I! I piiill.@iii * 009 !I. T,OTi7AP@D !IEI,@LT'il Si"@@'J. Irv@i.r J. I,,@iy I-I,c-a2-th Ser-ti-7,cas and 1.@ i-@t@il li'o,.il.tli U.S, De-pa,,,ti-,i--nt o@' Ecitic@tt.:icii, lqel@t'@ire In the value syste-@..-i of the soci(-t:y we place @i very high priority on health. In fiscal year 1969, we spent $60.3 billion in pit,-stiit oil health. This suite rc--,p,.-(-,sciits 6.7 pc-,@,-cc-@nt of our Gross Natioiiil Ilroduct, Preliminary estimates for, the fiscal year run higher still, in both total and percc,.n.t,).,,e. The Ai-iic3-ican health enterprise, in @71-i-.1ch you and I both T,7orl@, has had this greatness thrust upon it rather i@llo-t of us rc-mcribe@c when the world of medicine was peopl-c@cl friendly doctors carrya.ng black bac@s an,'j r)z),rces in the of Florence @Ni,-htin-ale offerina soothing hands and teiltde.-i-- hearts. Thit was a co-i-nf ortabIE! world. - lie leave it reluctantly. But leave it we must. For explodin@ technology and soar3.no expect,-- tions have made that i-7orld anachronistic as the doctor's watch-fob in the. Norman Rockwell illustrations. There is no place in such a world to hide a $60-billion industry. In short, health has been thrust into the world of political pro- cess. It is involved in the intense competition for resources--i-,ianpo%@er, money, and i-,iaterials---@,ihich cliar@ictcrizcE,@ that process. This competition is continuous and Unrelenting. It takes place at all levels of govern- Mc-,nt and in the private sector as well. *Presented to Regional I-ledical- Z-Loii flosp-.tal and @ledi.cal Center., San FraicJsco, California, January 26, 1970. 2 Ilealti@i is in fierce competition with many cl,-@iTTiiilts for social. priority. It competes with edu(-.at-i-on, the rebuilding of cities, national defense, crime control, and with scores of other worthy and necessary pursuits. And within the total health share of the total resources that emcrae frori this competition, we find another level of competition aitic)iig desirable endeavors. Decisions must be made on such questions as: Hoi.7 much to pay for care? liow much to stimulate a-ad support research? I-lo@,7 much to build the basic resources of manpower and facilities? lio-,7 much to organize these into an effective system? lloiq do we build institutio,,is? Of all the arenas in which these political processes are in con- .stant interplay, the largest and ir@ost visible is the Federal government. The decisions made in that arena exert a Tqajor influence on those made at al 1 other levels, i.ncluclin- those in the private sector. A few figures will help to indicate the nature and scope of the Federal health investment, and thus why, although we might wish it were otherwise, health is deeply involved in the world of politics. TABLE 1. Fedei-til Oittleii's fi)@- ille(ii(-al A (-tii-iiic,s (iii Aliltioiis of De)ll@ii-s).* Tol..%L FEr)rRAt OU 11,AN'S 1960 1966 1969 1970 $3,507 $5,91-7 S 16,3 16 S 18,'-' 7 7 Provision of hospital] & medical services, total 2,165 3,521 12,518 13,977 Direct (benefici@try) 1,702 2,] 99 2,896 2,996 Indirect (,Nledicare, Nledic@iid etc.) 463 1,122 9,622 10,981 Development of I)ealt) resources, total 1,016 1,955 3.057. 3,496 Research 509 1,167 1,476 1 @639 ,Nlanpo@k,er 2 17 4 10 841 93'- Facilities construction 290 378 595 728 lnipro%,ing organization & delivery - - 14 5 197 Prevention & control of health problems, total 326 451 74 1 804 'Source: Spcci@,l An@,T@sis, 19'0 flud2et. prepared b, the Fitirei,u of the El,@d,,@t. l@xect,ti,e OfEcc,)f the P,ei(lent. 3 Chart I shoT7s the- distribution of Fedc?.r@il. finii-ici@-i.1 resources i.n three broad analysis by the Bureau of the Budget. The first of these is the provision of services, both directly to ,,nri.ous oroups of federal. beneficiaries and indirectly su(-@h -.is 'leclic, through f arc -Liid @IrL,.cli.caicl. The second cate-ory is the devel.oT-)@ic-nt of health resources, including Tilalipo@,7er facilities, ir!iprovc.@-i@ients in ii)cl delivery and the generation Of rl@,7 The third catc,-,ory consists of Out-- lays for prevention of dise,@se slid control of health prc-l@)lc--tiis, including eiivirori,f.@c-nta..I. problc-@.-cc,. In the deca,ule between 19'UO and 11,170 federal c--,@-pc@,i-Lditures for health have grown from 3.5 billion Ciol.lars to Tiore that.