our
nation has never done before: provide health security to every
American - health care that can never be taken away.

     The debate over health care reform that will unfold over
the next several months touches all of our lives and the lives
of our children, our parents and generations to come.  Because
this issue is so critical to all of our futures, it is important
that all of us have the opportunity to understand the complex
issues and difficult choices that lie behind the design of any
comprehensive reform effort.

     That is why we have written this book - to lay out the
dimensions of the crisis that confronts our nation, explain its
elements and complexities, and state the case for comprehensive
reform as proposed in the Health Security Act.

     Book after book has been written about the intricacies of
the health care system and the difficulties of addressing these
problems.  But most of them have not been written for people
like you and me - people who may not be experts in health care
policy but need and want to understand an issue so vital to our
nation and our future.

     I invite each and every American to read this book, to
listen to the stories told here, to think about the issues and
grapple with this complex - but solvable - problem.  Then I
invite every American to join in the debate.         Every
month, two million Americans lose their insurance for some
period of time.  Every day, thousands of Americans discover
that, despite years of working hard and paying for health
insurance, they are no longer covered.  Every hour, hundreds who
need care walk into an emergency room because it is the only
place they can go.  And business owners, large and small,
struggle to stay afloat while providing coverage for their
families and employees.         Each time someone loses health
coverage or is denied insurance, their experience becomes
another chapter in a growing national tragedy.  Anxiety and fear
about the cost of health care affect tens of millions of
Americans - those with health insurance and those without.  Even
those with the very best benefits worry that their insurance
might not be there tomorrow or may no longer be affordable.
Over the past months, I have had the extraordinary opportunity
of listening to thousands of Americans talk about health care.
I've sat in living rooms talking to farm families.  I've stood
on loading docks talking to people who have worked for 10, 15,
and even 20 years without insurance.  I've visited hospitals,
talking to doctors and nurses.  I have learned firsthand about
the tragedies of hard-working families who simply cannot get the
health care they deserve.          I have read letter after
letter of the more than 800,000 we have received at the White
House from people all over our nation who took the time to sit
down and share their concerns about health care.  I have been
moved by stories of parents who cannot afford a prescription for
a child who is sick and hurting, of families barely hanging on
financially and emotionally because of a health care crisis, of
people trying to start a new business suffocated by skyrocketing
insurance costs, of older Americans forced to choose between
food and medicine, and of young people just leaving school
unable to afford insurance.

     I have carried their stories in my mind as we worked long
and hard to devise solid answers to tough questions. The
President's Health Security Act is a product of all the people
who took the time to share their ideas, their research, and
their personal experiences with us.  And, as we move forward in
this great national discussion, we must focus on these people,
their health care, and their peace of mind - not solely on
theories or statistics.

     The concerns that were expressed again and again - from
those who need care and those who give care -  convinced me of
one point: although America can still proudly boast the world's
finest health professionals and astounding medical advances, our
health care system is broken. If we go on without change, the
consequences will be devastating for millions of Americans and
disastrous for the nation in human and economic terms.

     As a mother, I can understand the feeling of helplessness
that must come when a parent cannot afford a vaccination or well-
child exam.  As a wife, I can imagine the fear that grips a
couple whose health insurance vanishes because of a lost job, a
layoff or an unexpected illness.  As a sister, I can see the
inequities and inconsistencies of a health care system that
offers widely varying coverage, depending on where a family
member lives or works.  As a daughter, I can appreciate the
suffering that comes when a parent's treatment is determined as
much by bureaucratic rules and regulations as by doctors'
expertise.  And as a woman who has spent many years in the
workforce, I can empathize with those who labor for a lifetime
and still cannot be assured they will always have health
coverage.

     As an American citizen concerned about the health of our
nation, I stand with you as we confront this challenge that
touches all of us.  We can and will achieve lasting, meaningful
change.

Table of Contents

Health Security, The President's Report to the American People

      Letter from President William Jefferson Clinton

     Foreword by First Lady Hillary Rodham Clinton

1    Why Change     1               Rising Insecurity   2
Growing Complexity  6           Rising Costs   7
Decreasing Quality  12           Declining Choices   14
Growing Irresponsibility 14           An American Challenge
16

2    Principles of Reform     17              Security  17
Simplicity     18           Savings   18           Quality   19
Choice    20           Responsibility 20

 3    How the New System Works 21           How Reform Will
Affect You    21           Small Business in the New System   24
Discounts for the Smallest Companies    26           An Overview
of the New System 26           Flexibility    27

4    Security  33           Comprehensive Benefits   34
Insurance Reform    39           Limits on What Consumers and
Businesses Pay  40           Protecting Older Americans    41
Access to Care in Rural and Urban Areas 43

5    Simplicity     47              Reducing Paperwork  47
Cutting Red Tape    51

6    Savings   53              Increasing Competition   54
Strengthening Buying Clout    56           Lowering
Administrative Costs 58           Limiting Premium Increases
58           Reducing Health Care Fraud    59

7    Quality   61             Better Information for Judging
Quality  62           Investing in Research    64
Emphasizing Preventive Care   65                  8    Choice
71           Choosing a Doctor   71           Choosing a Health
Plan   73           Increasing Options for Long-Term Care   74

9    Responsibility 77

          Medical Malpractice 78           Paying for Health
Security                                  80

Conclusion     85

Speech to Joint Session of Congress     89           President
William Jefferson Clinton                September 22, 1993



Appendix  107

I.   Existing Government Programs  107                 Medicare
107           Medicaid  108           Department of Defense
108           Veterans Health Care     109           Federal
Employees Health Benefits Program    110           Indian Health
Service    110

II.  Scenarios Under Reform   111 Today          111 The Health
Security Act  111      Employer Share 113      Two parent family
114      Couple         115      Individual     116      Self
employed consultant 117      Small Business 118      Union
worker   119      Teacher   120      Professional couple 121
Low-income family   122      Low-income couple   123      Part-
time worker with no non-wage income     124      Part-time
worker with non-wage income   125        Self-employed farmers
126        Medicare beneficiary     127        Working medicare
beneficiary  129      Medicaid Beneficiaries (AFDC and SSI)
130        Medicaid Beneficiaries who do not receive AFDC or SSI
131      Child with disabilities  132      Undergraduate student
133      Unemployed Individual    134      Federal employee
135      Veteran   136       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.

Chapter 2 -- PRINCIPLES OF REFORM



"Some things, like universal access, are not negotiable.  And
that's exactly the way it should be."

