Looking Toward the Future

Excellus Health Plan, Inc.

Looking Toward the FutureAuthor(s): Wilbur J. CohenSource: Inquiry, Vol. 17, No. 2 (Summer 1980), pp. 115-119Published by: Excellus Health Plan, Inc.Stable URL: http://www.jstor.org/stable/29771320 .

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invited Paper Looking Toward the Future

Wilbur J. Cohen

I share a common experience with three for? mer Secretaries of Health, Education, and Welfare: Secretaries Flemming, Richardson, and Califano. Like them, I was involuntarily retired from my position. And it's no secret that I wasn't particularly happy about it at the time.

Although being Secretary of Health, Educa?

tion, and Welfare is a controversial position to be in, I enjoyed every minute of it. It broadens

your scope of interest. It stimulates your mind and your glands. But, if you hold the job long enough, it probably shortens your life expec? tancy. I look back on the position as the high point of my professional experience.

One result of my experience was full real? ization of a fact that physicians know well:

Time heals many wounds. Although I was

roundly criticized by most physicians before 1965 for my advocacy of Medicare, I find that?ever since the tenure of Joseph Califano as Secretary?my reputation, strangely, seems to have improved. I don't think it had anything to do with my policies or views, but it does

prove to me that attitudes are relative to

changing experience. And that fact is a great comfort as one gets older.

I am 66 years old now and enjoy greater opportunity for reflection and evaluation. I

enjoy being a grandfather, and having the pro? tection of Medicare, Social Security, and the First Amendment to the Constitution. I con

sider being alive and struggling with all our current insoluble problems preferable to the

only other alternative available.

During the 11 years since I left the Cabinet, I have had the opportunity and privilege to think about the past, present, and future of health, education, and welfare in our nation. I believe that, for a democratic, market-ori? ented political and economic system to sur? vive and prosper, we must make health, edu?

cation, and welfare an important mission in our economy.

Such a mission truly is important in our

economy and for the quality of life. Approxi? mately 27% of our entire gross national prod? uct is expended on our pluralistic and com?

plex, public-private system of health, education, and welfare. And I believe this per? centage will increase in future years.

Health Costs

A little more than 9% of the GNP currently is

spent for health and medical services. This

percentage has been rising over the past 50

years. When I first started working in the field of health economics in the mid-1930s, the per? centage averaged about 4.25%-4.5% of the

gross national product. Over successive de?

cades, it grew to 5%, then to 6%, 7%, and 8%.

Recently it passed 9% of a much larger gross national product. I predict it will reach 10%

during the 1980s. And, some medical econo? mists predict it will continue to increase.

It is this growing cost, this increasing ex?

penditure, that presents such a challenge to

organized medicine, to the government, and to the general public. I do not have the solu? tion to this problem, but I do foresee the chal?

lenge to be ever present. Additionally, it is an

Wilbur J. Cohen is Sid W. Richardson Professor of Public

Affairs, Lyndon B. Johnson School of Public Affairs, The

University of Texas, Austin, TX 78712.

The paper published here is based on remarks made by Professor Cohen on Feb. 22, 1980, to the American Med? ical Association's leadership conference held in Chicago.

Inquiry 17: 115-119 (Summer 1980). Copyright ? 1980 by the Blue Cross Association. All rights reserved. 115



Inquiry/Volume XVHy Summer 1980

inescapable problem for organized medicine. I predict physicians will have to deal and live

with this issue no matter which Administra? tion is in power in Washington.

Sometimes we do know the solutions to our

problems, but to make the solutions workable

is a most difficult matter.

Health Programs

Like many others, I find myself dissatisfied

with the present system of health care deliv?

ery. You may be surprised to learn, however, that I also find myself dissatisfied with most

of the major national health insurance pack? ages currently in Congress.

I don't think the present system of delivery is as good as its defenders say it is, but, at the

same time, I don't think it is as bad as its

severest critics claim. There is no perfect health delivery system, nor is there a perfect national health insurance plan. In fact, I doubt

that either is in sight within our lifetime, or

probably ever. Physicians and the general

public will have to learn to live with an im?

perfect and a very complex system. I do believe that some additional changes

will be made during the 1980s. I see several

important areas of possible and likely devel?

opment:

1 Further progress in extending major med?

ical insurance coverage by federal legisla? tion to every person in the nation. The big

questions are how and when. Despite the

widespread support for such coverage, it

is still a controversial issue.