-, 1.8 billion. By far the greatest gain. has tal,,eii place in the area of indirect payment of services It should also be noted that the rapid upward trend in federal health- research investment, which had already reacli--d the 500-iTiillion-dol.1-ar level by 1.960, continued throug,i the first half of the decide ind has tended to level off since that time. Ilost notable in the context of this discussion is the outlay identi- fied as ii-provin- organization and delivery, which includes the recional medical pro,;ra-Ps, the partnership for health, and certain programs of the Office of Econo-,@ii-c Oppo3:tunity and the CliiJ.dren's Bureau. Total expenditures for these system-bLlildiii@, I)rograilis constitute a very small proportion of the federal health investment. Chart 2 indicates the distribution of health dollars across the 4 major federal agencies. The Department Of ITIC',,Iltll, Fclucation, and INTelfare his by far thc@. lar-esc share, but ei.(,ht other agencies spend 1,@iore C, L, 0 than 100 million doll.ars for health, and t@qc) of thcsc--the D@epirtiL,@el,,t of Defense and the 'Vctp-raiis AO,,-ilinistratio-i--hzive health outlays in excess of 1 billion dollars. 1,7ithin IIE@,! the t@qo largest health expendi- tures are not in the so-called "health acencies" but in the Social. Security Ad-7@inistration and the Social and Pe'llabil..itation Service, vThl.cli administer liedica.re and @ledic--id, respectively. I'ABI-E 2. F@,dei-eit oittitti..@ ii),. Aieetit-til @llillioll@% 1968 1969 Department Of Flealth, Education, & Welfare 9,8 1 5 S 1 1,500 Health.Services &@ Nleiit@@l Health 959 1,109 Administration National Institutes of Health 1,285 1,247 Consumer Protection & En%@ironnienial 151 186 Health Service Social Security Administration 5,332 6,222 Social &, Rehabilitation Set% ice 2,080 2,727 Other 8 9 Department of Defense 1,76 1 1,921 Veterans Adii)inistrition 1,440 1,550 Department of Flousing &, Urban 83 142 Development Department of A,@rictilttil-c 149 1 82 Allency for International De%elopnieiit 117 179 Office of Economic Opportunity 1 03 134 Nation,t] Aei-onttilics & Space Adniiiiistrition 103 III Atomic Energ5, Commission 100 too Other 460 497 Total fe(feral outit@@s for health S 14,131 $1 6.31 6 'Source: Special 1970 flt,dpet, Prepared bv thL 13,iie@iLi of the Execuii,e O,,Iicc of (he Now the world of politics is a very practical. one, and I believe that as you think about this $18 bill.ion Federal health investment, you ought to be a%qare of the over-riding theries of the current Administration. After al.1, political decision-,-aal,:er&, do have a certain method to their madness, thouc-,h at times it must be difficult to discern. 5 I thing that @,.,e can see bro@icl tlicT,,i(,-s @qnl strategies related to the naticii's Nl-',).:,ch the new Administration is pursu-. nc,. The n@osl- of course, is the control of infla- L tioli. This ha.,, been as ti-Lc pri-taary target problem, and the strategies for its control set much of the within which Federal action i-7il.1 take pla.ce. I.!ithin this frame-,7ork, the first major tirtifyiii,, strategy of the Administratioia's proteins in the domestic sphere his been called the New Federalism. Al.tlioti,,Ii thc-tre --re sc)iae @.7ho regard this -ts just mere rhetoric, it represents a very conscious effort to establish a division of labor between lave-Is of government in the solution of public problems. For example, a principal sLib-ther,-,e of the New Federalism invo es a distinction beti,.,een income transfer and support programs, on the one hand, and service pro-raT-is in the human resources field on the other. Speaking very broadly, the Administration seems to believe that the Federal government should assume the basic responsibility for incoiie support. This is exemplified by its radically new Family Assistance Plan proposals to be administered federally. By contrast it would have programs for the delivery of services the responsibility of State and local government. A second important ele@-.,lent of t]).c line,,,, Federalism involves a form of decentralization. The 'inresid(?nt's Training prop osals repre- sent a selective but far-reaciiiii(,,, de,legation of power to State and li local Governments. The delecati.on is selective because the programs 6 will be carc@.E;,@.2,.Ly monitored f or ef f ectiveiicss of perf or!