Former Surgeon General C. Everett Koop, M.D. September 1993

________________________

Six principles underlie the Health Security Act:  security,
simplicity, savings, quality, choice and responsibility.

SECURITY

Guaranteeing comprehensive benefits to all Americans.

1) The Health Security Act guarantees all Americans
comprehensive health benefits, including preventive care and
prescription drugs, and ensures they can never be taken away.

2)  The Health Security Act outlaws insurance company practices
that hurt consumers and small businesses. Insurers will not be
able to deny anyone coverage or impose a "lifetime limit" on
people who are seriously ill. And the plan outlaws charging
older people more  than younger people, and sick people more
than well people.

3)  The Health Security Act sets limits on what consumers pay
for health coverage. It limits how much health care premiums can
go up each year, and sets maximum amounts that families will
spend out-of-pocket each year, regardless of how much or how
often they receive medical care. The Health Security Act removes
"lifetime limits" on coverage, ensuring that benefits will
always continue, no matter how much care you need. 4)  The
Health Security Act will preserve and strengthen Medicare,
adding new coverage for prescription drugs.  A new long-term
care initiative will expand coverage of home and community-based
care.5)  Access to quality care will expand, so that people know
that there will always be a doctor that they can get to and a
hospital that will treat them. Particular attention will be paid
to the needs of underserved rural and urban areas.

SIMPLICITY

Simplifying the system and cutting red tape.

1)  The Health Security Act reduces paperwork by giving everyone
a Health Security card and requiring all health plans to adopt a
standard claim form to replace the hundreds that exist today. 2)
The plan cuts insurance company red tape by creating a uniform,
comprehensive benefits package, standardizing billing and
coding, and eliminating fine print.

SAVINGS

Controlling health care costs.

1)  The Health Security Act increases competition, forcing
health plans to compete on price and quality, instead of on who
does the best job of excluding sick people or old people. Health
plans will have an incentive to provide high-quality care and
control costs to attract more patients.

2)  The plan strengthens buying clout by bringing together
consumers and businesses in Rhealth alliancesS to get good
prices on health coverage. Today big businesses use their clout
to get low prices; alliances will allow consumers and small
businesses to get a good deal, too.

3)  The plan lowers administrative costs by cutting paperwork
and simplifying the system.

4)  The plan places limits on how much premiums can rise, acting
as an emergency brake to ensure that health care costs donUt
spiral out of control.

5)  The Health Security Act criminalizes health-care fraud,
including overbilling, and imposes stiff penalties on those who
cheat the system.

QUALITY

Making the world's best care better.

1)  The Health Security Act arms doctors and hospitals with the
best information, latest technology and feedback as it empowers
consumers with information on quality Q forcing health plans to
compete on quality in order to attract patients. 2)  The Health
Security Act also invests in new research initiatives -- into
new ways to make prevention work, new treatments, and new cures
for diseases.

3)  The Health Security Act emphasizes preventive care --
putting a new emphasis on keeping people healthy, not just
treating them after they get sick. The comprehensive benefits
package  pays fully for a wide range of preventive services not
covered by most insurance plans today. And it builds a stronger
health care work force -- training more primary care doctors,
nurses and other health professionals to provide care into the
next century.

CHOICE

Preserving and increasing the options you have today.

1)  The Health Security Act ensures that you can follow your
doctor and his or her team into any plan they choose to join.

2)  All Americans will be able to choose from at least three and
likely many more kinds of health plans offered --  no matter
where they work. The choice of plan will be yours -- not your
employerUs. And every American will be able to switch plans
every year if they're not satisfied with their care or service.

3)  The Health Security Act makes it possible for more elderly
and disabled Americans to continue to live in their homes and
communities while receiving long-term care.

RESPONSIBILITY

Making everyone responsible for health care.

1)  Without setting prices, the Health Security Act asks drug
companies to take responsibility for keeping prices down.

2)  To discourage frivolous medical malpractice lawsuits the
plan requires patients and doctors to try and settle disputes
before they end up in court, and it limits lawyers' fees.

3)  Everybody -- employers and employees alike -- will be asked
to pay something for health care coverage, even if the
contribution is small. Low-wage small businesses and workers
will get substantial discounts, but everyone must take
responsibility.   Chapter 3 -- HOW THE NEW SYSTEM WORKS

How Reform Will Affect You

After health reform goes into effect, every American citizen and
legal resident will receive a Health Security card.  Once you
get your card, you will never lose your health coverage -- no
matter what.  If you get sick, you're covered.  If you change
jobs, you're covered.  If you lose your job, you're covered.  If
you move, you're covered.  If you start a small business, you're
covered.       The card guarantees you a comprehensive package
of benefits that can never be taken away.  Those benefits are as
comprehensive as the ones that most Fortune 500 companies offer
their employees.  The package includes doctor and hospital care,
as most insurance plans do, and also covers prescription drugs
and a host of other services. [See chapter 4]  You will also
receive something rarely found in today's insurance plans --
preventive care.

     No matter which plan you choose, you will also receive
something. The plan will pay 100 percent of the costs for a wide
range of preventive care services, including prenatal care, well
baby care; immunizations; disease screening for adults, such as
mammograms, Pap smears, and cholesterol tests; and health
promotion programs, like stop-smoking classes and nutrition
counseling.

     You will be able to choose your doctor. Every American will
have a choice of health plans -- and plans will enroll everyone
who applies, regardless of age, occupation or medical history.
While prices will vary among plans, each health plan will charge
everyone the same price for the guaranteed, comprehensive
benefits package.  Employers or insurance companies won't decide
how or where or from whom individuals get their care -- you, the
consumer, will decide. You will be able to follow your doctor
into a traditional fee-for-service plan, join a network of
doctors and hospitals, or become a member of a health
maintenance organization (HMO).  For older Americans, the
Medicare program will be preserved and strengthened with new
coverage of prescription drugs.  There will also be expanded
options for home and community-based long-term care.

     Like today, almost all of us will be able to sign up for a
health plan where we work. Brochures will give you easy-to-
understand information on several health plans -- the doctors
and hospitals involved, an evaluation of the quality of care,
and prices. There will be regular "report cards" that measure
quality and consumer satisfaction for each plan.  Once a year,
consumers will have a chance to choose a new plan.  If you are
not satisfied with your care or service, you can "vote with your
feet" and pick a new plan, something most people can't do today.

