I am especially pleased to be a cosponsor of this bill for two reasons. First, the Institute of Interdisciplinary Studies, in my own State of Minnesota, has been a leading force, if not the leading force, in the development for the health maintenance organization "strategy." This organization, headed by my good friend, Dr. Paul Ellwood, was instrumental in persuading the administration to adopt the health maintenance strategy. Since then, through testimony before the Health Subcommittee, and in consultation with members and staff of the subcommittee, Dr. Ellwood and his excellent interdisciplinary team have provided an invaluable resource in developing the approach which is reflected in this legislation.

I am also pleased that the bill reflects the substance of my proposed Community Medicine Act of 1971, S. 1301. My bill seeks to engage medical schools and teaching hospitals in the delivery of health services to under-served populations through health maintenance organizations. Thus, it has two objectives: To improve the quality and relevance of medical education, and to improve the level of services to those whom the present delivery system has left behind. The provisions for area health education and service centers in the new bill should achieve the same objectives. Perhaps most significantly, this new bill will make it possible for high quality, comprehensive, medical services to be brought to citizens in our rural areas who have increasingly been denied such care.

I am greatly encouraged by the possibility that enactment of this legislation will contribute to the control of health care costs. As we all know, these have been skyrocketing. Experts agree that group. practice, emphasizing preventive care and early detection of disease, can help to cut the costs of medical care, while not sacrificing quality. The bill also provides for a significant innovation in the form of a quality health care commission. This commission should be able to lead the way in the development of new measures and standards to monitor and improve the quality of care. The Institute for Interdisciplinary Studies in Minneapolis contributed significantly to the development of these features in the bill.

There is a rapidly growing consensus on the advantages of using health maintenance organizations as a means for delivering health care. A brief survey of the experience under one such plan, in Columbia, Md., and of the legislative situation was printed in the Minneapolis Tribune a few months ago. I ask unanimous consent that the article be printed in the RECORD.

There being no objection, the article was ordered to be printed in the RECORD, as follows:

[From the Minneapolis Tribune, Aug. 8, 1971]

"NEW MEDICINE" TESTING HEALTH CARE ALTERNATIVE

(By Richard P. Kleeman)

COLUMBIA, MD.-"They're good doctors," the young mother said, wrapping up her view of the "new medicine" practiced in this growing "new town" under a prepaid family health care plan.

A psychologist and early member of the two-year-old Columbia Medical Plan, she chatted with a reporter while supervising her three youngsters at play in a village-square sandbox:

"They discovered a condition in one of my kids that put him on constant medication. We travel a lot and he gets strange injections-but all our bills are covered."

From her librarian's desk, a mother of four also talked about the medical plan: "I had major surgery last fall and got excellent care, but I also feel it's preventive medicine, and I've always believed in that. You can have a physical without being afraid of a cost that floors you."

Her child's hay fever medicine and her own contraceptive supplies, bought through the clinic, cost less than half of drugstore prices, she said.

And a young recreation worker-calling the plan "a Godsend to new parents"— said major surgery on varicose veins in both legs, cost him all of $4 at the Baltimore, Md., hospital of Johns Hopkins University, which sponsors the Columbia plan.

But at Columbia's subsidized housing project there was another kind of reaction: The mother of two youngsters, separated from her husband, said, "I'm all for the plan, but it's too expensive right now."

The monthly charges found excessive by these hard-pressed families were recently raised to $15 for individuals and $51 for a family of more than two members. The monthly premium for two-member families has just been cut from $43.60 to $30.

"Sure, some people in the low- and mid-income scale would find those premiums high," admits William P. Towie, 39, a St. Paul native who trained in hospital administration at the University of Minnesota and now administers the Columbia plan.

"But if you compare the costs of medical care, you find annual per capita costs relatively the same in or outside the plan-roughly $600 per family-so it be comes a matter of how the dollar is used."

At Columbia, the medical plan dollar buys doctor care general and specialized, except for dentistry and prolonged psychiatry-on a round-the-clock basis. It also buys coverage while away from home and, pending completion of the first section of a planned 180-bed hospital in Columbia, hospitalization plus additional specialist care at Hopkins' hospital in Baltimore.