2 Improvement of Medicaid to finance uni?

form comprehensive national coverage of

the medically indigent. If we are going to

provide uniform national coverage for the

middle and upper incomes, we also should

provide uniform coverage for those with

the lowest incomes. 3 Increased emphasis on prevention and use

of noninstitutional services in Medicaid,

Medicare, and other insurance coverage. The emphasis should include wider and

easier access to home health services, con?

valescent skilled nursing care, hospice ser?

vice for the terminally ill, community men?

tal health services, reduction in unneeded

116

hospital beds, and greater use of para professional personnel.

4 Coverage of all services for all pregnant mothers and young children, without de ductibles or coinsurance. Such a program, I believe, has high priority.

5 An increase in the number of female and

minority physicians, which?along with an

increased role for nurses in the health de?

livery system?not only may have a sig? nificant impact on improving services to

minorities and children, but may modify the balance of political power in the na?

tional health arena, which has changed in

the last 15 years and will continue to

change.

6 Slow, but continued, increase in health

maintenance organizations. I would hope the AM A would support this trend.

7 Further emphasis on health education and

personal health responsibility through schools, the media, and public and private health agencies.

Several suggestions of my own follow:

8 Rather than requiring assignment for Medi? care reimbursement, or increasing the reim?

bursement limit from the 75th to the 90th

percentile, I support the recommendation to move to negotiated and reasonable state

fee schedules. This arrangement would be

easier for everyone to understand and

would be fairer to the physician, the patient, and the taxpayer.

9 The three-day prior hospitalization re?

quirement for skilled nursing home care in

Medicare should be eliminated. 10 The waiting period before eligibility for

Medicare coverage for the disabled under

age 65, as well as the waiting period for el?

igibility for disability insurance benefits, should be shortened to three months.

11 Parts A and B of Medicare should be com?

bined for financing and coverage. Instead of

paying 70% of Part B out of general reve?

nues, as we do presently, I advocate paying 50% of both coverages out of general reve?

nues, and reducing the Old Age, Survivors,

Disability and Health Insurance Program

(OASDHI) payroll tax accordingly. Of

course, separate cost accounting would be

retained for Parts A and B.



Some Comments on a Mandated Plan

All national health insurance plans present some difficult problems. I am especially criti? cal of the so-called "mandated" type of na? tional health insurance, which requires em?

ployers to take out health insurance coverage on their employees and their dependents. This is the most complex and expensive type of health insurance coverage. Not only does it

inevitably involve the federal government in the detailed regulation of health insurance pol? icies, but it involves federal regulation of health insurance carriers. Federal regulation of private insurance companies is the most

frustrating and expensive form of achieving universal coverage.

I recognize that both President Carter and Senator Kennedy, as well as many persons who advocate the private sector approach, fa? vor the mandated-type plan. They argue that it keeps the cost off the federal budget, al?

though whether it is on or off the federal bud?

get, the cost still exists. Supporters of the

mandated-type plan also argue that it retains a competitive, free-choice element in the health insurance system. This result, how? ever, can be achieved without the extra cost of each plan collecting its own premium.

If adopted, I predict that a mandated-type plan will not be a simple, clear-cut solution that will satisfy providers and patients. In?

stead, it will involve both government and pri? vate carriers, who likely will get in each oth? er's way, and who will impede the work of the

physicians and hospitals. Indeed, I think it would be better to stop,

look, and listen before we leap into the morass of the complex interrelationships that will be

spawned by a mandated plan. I hope such a

plan will not be enacted this year. Medicare is a model of simplicity compared

with a mandated-type plan. The fiscal inter?

mediary system in Medicare is a much more sensible and efficient mode of operation than are hundreds of private plans, each collecting contributions separately and paying benefits

separately. I am both heartened and concerned by the

fact that the national health insurance plan, which will be adopted eventually, has not yet been formulated or drafted. Consequently, I

Looking Toward the Future

believe the public and physicians still have an

opportunity for constructive input into the plan to be adopted. Nevertheless, I predict the

plan adopted ultimately will have some un?

expected surprises for all of us. That is inev? itable in the legislative process.