     If you're self-employed or unemployed, you can sign up
through the health alliance in your area by phone or through the
mail. Alliances, run by boards of consumers and local employers,
will contract with and pay health plans, guarantee quality
standards, provide information to help consumers choose plans,
and collect premiums.  They will, in effect, take on roles
similar to major corporate benefits offices.  The largest
national corporations -- those employing 5000 workers or more --
have the option of continuing to self-insure their employees or
joining regional alliances.  For the consumer, particularly
people who work, the local alliance will be largely invisible.
It will help you get good prices on insurance, but you'll still
sign up for health care at work.          In order to get care,
most people will do what they've always done -- go to the same
doctors, hospitals, pharmacies, or other providers.  More
providers will organize into "networks" -- groups of doctors,
nurses, hospitals, and labs that cooperate together to
coordinate the care of their patients and control costs.    Once
you've picked a plan, if you need to go to the doctor for a
check-up or if you get sick, you'll simply take your Health
Security card, show it at the doctor's office, and they'll take
care of you. Then you'll fill out one standard form, and you're
done. So when you get sick, you won't be buried in forms -- and
neither will your doctor or hospital.

     Unless your employer chooses to pay your entire premium,
you will contribute about 20% of the cost.  Your share of
premiums will be deducted from your paycheck, the same way most
people pay now.  If your employer wants to pay the full cost of
your premiums, that will always be an option.  In addition,
individuals will pay limited co-payments or deductibles to their
health plans as part of their coverage.  People who are either
self-employed or unemployed, but still can afford to contribute,
will send in a monthly check for insurance.  (See charts at the
end of the chapter.)

     Today, most businesses offer health coverage to their
workers.  For these businesses, health care reform which
provides universal coverage will mean a tremendous benefit.  No
longer will these businesses bear the costs of other businesses
and their employees -- through higher premiums and higher taxes
to pay for people without coverage, or by covering spouses
working for other businesses.  And no longer will premiums
continue to rise out of control.  This will mean that businesses
will be more competitive and be able to create more jobs.

     Currently, health care costs represent an increasingly
large financial burden for businesses of all sizes.  Firms now
pay as much as 20 percent of their total payroll just to provide
health care coverage for their workers. Under the Health
Security Act, no business will ever pay more than 7.9 percent of
their payroll for health insurance.

________________________

"Successful implementation of health care reform is one of the
best pieces of news American business could receive."

Henry AaronHealth Economist, Brookings Institute

________________________

Small Business in the New System

     Today's health care system is stacked against small
business owners, their families and employees. Small businesses,
who are too small to have benefits departments, are burdened by
high administrative costs -- as much as 40 cents of every dollar
of their premiums -- compared to only 5 cents for large
companies. They are charged higher premiums because they don't
have the bargaining power that large companies do to get the
best prices from insurance companies. And they are the most
vulnerable to sudden rate hikes if even one employee gets sick.
Despite these obstacles, most small businesses -- particularly
those with more than one or two employees -- do provide
insurance for their workers.  And most of those that do not
cover their employees want to provide insurance but find it
impossible in a health care system that discriminates against
them.

     The Health Security Act creates a level playing field that
will finally allow small businesses to provide affordable
coverage for their employees without being discriminated against
because of their company size.  The Wall Street Journal has said
that the Health Security Act will be "an unexpected windfall"
for many small businesses that currently provide insurance to
their employees.  These companies will likely pay substantially
less under reform -- because of lower premiums and reduced
administrative costs.  And those small businesses who are
charged far too much today to provide a "bare-bones" package for
their families and employees will finally be able to afford to
provide a comprehensive benefits package -- in many cases
without spending much more than they currently pay for less
coverage  today. The Health Security Act will level the playing
field for small businesses in the following ways:

*    Small businesses will no longer face outrageous
administrative      costs because they will join together to get
the same benefits --      in terms of bargaining power and
administrative simplicity -- that      big businesses have
today.

*    Small businesses will be charged the same rate as large
businesses to provide coverage to their workers.

*    Small businesses that now provide insurance will see their
premiums decrease when they no longer have to pay for uninsured
workers.

*    The Health Security Act will outlaw insurance company
practices -- ranging from price gouging to refusing to insure
entire industries -- that make it impossible for small business
owners to get insurance today for their families or employees.

*    Reform will also streamline the workers' compensation
system      -- which is a never-ending source of frustration,
fraud, and high      costs for small businesses today.

*    Self-employed Americans will now be able to deduct 100% of
their premiums -- instead of the 25% allowed by law today.

Discounts for the Smallest Companies

Those small businesses that provide no health coverage today
will have to help pay for their employees' health care.  The
Health Security Act is specifically designed to protect small
businesses and help them make the transition to a system that
guarantees their families and employees the health security they
deserve.  Those low-wage businesses with 75 or fewer employees
will receive substantial discounts on the price of insurance,
depending on the size of the company and the average wage.

*    For the smallest firms that pay the lowest wages -- such as
restaurants -- the percent of payroll devoted to health care may
be      as low as 3.5 percent.  That amounts to $350 a year for
a company      with average wages of $10,000 -- or less than $1
a day per      employee.

*    These discounts apply to most small businesses with less
than      75 employees, even those that currently provide health
insurance to      their workers.

*    The vast majority of small businesses -- especially the
"Mom      and Pop" firms that are so vital to the American
economy -- will      find that the savings they reap in the cost
of health insurance for      their own families will
substantially offset any new spending      required to cover
employees.

 An Overview of the New System

     The Health Security Act rejects the idea of a government-
run health care system. Health care will remain rooted in the
private sector. Most people will get insurance through their
employers, as nine out of ten people do today. The plan achieves
universal coverage and recognizes that some direction from the
government -- including asking everyone to pay their fair share
-- will be necessary to achieve that goal. But it leaves the
tasks of delivering care and controlling costs to the private
market.      The Health Security Act seeks to build on what
works best in the American economy and fix what is broken.  What
works best is a competitive market that provides products and
services to Americans at the highest quality and lowest price.

     But the competitive power of the market is not working in
today's health care industry.  Today, insurance companies
compete not on the basis of price and quality, but by excluding
people who might become sick.

     The system is also broken in another fundamental way:
small and mid-sized businesses, the self-employed, and average
American families are powerless to bargain with insurance
companies.  Today, only big business has the clout to negotiate
lower prices.  The little guy -- the local hardware store, the
entrepreneur, the young family -- ends up getting stuck with
high prices and excessive cost increases.