-naiice. A third of the Fceicr@.t'lisi,@i effort involves revei-ilic sharin@. Pevenue sharinc@ is based on the assumption that the Fed(-ral mechanism for collecting money may be superior, but that many of the uses of funds so collected can best be determined and carried out at state and local levels. After all, if service programs are state and local problems, funds must be provided. This is no minor innovation. It has bipartisan support,. It N-7oul-d within several years move $4 billion of Fc-@de--ral funds to state and local units. A second iaajor theme of the new Administration, beyond the concept of the New Federal.1s,-.,i, deals i.@itli income strategy. The proposed Family Assistance Program involves supporting some 23 'Million people as com- pared with about 10 million today because it strikes at the problem of the working poor, hitherto a truly forgotten American. It also envisions the future expenditure of an additional 4 billion dollars. Another aspect of the income strategy is an effort to move govern- ment programs more toward cash support, with a proportional de-emphasis on "in-Icind" programs. In time, the i.n-kind programs, which would include such tlings as Medicaid and reiit supplements as well as food stamps and the like, would be phased into a total cash support system. Obviousl,7 this constitutes a sort of reliance upon what the economist calls the riarket strategy. It rests on the principle that people themselves can make the best choice of their daily expenditures. This market strategy could apply to a number of existing service PI: -,'Ii4 ch -I)c!.i.-so,,@,s rc@qLt' Fe era I iyic, omr-, support might be money to buy liead St@,,rt or other foi-ias of day- care from the source of their choice in lieu of present arrin@cvients for direct Federal institutional support. A third major tl-ic-,o,,e which I to Licrition briefly is an effort to rationalize tire, Federal. sy,-@t@ni. Our oi-Ti-I field of health offers as graphic an as any of an array of new pi-oFrams, each generated by a sepal-ate legislative act over the past few years, eicl-i desi@,ned to fulfill a legiti.rii@ite and x,7orthj purpo.Te, but all brought into bein- with- out adequate reference to -their cumulative impact and interaction. Looltin- outside the ir@iinediate ptirv--,.e.-,@,T of health we quickly find a still wider array of programs eich of which should be, but rarely is, seen in relation to the others. Settiii- the same eligibility criteria for welfare and food stamp programs is one example of rationalizing pro-r@3iiis--in thin,, instance, programs administered by different executive departments and presided over by different legislative committees. Other examples include block grants to states and consolidation or simplification of the entire grantsmanship" process which so many of you know so much better than even I. Finally, in listing the broad themes discernible in the procr@ini of the new Adirii:nistration, I want to mention the. PTapliisis on what the President has called "tl-ie quality of li.fe"--the matter of our physica environment. It is clear that a better c-,ivi.rotimeiit ranls very high on the priority and I thin!-, we call aiitic2ipr.,.I--e inijor attacks oii pollution in its many forms in tiie Tiioi7Ltlis aleaci. I think it is accurate to @-til:c tl),,i t :[.ii-;Iiativcs in the health care field will have to be formulated to take account of the ])road strategies that I have outlined. IIhc-ithr-@r the strategies are directly applicable to health, remains to be seen. The. priv@ite-publi.c iiii), that characterizes he@iltii car(--. is probably as complex as any in our -society. It has been the object of eiiori,,iotis attention ind growth, with a random harvest of Pi-i.x (@d blc-sFiiig@3, in tiie yeii-s just p@ist. A fundamental problem with desi(,r,.inZ; nc%-i care initiatives is that we are not yet really clear a-, to what the initiatives should be or N-iliere to put our Pioney to deal with the so-called health care crisis. As to the major themes which I have just outlined, it may well be, in fact, tli@it, the peculiar ptiblic-privat--e character of the health industry is especially difficult to reconcile with soiie of these In these circi-,@-istances, and in view of tiie enormous --i-qoul-it of money already going into 1-tealth--6ylS billion Federal funds, $60 billion Cross National Prodtict--one can well ci-j:visioi-i that I President might prefer to make iic@@7 investments in improving the cnvirorl-.ient lqhcre lie could feel more certain about the results. 