Improving the Quality of Life

We open the decade of the 1980s with consid? erable apprehension and anxiety. Our anxi? eties involve both our foreign and domestic

policies. It becomes increasingly clear that these policies are interrelated?at the politi? cal, economic, and budget levels, as well as at the psychological level. Under these cir?

cumstances, to try to determine domestic

priorities for the coming decade in the midst of our anxieties and uncertainties is a dubious

assignment.

Yet, I believe there will be important break?

throughs in the 1980s that will bring further

changes. We begin with the recent inaugura? tion of a separate Cabinet department of ed? ucation. While I was not enthusiastic about the idea, I hope it will herald a renewed stim? ulus to our concern to provide education to all our future citizenry, from birth to old age. Another possible breakthrough is a welfare reform proposal pending in the Senate, which has passed the House of Representatives. This

proposal may serve as a basis for some key steps toward welfare reform. And, as I have

pointed out, we may have the making of some further incremental steps in national health in? surance in the Senate.

But none of these three steps in health, ed?

ucation, and welfare will usher in the millenni? um. They may well create some additional dif? ficult problems. They even will increase taxes. But they also may improve the quality of life for many persons.

What should we do?and not do?during the 1980s to improve the quality of life? I be? lieve this is one of the major issues confront?

ing us. One movement in this nation, which is

strong, influential and persuasive, answers this query in simplistic terms, namely, reduce taxes. In principle, I share that view, as I am sure others do. But in practice, it looks like the decade of the 1980s does not present an

optimistic outlook for such a result. We all

117



Inquiry/Volume XVII, Summer 1980

would like it to be otherwise, but it is not yet settled policy that as California goes, so goes the nation.

I would predict that if the movement for re? duction in local and state taxes is successful, it will only put the pressure on increasing the role of the federal government, thus increasing federal expenditures. At the same time, I think that if we can't see the prospect of reducing taxes, we can and must try vigorously to in? crease productivity, which has enabled us to

improve the standard and quality of life during the past 80 years of this century.

I am not sure how I can specifically direct the attention of physicians and others in the health field to be concerned about increasing productivity generally. Health professionals are, however, in the business of conserving the productive resources of our men and wom? en. I think all of us would agree that the mon? umental waste that occurs in human life be? cause of alcoholism, automobile accidents, cigarette smoking, and drug addiction is some?

thing we must work hard to minimize. I strongly support continued expansion for

basic research and development by business, government, and higher education. I continue to believe that the expenditures of the Nation? al Institutes of Health are a sound investment in our future. And, I still believe that the Food and Drug Administration does an outstanding job in a complex, controversial area, and that it should have additional resources to carry out its vast responsibilities more effectively and more promptly.

I am appalled at the widespread extent of fraud and abuse throughout our entire society.

While it is manifest in government and politi? cal circles, honesty compels me to say that I find it present in the private sectors as well. Even so, the pressures from the private sector often are the impetus for the public revelations in the public sector. I hope that the 1980s will result in a vigorous campaign to reduce fraud and abuse wherever it occurs?in our medical

system or elsewhere. I hope this will be a cam?

paign physicians will support. When we apply these more general princi?

ples to the health and medical care system, we

clearly have some difficulties in translating generalities into specific services, programs, and institutions. We know that there are drugs that are ineffective, that should be taken off

118

the market. We know that there are unnec?

essary surgical services. We know that there are unneeded hospital beds and wasteful, cost?

ly, and unnecessary technologies. We need the help of physicians in dealing with these

continuing problems. Their leadership in this area is essential.

At the same time, I do not think the solution to these problems consists of mathematically predetermined, compulsory cost constraints

placed only on hospitals and physicians. I urge a vigorous voluntary program. And, I urge states to adopt programs tailor-made to spe? cific problems?programs that are worked out with hospitals and physicians to make sim?

plistic, uniform, nationwide federal controls

unnecessary.

I would like to point out that the possibility of a more general or selective program of wage and price controls is ever present. I have my doubts about the longer run efficacy of wage and price controls. But all of us are dead in the long run. And, the immediate pressure of inflation is real and devastating to millions of

persons. Who can tell what the pressures of

public opinion will produce in the uncertain? ties of the 1980s?