     The Health Security Act seeks to fix these problems so that
all Americans benefit from a truly competitive health care
marketplace.  First, the Health Security Act outlaws insurance
company discrimination based on age, sex, or medical condition.
Instead, it makes insurance companies compete based on how well
they cover all of us, and not how well they exclude some of us.

     The Health Security Act joins consumers and small
businesses together in health alliances so that they can have
the same bargaining power that the largest companies get.  After
reform, every American will have bargaining strength to get low
prices and high quality care.

     For the first time, consumers will be in the driver's seat
when it comes to finding quality health care.  Health plans will
be forced to compete on providing the best care at the most
affordable prices. This will provide incentives for everyone in
the health care business to operate more efficiently --
incentives that don't exist today.

Flexibility

     Realizing the goals of the Health Security Act requires
that we build in flexibility.  National reform establishes a
framework within which states and local communities make their
own choices.  Americans cannot, and need not, come to one vision
of the single best approach to health care.

     Consequently the pace of reform will vary across the
country. Some states are already well along in addressing the
need for health reform. Some have served as models, forging
paths that other states will follow as they implement reform.
Under the Health Security Act states will begin implementing
reform in 1996, and all states are to begin implementing reform
by the end of 1997.

     Reflecting the geographic diversity of our nation, the
Health Security Act allows for each state to tailor health
reform to its unique needs and characteristics as long as it
meets national guarantees and standards for quality and access
to care. Certain states, in fact, may choose to set up a single-
payer system, where one agency collects and distributes all
health care dollars for that state. Flexibility is essential
because we know that what works in North Dakota may not work in
North Carolina.

     Although the Health Security Act establishes a national
framework to achieve the goals of reform by spelling out
standards and the comprehensive benefits that every American
must receive, it does not prescribe how to deliver care or
organize services.  It leaves those decisions to consumers,
doctors, nurses, hospitals and managers of health plans, rather
than to the government.  The Health Security Act establishes
protection at the national level to ensure security -- the solid
foundation upon which American communities are free to build.
Then it gets government out of the way to allow the reformed,
private market to work.                            Chapter 4 --
SECURITY

      "Six months ago, my sister-in-law, Pam, had a disabling
stroke.  Pam is only 39 years old, and she's a severe diabetic.
Six months have passed, her short-term memory has deteriorated,
her vision is leaving, and it looks as if my brother will either
have to hire someone to come into their home full time to care
for her, or put her in a nursing home, which his medical plan
does not cover.

My brother's attorney has advised him to divorce Pam so that her
medical bills don't pull him into financial ruin.  My brother
has two young sons that he's caring for and in order to continue
to provide for them, he is giving this consideration...

A man who loves his wife must divorce her so that her misfortune
(in sickness and in health) does not leave him with the
inability to raise their family."

A.P. Toledo, Ohio  ________________________

     Americans buy health insurance to provide security for
themselves and their families.  Security, in its full sense, is
what health care reform must give us all. We must be secure that
no American will face exclusion from coverage because of
illness, occupation or age.  We must be secure that health
benefits will be comprehensive enough to keep us healthy and
cover our health care needs throughout life.

Comprehensive Benefits

     Under the Health Security Act, all American citizens and
legal residents will be guaranteed a comprehensive package of
health benefits that can never be taken away.  They will receive
a Health Security card entitling them to enroll in a health
plan.

     Everyone will have a choice of at least three -- and, in
most communities, many more -- health plans. And no matter which
plan people choose, they will receive the comprehensive benefits
package.

****************************************************************
***

Sidebar - Pg 34-35

Covered Benefits



     Benefits covered under the nationally guaranteed
comprehensive package carry no lifetime limits.  The package
covers the following health services when they are medically
necessary or appropriate: *  Hospital services, including bed
and board, routine care,    therapeutics, laboratory and
diagnostic and radiology services    and professional services.
*  Emergency services. *  Services of health professionals
delivered in professional    offices, clinics and other sites. *
Clinical preventive services.  *  Mental health and substance-
abuse services (for details, see    box on mental health and
substance abuse).  *  Family planning services. *  Pregnancy-
related services. *  Hospice care during the last six months of
life. *  Home health care, including skilled nursing care,
physical,    occupational and speech therapy, prescribed social
services and    home-infusion therapy after an acute illness to
prevent    institutional care. *  Extended-care services,
including inpatient care in a skilled    nursing home or
rehabilitation center following an acute illness    for up to
100 days each year. *  Ambulance services.  *  Outpatient
laboratory and diagnostic services. *  Outpatient prescription
drugs and biologicals, including    insulin. *  Outpatient
rehabilitation services including physical therapy    and speech
pathology to restore function or minimize limitations    as a
result of illness or injury. *  Durable medical equipment,
prosthetic and orthotic devices. *  Routine ear and eye
examinations every two years.  *  Eyeglasses for children under
age 18. *  Dental care for children under age 18.



Planned Expansion of Benefits



     Beginning in the year 2001, the nationally guaranteed
benefits package will expand to include the following:

*  Preventive Dental care for adults. *  Orthodontia if
necessary to prevent reconstructive surgery for    children.  *
Expanded coverage for mental health and substance abuse
treatment.

****************************************************************

      The coverage provided by the comprehensive benefits
package equals that provided by America's major employers, such
as Fortune 500 companies.  It covers a full array of clinical
services, from doctors' offices, to clinics, to hospitals, to
rehabilitation centers, to laboratories, hospices, home-health
agencies and other professional offices.       The comprehensive
benefits package provides far more coverage for clinical
preventive services than traditional insurance.  It waives the
usual co-payments and deductibles for a wide range of preventive
services that are vital to keeping people healthy.  Preventive
services covered without co-payments include prenatal, well-baby
and well-child checkups, physicals for adults, immunizations and
regular screening tests such as mammograms and Pap smears.
The Health Security Act particularly expands preventive services
for certain low-income women and children.  By fully funding the
Special Supplemental Food Program for Women, Infants and
Children (WIC), more families will be able to receive nutrition
counseling and get nutritious food -- part of the overall
strategy for keeping people healthy rather than waiting until
they get sick.