Depending on which version of the plan they use, subscribers pay $2 per clinic visit-or nothing. Drugs generally runs $2 per prescription.

The plan is offered only to groups through their employer's health insurer, but the 14,000-plus residents of Columbia, located between Baltimore and Washington, D.C., constitute a "group." About half have chosen to join the medical plan, along with another 75,500 nonresidents.

Towie expects membership to hit 15,000 next June and the plan to start breaking even not long afterwards.

The Columbia plan, with which Towie has been associated since its planning stages in 1966 and which he has run since 1969, is testing many things for many interested onlookers.

The Nixon administration, as well as every member of Congress concerned about the national health care crisis-i.e., most of them-are watching plans like Columbia's.

For virtually every broad-gauge national health proposal-including those of Minnesota Senators Walter Mondale and Hubert Humphrey-provides for some form of government support for prepaid group health plans, which the administration calls HMOS (health maintenance organizations).

"The way health care is financed today works against the consumer's interest," declared a 1970 study made for the administration by the Health Services Research Center of the American Rehabilitation Foundation in Minneapolis.

Since payment traditionally has been based on the number of doctor-visits and hospital days used, the greater the number of such visits and days, the greater the reward to the provider, the study pointed out, adding:

"The consumer, unable to judge his own treatment needs, pays for whatever he is told he needs."

In contrast, the Minneapolis study suggested a "health maintenance strategy" aimed at a "highly diversified, pluralistic and competitive health industry."

Under such an approach, HMOs of various types would be paid annual fees to keep people healthy-as well as to care for them when sick.

Mr. Nixon clearly accepted these arguments. In his “national health strategy” message last February, he restated points from the Minneapolis report and emphasized that for the seven million Americans enrolled in HMOs. "studies show they are receiving high quality care at a significantly lower cost-as much as one-fourth to one-third lower than traditional care in some areas.

"They go to hospitals less often and they spend less time there when they go," the President added.

"Patients and practitioners alike are enthusiastic about this organizational concept. So is this administration."

He proposed and Congress is still debating—making HMO membership available, where possible to every health plan subscriber; providing up to $23 million initially to aid in planning some 163 new HMOs-118 of them in areas now unserved medically-and allocating $300 million in federal loan guarantees for building HMO clinics and meeting start-up deficits.

The President also proposed a model law for adoption in the 21 states whereunder past pressure from the organized medical profession-laws restrict group medical practice.

(The University of Minnesota has been mentioned among many organizations contemplating establishment of an HMO, and the Nicollet Clinic and Eitel Hospital announced plans to cooperate on such a plan.)

Towle admits to some uncertainties about the best financing mix for HMOs, but is convinced, for both personal and professional reasons, of their underlying soundness.

With his employer paying half the monthly premiums for his family—a wife and four daughters-Towle said he had less than $50 out-of-pocket expense for routine medical care last year, on top of his $300 half-share in the premium. His wife's major surgery cost him nothing. He recognizes that-despite an 87 percent favorable reaction to Columbia's plan from its members in a recent survey-some subscribers feel smaller families should not subsidize larger ones. A three-rate structure is under review, he noted.

But the prepaid plan basically aims at taking care of what Towle calls "grayzone people": Those of middle-income, neither old enough to be eligible for Medicare nor poor enough to qualify for Medicaid.

Some such people, he said, buy no medical insurance, taking a chance their families wont' get sick.

"But if they lose, those who gamble that way can lose awfully hard," Towle observed.

The administration's "national health insurance partnership"-which supporters of full-scale national health insurance call inadequate proposes that all employers must provide their employees with basic health insurance coverage. An employee could have the option of using his employer's contribution toward membership in an HMO.

Some such plan, Towle said, would begin to take care of working "gray-zone people"-but there still would need to be government subsidy, as the administration has proposed, for the low-income self-employed and for the unemployed. Of Columbia's fast-growing plan, which looks toward an eventual enrollment of 100,000, Towle says, "It may seem like socialism to some-but what we're doing is simply pooling our resources."