14hat is this health care crisis, any@.7ay? If you ask the consumer, the answer comes back in the form of soi@ie strident questions about what he is getting for his money. Ile may not know the figures, but he is aware of the enormous invest-,ieiit trie ii@it-.LC)n is making in health. Ile x,iondcr-@ why all the people are not the benefits oF what we know today. Ile i.,,ondc-.cs x,7iiy our iiati.oi is 15'Lli in the world in infant mortality and 22iid in life expectancy for why o,,Ie-11@Llf of the. babies born in public hospitals are I)orn to Mothers who have had no prenatal care, and why a poor child has four ti.T,,ics the risk of the noii- poor of dying before he reaches 30 years of ige. The big question is not lio@,7 much money should go into health, for after all, who can say what life is i..,orth? Ratl:ic,.r it is @,ylietlier we would be better off at the $100 billion level, and what changes we would make in how we. spend it. I think It is fair to say that we have arrived at our present state of crisis by poti3.-ing our resources and good intentions into courses of action that turned out to have elements of mythology about them. The first myth was that-viassive governmental support of biomedical research would set in motion a chain of events that would automatically improve health care for all. We supported research and harvested brilliant advances in the science and technology of medicine. This activity shaped the medical schools of today, for -ood or ill, and in large measure determined the nature of today's medical practice. But it did not, by iny means, bring about the delivery of these benefits to everyone; espedially-it failed to deliver then to those who.need them most. And in the process the newly generated technology placed a heavy additional strain on the delivery systeiii--in costs, in manpower, and in other ways. 10 Then, as we I)e-an to recoL,,i:iize tl-.e "OL-liL-r A.,,-,iorica" of 40 or 50 million poor blcicl-,s, Iiidi,-Lns, and ot ers outside the reach of the system, we succu;@"beL' to the second mytl-l--tliat the only thinc, standing betiqecn these people and the. best in he@-@ th care was lack of money. l@Te poLircd our resources and our good intentions into providin,, money tickets irito the system thrati-li prc)-rams like Medic@-irc- and illi2dicaid. These I)rogr@iins have accounted for by far the major @liare of Federal increase in cxpc@rcl-.Itures since 1.965. But again wE,. found that autoii,,,@,t.:Lc delivery of the best in health care to everybody did not happen. The hard fact is that 76 percent of the total. Federal expenditure for health is financing the entry into a health care system that is not capable of rc@spondiiic,. lie have learned to our bitter regret that in many places entrance into the system does not exist, and that added purchasing power of Medicaid and Medicarc- has led to the dilution in qual.ity of care, increase in cost, tnd the move- ment of more people into the hospital element of the system. 1,That is therefore first on the agenda to deal with the crisis in health care s the need to control our methods of financing and then a major effort by society--Government at all levels and voluntary at all levels-,-to build and shape a medical care system that natch6s our willingness to spend $60 billion or maybe.$100 billion a year. I am not sayinQ that the expenditures for research and the financial assistance pro@re@nis were not needed and a public Food. Quite the contrary. 0 But it is clear that these two approaches, each based on principles that were part valid and pirt Triyt'Li, do not the prol)l-c@i,,-t of lic@,..I.th care delivery either siii@,ly or to-(-@tlier. To cio that N,;L., need to give major attention to efforts and resources to fashion @L cic@l-j-vr-ry system. If there is a @asic imbalance bcaci,7cori the fl.nai,,ci.i-i,, of health care services and the capacity of the health care system to respond, then we need a strategy of change which will expand capacity. The strategy which I would suggest rests on a concept of investment as opposed to consumption. Although we Jerry improve the i-,I@inigcment o our fiiiancin- mechanisms, and x4e- may offer -.Incentives to raise efficiency and lower costs, let us not delude ourselves into thinking that chance,, can come about through such actions. To create @i health care systLnn will be no i-qliior fix-up operation. As