***************************************************************

Sidebar - Pg 36

Preventive services

      The Health Security Act offers comprehensive coverage for
a specific set of preventive screenings, laboratory tests and
periodic checkups.  Included in the benefit package, at no cost
to the consumer, is coverage for preventive care such as
immunizations and specific screening tests.         Some
preventive services will be targeted to groups that have a high
risk for certain diseases, such as men considered especially
vulnerable to cardiac problems and women with a close family
history of breast cancer.  Children will receive a full range of
prevention services, including immunizations, well-baby checkups
and developmental screenings at no extra charge.

 ***************************************************************

________________________

      "We believe reform will enhance both medical security for
the nation's 65 million children and peace of mind for their
parents.  We are especially impressed by the commitment of
yourself and the First Lady to ensuring all children have access
to appropriate health care, because it is such an important
investment in the nation's future"

Lawrence A. McAndrews, President and CEO National Association of
Children's Hospitals and related institutions. September 21,
1993 ____________________

      The benefit package also expands traditional coverage of
mental health and substance abuse treatment.  Insurance
companies often tightly limit their coverage of mental health;
they adopt that policy partly because they depend on the public
mental health system -- and the taxpayers who pick up the bills
-- to serve millions of people who lack coverage for even basic
treatment, or who suffer from chronic or serious illness. The
Health Security Act eliminates the lifetime limits on mental
illness that can devestate family savings; and it  provides
coverage for regular clinical visits, and offers more flexible
care.        For millions of Americans, the comprehensive
benefits package will provide a significant expansion of
coverage.  Those whose current benefits are more generous -- a
much smaller number -- will have every right to continue
receiving richer benefits.  Nothing in the Health Security Act
prevents employers from providing more extensive benefits, with
no strings attached.

****************************************************************
***

Sidebar - Pg 38

Mental health and substance abuse



     The Health Security Act offers Americans guaranteed
coverage for mental illness and substance abuse, ending the
agony that families confront when a serious mental illness
occurs.

     The benefit package gradually expands coverage for mental
illness and substance abuse, both for inpatient and outpatient
therapy.  Out-patient services will include diagnostic office
visits for medical management, substance abuse counseling, and
relapse prevention.  The benefit package also provides coverage
for a wide range of new approaches, such as intensive care
delivered outside the hospital.         The Health Security Act
eliminates lifetime limits on mental health and substance abuse
treatments.  Initially it contains limits on the number of days
of inpatient and outpatient treatment, but it commits to
removing those limits by the year 2001.

Types of services covered:

*  Inpatient care *  Alternative treatment programs which
provide intensive care    outside hospitals *  Outpatient
therapy with requirements for patients to share    part of the
cost. *  Brief office visits and medical management for patients
who    take medication.


****************************************************************
***

      Not everything is covered in the benefits package. It
would just be too expensive. Examples of services that are not
covered include:            *  Services that are not medically
necessary or                      appropriate      *  A private
room in a hospital      *  Adult eyeglasses and contact lenses
*  Hearing aids      *  Cosmetic surgery

     Individuals will be free to purchase supplementary
insurance, although the comprehensive benefits package leaves
little need for additional coverage.  Employers are also free to
offer additional benefits or absorb co-payments and deductibles.

     However people choose to receive health care, the Health
Security Act guarantees all Americans something no amount of
money can buy in today's insurance market:  the knowledge that
they will always have comprehensive health benefits that can
never be taken away -- no matter what happens in their lives or
their jobs.  If they lose a job or change employers, coverage
will continue without interruption.  If they move, get married,
separate from a spouse, experience a catastrophic illness or
confront any other crisis, their health coverage will continue
uninterrupted.

Insurance Reform

     The Health Security Act outlaws discriminatory insurance
practices that prevent millions from obtaining health coverage
today.  It will return the concept of health insurance to its
roots: offering protection to everyone whether they're healthy
or sick, young or old. It will put an end to the practice of
underwriting -- searching for only the healthiest people to
insure.        Under the Health Security Act, health plans will
be required to:

*  Enroll everyone who applies, whether they're healthy or sick,
young or old; *  Charge everyone the same price for the
comprehensive benefits    -- no more charging higher rates to
sick people, older people, or    people with pre-existing
conditions;  *  Provide coverage without resorting to "lifetime
limits" that    cut off coverage when people need it most; and
*  Limit deductibles in fee-for-service plans to $200 for an
individual and $400 for a family.

     By establishing a uniform, comprehensive benefits package,
the Health Security Act no longer makes it advantageous for
insurance companies to shape benefits and policies that attract
the healthy and avoid the sick.  Health alliances, in turn, will
help organize the private market so that consumers -- for the
first time -- can compare plans and providers and make informed
choices.  Their mission will be to promote competition among
health plans based on quality and price -- not on who can screen
out sick patients.        Limits on What Consumers and
Businesses Pay

     The Health Security Act also takes several important steps
to protect families and businesses from rising health costs and
financial ruin.  To provide secure financial protection against
the most devastating illnesses and injuries, it prohibits so-
called "lifetime limits" and restrictions on the amount of
medically necessary or appropriate care.  The limits, which are
included in six out of every ten insurance policies today, can
mean bankruptcy for families in which catastrophic illness
strikes.  The Act also sets maximum annual out-of-pocket limits;
even those who select the most expensive plans can spend no more
than $1,500 a year for an individual, or $3,000 for a family.
Insurance picks up the full cost of any medical care that
exceeds those limits.

     The Health Security Act also limits deductibles -- the
amount people pay each year before insurance kicks in, which can
run into the thousands today -- to $200 for individual's and
$400 for families who choose traditional fee-for-service plans.
Employers will pay a maximum of 7.9 percent of their payroll for
health care.  Small businesses -- those with fewer than 75
employees -- will receive discounts of between 30 and 80
percent, compared to what the average large business pays.  And
the self-employed will be able to deduct from their taxes 100
percent of their health care, up from today's 25 percent.

      PROTECTING OLDER AMERICANS

     The Health Security Act preserves and protects the Medicare
program, providing older Americans with the health security they
deserve.  People covered by Medicare will see little difference
in how, where or from whom they receive their health care, but
they will receive new prescription drug benefits.
Americans eligible for Medicare will automatically receive the
new prescription drug benefit -- which will cover drugs and
biological products, including insulin, approved by the Food and
Drug Administration -- when they enroll in the Part B benefit,
which covers physician and other outpatient services.  Under the
drug benefit, there will be a $250 annual deductible for each
person.  Individuals on Medicare will also pay 20 percent of the
cost of each prescription up to a maximum of  $1,000 over the
course of a year.

