The following is from the Congressional Record:

THE AMERICAN HEALTH SECURITY ACT OF 1999 -- HON. JIM MCDERMOTT

(Extension of Remarks - March 18, 1999)

HON. JIM MCDERMOTT

in the House of Representatives

THURSDAY, MARCH 18, 1999

Mr. McDERMOTT.

Mr. Speaker, I rise today to once again introduce the American Health Security Act. The single payer plan I propose is the only plan before Congress that will guarantee health care universality, affordability, security and choice.

While this Congress lacks the political will to enact comprehensive health reform, the underlying needs for reform remain prevalent: health care costs are more unaffordable to more people and the number of people without health insurance continues to rise. These problems are compounded by increasing loss of health care choice and autonomy for those people who have insurance leading to disruptions in care and in relationships with providers.

The American Health Security Act I am introducing today embodies the characteristics of a truly American bill. It will give to all Americans the peace of mind--the security--to which all citizens should be entitled. It creates a system of health care delivered by physicians chosen by the patient. No one will have to leave their existing relationships with their doctors or hospitals or other providers. It is federally financed but administered at the state level, so the system is highly decentralized. And it provides new mechanisms to improve the quality of care every American receives.

The American Health Security Act (the Bill) provides universal health insurance coverage for all Americans as of January 1, 2000. It severs the link between employment and insurance. The federal government defines the standard benefit package, collects the premium, and distributes the premium funds to the states. The states, through negotiating panels comprised of representatives from business, labor, consumers and the state government, negotiate fees with the providers and the government controls the rate of price increases. The result is health care coverage that never changes when your personal situation does, never requires you to change the way you seek health care, and never causes disruption in your relationships with your providers.

The bill provides the coverage under a mechanism of global budgets to achieve controllable and measurable cost containment that will yield scorable savings over the next five years. Unlike other single-payer proposals of the past, it provides for almost exclusive state administration provided the states meet federal budget, benefit package, guarantee of free choice of provider, and quality assurance standards. This bill explicitly preserves free choice of provider by providing a mechanism for fee-for-service delivery to compete effectively with HMOs. It will not force Americans into HMO models.

The insurance mechanism of the American Health security Act is easy to use and understand. Quite simply, a patient visits the doctor or other provider. The provider then bills the state for the services provided under the standard benefit package and the state pays the bill on the patient's behalf, just as insurance companies pay medical bills on the patient's behalf now. The difference is that complicated and expensive formulas for patient copayments, coinsurance, and deductibles in addition to premium costs are eliminated.

The standard benefit package is in fact extremely generous. It covers all inpatient and outpatient medical services without limits on duration or intensity except as delineated by outcomes research and practice guidelines based on quality standards. It provides for coverage of comprehensive long-term care, dental services, mental health services and prescription drugs. Cosmetic procedures and other `frill' benefits such as private rooms and comfort items are not covered.

The extent of state discretion is substantial. The federal budget is divided into quality assurance, administrative, operating, and medical education components. The system is financed 86% by the federal government and 14% by the states. That federal pie is then apportioned among the states. For example, states with large elderly populations can be expected to require a larger volume of higher intensity services and will receive a larger federal contribution. However, the states are free to determine how that money is allocated among types of providers and to negotiate those allocations according to the state's individual needs, provided federal standards are met. The ability of HMOs to operate and compete on a capitated basis is preserved.

The states must demonstrate the efficacy of their methodologies or federal models will be imposed. However, states are not required to seek waivers in advance. While the federal government will not make separate allocations to states for capital and operating budgets, the states are free to allocate capital separately to assure adequate distribution of resources throughout the state and to develop their own mechanisms for doing so.

The financing package reflects the CBO scoring of this bill's predecessor, H.R. 1200, in the 103d Congress. The numbers were provided by the Joint Committee on Taxation (JCT) on the basis of the CBO scoring. Accordingly, the bill is fully financed. In fact, JCT estimates that the American Health Security Act will lead to deficit reduction approximating $100 billion per year by the year 2004.

Everyone will contribute to the health insurance system, except the very poor. Employers will pay 8.7% of payroll and individuals will pay 2.2% of their taxable income. A tobacco tax equal to $0.45 per cigarette pack is also imposed. These payroll deductions are lower than current insurance costs for most businesses and individuals, even while providing universal coverage and a more generous benefit package than exists in the private market today. The key is that the money necessary to provide coverage to people who cannot afford it comes from the administrative savings achieved through the elimination of the insurance company middle man. Americans are freed from the hassle of obtaining and keeping their insurance and have a federal guarantee that their health care costs will be paid for, regardless of who their employer is, where they move, or how their personal or family situation changes.

In addition to providing realistic and affordable financing, the bill provides quality assurance mechanisms that enhance system-wide quality and truly protect the consumer. It attempts to end the interference between doctor and patient. It establishes a system of profiling practice patterns to identify outliers on a systematic basis. Pre-certification of procedures and hospitalization (getting permission from insurers before your doctor can treat you) is prohibited except for case management of catastrophic cases.

Practice guidelines and outcomes research are emphasized as the main quality and utilization control mechanisms which gives physicians latitude to deviate from cookbook medicine where required for individual cases without going through intermediaries. Only if practitioners consistently deviate are they subject to review to ascertain the basis for the pattern of practice. This system includes mechanisms for education and sanctions including case-by-case monitoring when the review indicates serious quality problems with a specific provider.

The need for a 1:1 ratio of primary care physicians to specialists is explicitly set forth. Federal funding to graduate medical education is tied to achieving this ratio. Funding to the National Health Service is also provided to achieve this goal.

Special grants are provided to meet the needs of underserved areas through enhanced funding to the community health centers, both rural and urban, to enable outreach and other social support mechanisms. In addition, states have discretion to make special payment arrangements to such facilities to improve local access to care. It is anticipated that the revenue streams established for the public health service, community health centers, and education of primary care providers will double the primary care capacity of rural and other underserved areas in this country.