I therefore urge the health professions to continue to develop a voluntary plan, in co?

operation with state agencies. The result can be a plan that will be effective but flexible, one that will continue to assure quality and

excellence, innovation and progress.

Aging and Social Security

One of the monumental achievements of the

improved standard of living has been the in? crease in life expectancy. Earlier in this cen?

tury, the proportion of persons age 65 or older was 5% of the total population. Today, it has

grown to more than 10%. Estimates indicate that during the next 50 to 75 years, the pro? portion may exceed 15%.

This has resulted in the widespread fear that the cost of Social Security eventually may be? come so onerous that we will have to either

place an undue burden on the younger work? ers, or reduce benefits, or some combination of both.

As a result, many older persons believe they may not receive their promised Social Secu?

rity benefits. The attitude is even more wide



spread among our disillusioned younger peo? ple.

I think this view is unwarranted by the facts. The Social Security system has paid the benefits due beneficiaries for 40 consecutive

years. I think it will continue to do so. And now I will say something with which

you may disagree: We cannot afford to dis?

parage, undermine, and attack government continually, generally, and universally with? out paying a tremendous price in the loss of

support for improving the administration of

public programs. We must find a way to define more clearly the respective roles of federal, state, and local governments, of the private and nonprofit institutions. Additionally, we must determine how to more appropriately share costs, responsibilities, and preserve the

rights of all. I apply these general principles to Social

Security. If we undermine confidence in the

government's role in Social Security or Medi? care, it is true we may be able to develop a better system from the ruins of the present one. But that is not a foregone conclusion; it could be a less desirable system. The good can be the enemy of the better. But the ideal of the better also can undermine the good.

There are those who currently contend we soon should raise the retirement age in Social

Security by steps, from age 65 to 68. The ar?

gument is that such a revision will save money and help prevent younger people from rebel?

ling at the increasing cost of Social Security. Moreover, the argument has it that persons will be inspired to work longer and employers will be encouraged to continue to employ old? er persons.

I do not think we should take such steps now or in the immediate future on the basis of

pessimistic estimates of future costs. Such

pessimistic estimates cannot accurately take into account two significant variables: 1) the future fertility rates of women, which will de? termine the demographic character of our na?

tion; and 2) the future national economic pro? ductivity rates, which will determine our

ability to finance our standard of living. Even with the gloomiest productivity esti?

mates, I believe it is possible for our real gross national product per capita to be substantially greater 20 and 50 years from now. I therefore dissent from the current pessimistic long

Looking Toward the Future

range projection of gloom and doom. I think we are likely to afford a good nationwide re? tirement program and a good medical care

program for older Americans in the future. I think the nation should discuss this issue in greater depth before we make an unwise and unnecessary change in basic policies about work, leisure, retirement, and financing of re? tirement.

I am a member of the statutory National Commission on Social Security, which will re?

port to the President and the Congress in Jan? uary 1981. I hope you will await our report and study it carefully. I favor taking the Social

Security system out of the Department of Health, Education, and Welfare and restoring it to the status of an independent board, as it

was originally under the 1935 law. I also think the earmarked income and outgo of the Social

Security system should not be included in the unified federal budget.

The fact is that Social Security income and

outgo have been included in the unified bud? get, which led President Carter and his advi? sors to the unfortunate conclusion last year to recommend reductions and cutbacks in Social

Security benefits. I vigorously opposed the President's recommendations, and will contin? ue to do so, if they are basically designed to

help balance the budget, rather than meet the needs of the beneficiaries.

Conclusion

I have presented some observations, predic? tions, and recommendations that I hope merit your thoughtful consideration. You may not agree with me on some or all of these matters.

Nonetheless, I strongly urge a continued ex?

change of ideas among physicians, other health

personnel, government, the academics, and the public.

Health and medical care are too important to become the exclusive provinces of any one

group. We need the advice and help of pro? vider and patient, taxpayer, politician, and bureaucrat.

Despite its inadequacies, costs, and prob? lems, I am glad I live in the United States and have the advantage of being served by a health and medical care system that is changing, im?

proving?and that is willing and able to change and improve.

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Looking Toward the Future