****************************************************************

Sidebar - Pg 42

 Early Retirees

      When Americans over age 55 find that health problems or
other events require them to stop working, they often confront
the worst possibilities in the current health insurance market:
because of age, or medical conditions, individual coverage is
difficult to obtain or very expensive. Under health care reform,
American workers who retire between the ages of 55 and 64 will
never have to worry about losing their health coverage.

     Under the Health Security Act, individuals over age 55 who
retire before they are eligible for Medicare will pay for their
coverage like other people who do not work and will be eligible
for discounts based on income.

     When reform is fully implemented, at the end of this
decade, early retirees will become eligible for greater
discounts requiring them to pay only the portion of their
insurance premium that they paid as employees, unless they have
an annual income higher than $100,000 for an individual, or
$125,000 for a couple.

     To be eligible for this greater discount, early retirees
will have to have worked for ten years, the same standard used
for eligibility under the Social Security Act.

     The coverage for early retirees in the Health Security Act
will provide a major financial benefit to employers who
traditionally cover the cost of retirees' health premiums.

     Employers who wish to provide coverage for any or all of
the retired employee's share of the premium or for cost sharing
required by health plans will continue to do so, as they do
today.

     When they reach age 65, retired workers have the choice of
staying in their health plan or enrolling in Medicare, just as
they do today.


****************************************************************

      Part B premiums will increase about $11 a month to cover
25 percent of the cost of this new benefit.  But for seniors who
have Medigap policies, which cover services not provided by
Medicare, premiums for those policies should decline since they
will no longer cover prescription drugs.         As Americans
enrolled in health plans through alliances turn sixty-five, they
can choose between remaining in their health plan or entering
the Medicare system.           Older Americans will also see
their long-term care options expand and improve under health
care reform.  The Health Security Act creates a new home and
community-based care program and expands the range of choices
for disabled individuals who require long-term care.

     Among other things, the Health Security Act will:

*  Expand home and community-based services; *  Improve Medicaid
coverage for people in nursing homes; *  Improve the quality and
reliability of private long-term care    insurance and provide
tax incentives to encourage people to buy    it; and *  Provide
tax incentives to help people with disabilities work.

 ACCESS TO CARE IN RURAL AND URBAN AREAS

     The challenges of guaranteeing health security in rural and
inner-city communities are essentially similar:  both include
unusually high numbers of people without health insurance,
making it difficult to attract doctors.  Scarce economic
resources create barriers to organizing effective networks of
care.

     Greater incidence of poverty aggravates health problems.
Many people in these areas require special services -- rides to
the doctor, babysitting and translators, just to get access  to
health care services.

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*

Sidebar - Pg 44

Long-Term Care

     Beginning in 1996, a new home and community-based care
program will enable older Americans with severe disabilities to
remain in their own homes or with their loved ones, yet still
receive the care and assistance they need.

     Medicaid nursing home coverage will be enhanced, allowing
nursing home residents to keep $70 per month for living
expenses.  States will have the option to provide even greater
financial protection by allowing individuals to retain up to
$12,000 in assets, instead of today's $2,000.

     The Health Security Act also provides tax incentives to
encourage people to buy private long-term care insurance that
meets new standards, and tax incentives to help individuals with
disabilities to work.


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*

     Although urban and rural areas have some of the same
problems, the circumstances that cause them are often very
different.  In rural areas, geography is the main obstacle.
With a relatively small population spread over a large area and
health care professionals in short supply, patients often have
to travel long distances to see a doctor.  Doctors are reluctant
to practice in rural areas because they have no help or support
from peers.  Without enough doctors, nurses and health
facilities, building networks of care becomes more difficult, as
does the task of attracting enough health plans to foster
competition.            In inner-city communities, the challenge
is almost the opposite:  crowded cities with culturally diverse
populations.  Only a few blocks away from world famous academic
health centers, residents of low-income neighborhoods contend
with a laundry list of health care problems too few doctors and
nurses; little or no access to culturally-sensitive care; high
rates of infant mortality and low-birthweight babies; frequent
violence; and serious health epidemics such as AIDS.

     To serve both communities, the goals of health care reform
are similar:  increase the economic base for health care through
universal coverage, provide discounts to make care affordable,
and create incentives to attract health care providers to the
area.        The Health Security Act includes new loan programs
and investments to increase the level of service available in
underserved urban and rural areas.  Expansion of the National
Health Service Corps will send new physicians and other health
professionals into underserved rural and inner-city communities,
substantially increasing the supply of doctors and nurses.
Successful programs, such as community and migrant health
centers, will expand to increase the number of places where
people can find care.

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Sidebar - Pg 45

THE MAYO CLINIC A Model for Reform

     If you went searching for the highest-quality medical care
in the world, you might not immediately think to head to rural
Minnesota. But there in Rochester, you'd find the Mayo Clinic, a
magnet for patients all across America.

     The largest managed care practice in the United States, the
Mayo Clinic is known worldwide for its effectiveness at
diagnosing and treating illness, and for the excellent
physicians who work there. And they've proved that you can
control costs and provide top-flight care, holding cost
increases well below national averages.

     The Mayo Clinic has led the way in encouraging the
development of networks of doctors in rural areas, and linking
rural physicians and regional health centers in order to
increase the availability of high-quality care. These kinds of
rural networks serve as the cornerstone for the Health Security
plan's strategy to make care more available for residents of
rural and remote areas.


****************************************************************

     A new program of federal grants and loans will support
doctors and hospitals in rural and inner-city communities form
their own networks and compete with other health plans.  This
program will link federally funded clinics with other community
providers bolstering their skills to coordinate care, negotiate
with health plans, and form their own health plans.

     The Health Security plan -- by supporting the creation of
new clinics and offices and renovating and converting existing
clinics and offices -- will ensure more and better places to
seek care in these areas.  In addition, it will improve the
level of care -- and reduce isolation -- for urban and rural
residents.  This will be done by linking members of the practice
networks with each other and with regional and academic health
centers through the development of more sophisticated
information systems.

     Two new programs will overcome barriers to care for hard-to-
reach, isolated, or culturally-diverse populations.  One will
support school health services for adolescents.  Another will
support transportation, child-care, translation, outreach and
follow-up services for those in need of care but who are not
being served by current programs.