Mr. MONDALE. Mr. President, we have a similar plan operating very successfully in St. Paul, Minn., and another excellent plan serving the northern Minnesota communities of Hibbing and Virginia. The experience in our State amply justifies the reliance that this bill places on health maintenance organizations as an important contribution to improved health delivery.

Mr. President, I believe this is an outstanding bill. I am proud of my contribution and that of a number of outstanding Minnesotans to it. I hope and trust the bill will be acted on promptly. Once again, I wish to express my admiration and respect for the very significant work in the field of health represented by this measure offered by the Senator from Massachusetts.

Mr. KENNEDY. Mr. President, I want to comment upon the legislation the Senator mentioned, S. 1301. It would provide assistance to medical schools that relates in a substantial way to the delivery of health care. That feature of his bill has been incorporated into the HMO legislation.

There is no reason in the world not to encourage medical schools to move into this area and to provide the kind of expertise, research, and training that only they can. We have included this feature of S. 1301 in the bill, and I think as a result it will provide the kind of additional assistance to medical schools which will bring new energy into HMO's and into the delivery of health care.

I wanted to acknowledge the very substantial contribution of the Senator from Minnesota in this area and thank him for his comments. Mr. President, I ask unanimous consent that the bill be referred to the Committee on Labor and Public Welfare, and that if and when the bill should be reported, that it be referred to the Committee on Finance for that committee's consideration of any provisions relating to trust funds, and so forth, which might fall within the jurisdiction of the Finance Committee if the Finance Committee so desires.

The ACTING PRESIDENT pro tempore. Without objection, it is so ordered.

Mr. KENNEDY. Mr. President, I ask unanimous consent that a very splendid statement by the distinguished Senator from Washington (Mr. Magnuson) be printed in the record as a comment on the legislation.

The PRESIDING OFFICER. Without objection, it is so ordered.

STATEMENT BY SENATOR MAGNUSON

Mr. President, I am pleased to add my support to the Health Maintenance Organization and Resources Development Act of 1972 which the distinguished Chairman of the Senate Health Subcommittee (Mr. Kennedy) is introducing today. Senator Kennedy once more deserves commendation for his continuing efforts to focus national attention upon the health care crisis in America.

I view this bill not as a finished legislative product but rather as an extremely valuable working paper, a springboard for serious Congressional consideration of the complex issues involved in the delivery of health care. Hopefully, out of this deliberation will come answers to some of the problems that now hinder the delivery of health care.

How can we re-orient health care so that more emphasis will be placed on preventing illness as opposed to just treating its ravages? How can we overcome the maldistribution of health care resources which now denies care to millions of Americans living in rural areas and in inner-city neighborhoods? How can we maximize the use of every health care dollar so that all Americans can receive maximum-quantity health care at minimum cost? These are just some of the questions which must be answered if the dream of quality health care for all is ever to become a reality.

As Chairman of the Health Appropriations Subcommittee, I am committed to translating that dream into reality. That is why I have consistently urged the Congress and the Administration to increase federal expenditures on health research, health manpower training, health facilities construction and the direct delivery of health care to those who would otherwise go unattended. That is why I introduced the National Health Service Corps Act in the 91st Congress and why I have introduced both the Children's Dental Health Act and the Children's Catastrophic Health Care Act in the 92d Congress.

For the same reason, Mr. President, I joined as one of the original cosponsors in supporting the National Health Security Act when Sen. Kennedy first introduced it in 1970. That bill has spurred a wide-ranging debate in Congress and throughout the nation about the best methods for financing health care. Hopefully, the Health Maintenance Organization and Resources Development Act of 1972 will spur a similar national debate over the delivery of health care. Out of that debate, hopefully, will come answers to some of our health care delivery problems. And out of all our efforts will come, hopefully, the day when quality health care for all will be a reality rather than just a dream.

Mr. KENNEDY. Mr. President, I ask unanimous consent to have printed in the record a section-by-section analysis, together with the text of the bill.

There being no objection, the bill and analysis were ordered to be printed in the record.

(The text of S. 3327 appears on p. 1, and the section-by-section analysis on p. 89.)

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