     Hospitals, clinics, doctors and health professionals who
traditionally serve in these areas are also eligible for
designation as "essential community providers", gaining special
protections during the implementation of health reform.  To help
these key providers adapt to the changes in the system after
reform, the Health Security Act requires health plans to
contract with essential community providers for five years to
enable them to continue to serve the residents in these rural
and urban communities who depend on them.

Chapter 5 -- SIMPLICITY

           "Each of our medical insurance policies requires
separate and different applications for reimbursement, each of
which have to be mailed to different addresses.  This mountain
of paperwork places an undue burden on older Americans . . ."
J.H. Venice, Florida ________________________



     In order to simplify American health care, we must move
forward on two fronts.  First, we must reduce paperwork by
adopting standard insurance forms and clarifying administrative
rules.  Second, we must strip away the unnecessary layers of
regulation and oversight as we  hold health plans and providers
accountable for results.  Streamlining administrative burdens
will make our system less daunting and frustrating for consumers
and more supportive and flexible for the doctors, nurses, and
hospitals on the front lines.

      REDUCING PAPERWORK

     Guaranteeing all Americans health coverage and establishing
a uniform, comprehensive set of benefits represent the first,
vital steps toward simplifying health care.  If all Americans
have guaranteed coverage for comprehensive health benefits, then
doctors, hospitals and clinics have less paperwork to do when a
patient walks in the door. Doctors, nurses and other health
professionals will no longer have to worry which patients are
covered for what services.  Patients no longer will have to deal
with confusing sets of insurance requirements, and will no
longer be stuck with huge medical bills because they didn't read
the fine print.

     The Health Security Card that every citizen and legal
resident receives will guarantee that health coverage travels
with you as circumstances change, whether you switch jobs or
move to another state. Like the cards that activate bank-teller
machines, a magnetic strip will provide basic registration
information, including identifying the health plan in which you
are enrolled.  A personal identification number will authorize
access to insurance information, reducing the process of
registering and billing, but maintaining your privacy.

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Sidebar - Pg 48

 Protection of Privacy
_____________________________________________________

     The Health Security Act establishes the first national
privacy protection laws specifically aimed at protecting the
medical records of patients.

     Under reform, new security standards will protect computer
information, ensuring that medical records will be available
only to health professionals who have a legitimate need to see
them.  For example, the bill clerk in the hospital's financial
department won't have access to medical information.  This is an
assurance that few insurers, or hospitals, can offer consumers
now.

_____________________________________________________

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*

     The Health Security Card will not be a "smart card" --
which carries information in a computer chip -- a national
identification card, or a credit card.  It does not hold
sensitive information such as medical records. It's simply a way
to streamline the billing process, reduce paperwork for doctors
and patients, and assure people that they have a comprehensive
set of benefits that can never be taken away.            All
health plans will adopt a standard form that providers file for
services.  Replacing the hundreds of different claim and billing
forms and codes insurance companies use today will allow health
professionals to collect and send the same information to all
health plans and alliances. Uniform claim forms will reduce the
work that doctors, nurses, and hospitals must do and save an
estimated 75 cents for each claim.  In the long run we will save
billions of dollars and free health professionals to spend more
time caring for patients.

     Today, different types of insurance often overlap, causing
confusion, duplication, and waste. Under the Health Security
Act, the health care portion of both workers compensation and
auto insurance will be covered through regular health insurance.
The need to coordinate benefits will decline and small
businesses will be rewarded with less confusion and lower
administrative costs.

CUTTING RED TAPE

     Simplifying health care also requires aggressive steps to
reduce unnecessary regulation.  The Health Security Act frees
hospitals and other health care institutions from excessive
regulations.  The federal government will develop national
standards for quality which will use them as the basis for
licensing hospitals and other health care institutions.

     Today, dozens of public and private agencies, inspectors
and outside groups inspect hospitals every year to make sure
they meet quality standards. Although they all check the same
things, they make their visits separately, and hospitals must
spend time and money preparing for each visit. Under the Health
Security Act, these groups will coordinate their visits,
reducing preparation and follow-up time.  Rather than routinely
examining every hospital each year, inspections will concentrate
on institutions with poor histories, following up on complaints
and responding to problems.

     To reduce frustration and delay, all health plans will have
to make clear to participating consumers and doctors precisely
how they perform "utilization review" -- how the plan determines
whether appropriate and effective care was given.   Health
professionals and industry groups will establish new performance
standards, eventually reducing reliance on obtrusive methods of
control.        Chapter 6 -- SAVINGS

      The Health Security Act creates a new framework that will
ensure all Americans secure, affordable coverage -- and ensure
that we spend our health care dollars wisely.            Serious
health care initiatives must take aim at the waste,
inefficiency, and fraud that bloat our health care system.  But
the key to achieving the savings that lie at the heart of health
reform is to release the American spirit of competition.

     Competition, after all, drives the price and quality of
most products we buy.  Think about a car -- different companies
build their automobiles, set their prices, and try to win our
business. We shop around, kick the tires, make comparisons.
Magazines like Consumer Reports help us judge what we can't see
-- safety records and the satisfaction of those who've driven a
particular model.  Armed with information, we take our pick.  We
buy the car that best meets our needs for quality, performance,
and price.

     Health care has never worked that way.  Consumers often
haven't had any bargaining power, they haven't had good choices,
and they haven't had good information to make comparisons.
Bringing competition to health care will give consumers the same
buying clout in health care they've always had in other arenas.
The Health Security Act will improve quality and control costs.
Bringing about savings also requires action on several fronts.
Savings requires changing incentives.  Savings requires
streamlining and simplifying regulations and requirements.  And
it requires taking aggressive steps to stamp out health care
fraud, which drains $80 billion each year from real health
needs.

 INCREASING COMPETITION

     The Health Security Act controls rising costs primarily
through the power of a competitive market -- empowering
consumers to make choices and giving health plans the incentive
to compete for their business.  Reform will change incentives so
that health plans compete on the basis of quality, service and
cost -- not on screening out sick patients.  Physicians,
hospitals and other health professionals will be given
opportunities to shape a health care system that works for
patients.

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*

Sidebar - Pg 55

CONTROLLING PRESCRIPTION DRUG PRICES

     In the 1980's, the prices of prescription drug prices rose
at quadruple the general rate of inflation. In recent years,
several attempts have been made to control drug costs -- often
involving the use of buying clout to bring down prices.

     For example, HMOs and managed care groups are successfully
using their bargaining power to negotiate substantial discounts
from drug companies. Because they often control the brand of
drugs prescribed by doctors, health plans have the power to
drive down prices.

     Under reform, with the addition of prescription drug
coverage, Medicare will become the world's largest purchaser of
drugs. And the Medicare program will use its negotiating power
to get discounts from the pharmaceutical companies. In addition,
with competing health plans trying to become more efficient,
more and more buyers will use the same successful negotiating
techniques.


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*

     Consumers will take their pick among health plans, based on
what they have to offer. Which doctors are members of the plan?
Are the offices and hospitals convenient?  How much do they
charge?  Since all plans will offer the same comprehensive
benefits, people will be better able to compare than they are
today. Consumers will reap the savings from enrolling in health
plans that deliver high-quality care most efficiently -- and,
therefore, charge lower premiums.         Better incentives for
health plans will give consumers better value.  In the current
system, doctors and hospitals get paid extra for each service
they perform, necessary or unnecessary. Under reform, health
plans and providers make money by keeping their patients healthy
-- not doing more tests, but giving better care.

     It will be in the interest of each health plan to operate
efficiently -- providing the best quality care at an affordable
price. If health plans operate inefficiently, they will lose
money. If they start cutting corners, they'll lose patients --
and the business that those patients bring. Competition is about
finding the balance -- providing high-quality care while
controlling costs.

 STRENGTHENING BUYING CLOUT            Increased buying clout
can bring down costs. In today's health insurance market, for
example, big companies can go to an insurance company and say,
"Look, if you want the business of our 100,000 employees, you've
got to give us a good deal." And they get a good deal --
comprehensive benefits, high-quality care and affordable prices.
But if you don't work for a large employer you're not in a
position to bargain, so you're more likely to get high premiums,
bare-bones coverage or nothing at all.        The Health
Security Act will change that -- putting consumers and small
businesses in the driver's seat.  It's based on the simple idea
that bigger buyers get better deals.  By bringing consumers and
small businesses together in health alliances, the Health
Security Act gives everybody else the same buying clout as the
big companies.

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Sidebar - Pg 57

CALPERS A Model for Reform

     The state employees in California are getting a good deal
on insurance -- using their buying clout to bring down prices
and cut administrative costs.

     Adopting a role similar to the one that health alliances
will play under health reform, the California Public Employees
Retirement System -- usually referred to as CALPERS --
negotiates with health plans on behalf of almost 900,000 state
and local government employees and their families in California.
And CALPERS offers its members a choice of 24 different plans.
Prices for health plans vary, although all plans provide
coverage for the same package of health benefits -- just as all
plans will offer the same comprehensive benefits package under
the Health Security Act.

     Because they buy approximately $1.3 billion of health care
each year, CALPERS -- like the alliances under the Health
Security Act -- is in a strong position to get a good deal from
health plans.   Along with holding premium increases well below
national averages for the last two years, CALPERS has also
succeeded in reducing administrative costs.


****************************************************************

     Today, a major insurance carrier doesn't have to give any
kind of deal to the Mom and Pop store in Peoria.  But they will
not be able to ignore 5000 Mom and Pop stores brought together
in an alliance from Central Illinois.  That alliance will have
more complete information on the costs of health plans, quality
of care, service and consumer satisfaction than any buyer in
today's market. It will keep enrollment records and collect
premiums for many people, not just a few, and do it more
efficiently as a result. Everyone -- not just employees of large
companies -- will be able to get access to high-quality care at
an affordable price.   LOWERING ADMINISTRATIVE COSTS

     The Health Security Act simplifies the business side of
health care by cutting through the paper jungle generated by
some 1,500 insurance companies, and stripping away conflicting
regulations imposed by a  variety of federal, state, local and
private agencies.         Administrative costs take up 40
percent of every health care dollar spent by small firms and the
self-employed, with only 60 percent going to buy care.
Meanwhile, large purchasers pay only 5 to 7 percent for
administrative overhead; 95 percent of their health dollars go
to care, as they should. For all private health insurance, the
cost of administration totalled $44 billion in 1991, an average
of 16 percent of the benefits paid out.

__________________________

     "What the insurance industry burns up in commissions,
marketing and claims processing costs is almost unspeakable.
[President] Clinton would reduce those costs."

Professor Uwe Reinhardt Health Economist, Princeton University
_________________________

      Similarly, eliminating some of the duplication among
different kinds of insurance -- folding the health benefits of
auto insurance and workers compensation into one unified health
insurance policy,  for example -- will produce savings.  Today,
doctors and hospitals often submit separate claims for payment
to two or more insurers.  Under the new system, everyone will
have coverage, and most people will have one and only one source
of insurance.  Doctors and hospitals will no longer have to sort
out conflicting coverage.

LIMITING PREMIUM INCREASES

     The increased competition from health care reform will
squeeze the waste and excess out of the health care industry
that nearly every doctor, nurse, patient, consumer and insurance
carrier knows exists.  In order to reinforce the  the
competitive power of the market, the Health Security Act also
creates an enforceable, fail-safe limit on the growth of
insurance premiums.  This limit reinforces the new incentives
that slow the rate of growth in costs and acts as an emergency
brake to back up competition.  It serves to build in some
discipline and certainty so that businesses and families will
know their health care costs will not suddenly spiral out of
control. It also ensures that the federal government is serious
about living within its means.  Once American consumers and
employers have reaped the gains from savings, the limits on
premium growth will be reassessed, based on  experience under
reform.



 REDUCING HEALTH CARE FRAUD

     The Health Security Act makes health care fraud a specific
crime. The Act takes aggressive steps to combat health care
fraud, increase penalties for those who cheat the system and
expand enforcement activities. It imposes new prohibitions
against kickbacks and conflicts of interest, such as doctors who
refer patients to laboratories in which they have a financial
stake. And health care providers convicted of fraud and related
crimes will be excluded from participation in health plans.
The Departments of Justice and Health and Human Services will
lead the anti-fraud effort, organizing an All-Payer Health Care
Fraud and Abuse Enforcement Program to coordinate federal, state
and local law-enforcement activities.  The effort will target
practices such as overcharging for services, charging for
medical care that was never delivered, giving kickbacks to
doctors who refer their patients to certain clinics or
pharmacies, and delivering unnecessary services. If providers
file false claims against health plans, their assets can be
seized and criminal penalties for health care fraud can be
imposed. The revenues from seized assets will be funneled back
to support anti-fraud efforts.