a concept, investment means diverting some resources from current consumption in order to increase and improve consumption at a future time. Attainin- the benefits of tlie-irivcstr@ient can only happen after the investment has been made. Our financing mechanisms in health have been concentrated on fuiidinc, current consumption of health services. Since the pressures on financing C) current consumption ,7ill be very great in the coming years, it will be very difficult to generate sufficient investment funds from the current pa .tterns of financing health care. Furthermore the health care system, has not traditionally funded much of its capital investment from current income, a prominent example beiiic, the financing of hospital facilities throu-h charitable gifts, Federal grants, and local tax revenues. L> 12 Thus, since the of change, brill,-@Lnc, about the desired chaii@,,,2s -,.rtd in the health care system during tlia 70's will reqLiirc-. increased direct investments in the expan- sion of capacity and the inducciaent of iril)rovc,.iiieiits in organization and coverage of services. I emphasize direct investment to stimulate change because it is unlikely tfiat the spontaneous clian-es within the health care system will meet the challenge. These are some of the investments thit have to be made. In addition to closing some of 'the basic gaps in manpower and facilities, we will need to invest in innovative use of health manpower. We must increase our investment in research and development in new methods of health care as well as the support of biomedical research. We must invest in the planning and riana(,.,e-,nent capabilities that are still very underdeveloped for a $60 billion industry. We will need to further invest in better information, data, and statistics which will guide the workings of the health care system. We must provide seed money for improved care patterns. This seed money will serve as glue for the eyi8ting finance,-, mechanisms which will not presently fund a more efficient and effective pattern of health services. @lost important of all for the immediate future is an investment in filling the gaps in primary %-nbulatory care, which is the main barrier to improved health services for the poor and increasingly for the not so poor. No strategy is goin- to work, lio@,7o-vcr, unless we face up to some awesome decisions that -,.7e have been politely at-id carefully avoiding 13 for many years. John GLr(Incr on.--c observed that we Ire aii..@ious, but iir..-Taobilized. lle can br@-,',, loose from this an@,ic,.ty-piralysi.s syndrome only if we asl-l sor@-,.e really searcliin- questions, and answer then lioi-ie,-,t]-y. Questions like these: ' in the lig Can illel lit of national health care needs and the state of our resources, cling to the principle of fee-for-service as the general rule? Can we follow the freedo@---of-cliol.ce principle as far as we would like to, in the light of those same needs and resources? Can we leave such proc,,ran.,,s as Iledicare c,,i-id Medicaid uncontrolled? Can a coffi,,-,,-anity hospital continue to operate its "bus-,-iie s" on the basis of just filling its beds, or must it reach out to organize and serve community ai,,ibulatory care needs? If we are to effect change and not have a nationalized system like that of Great Britain, perhaps the creation of new community institu- tions ard investment in their support may be the most critical invest- ment requirement of all. For health car-- is ultimately a personal and family affair, and the best setting in which it can be provided is the community. But there is in the health world today no institution which can with real authority plan and Tqan:i.,,,e the organization and delivery of health care on the community scene. We have a be,,.7i.lderinc, array of individuals, -gencics, ind institti- tions. I-,Te- have in equally array of C-,overru-ientil. pro-.rams seekin- to support the disparate efforts of these autonomous entities. I,,Ie do riot have foci-l@ pc)iri.'c for trusteeship of health resource-., for the benefit ol' i-Lr.J. responsive to its people. The nature oy' this instituti.oi,. is not yet well defined, but soLiL@ o'L the ingredients are clear. It must be a peculiarly privlte-.- public i.,-iix, with sll--ro-ii.@, consulter involvement. This proviso may make health professionLtis acutely uncomfortable but the professionals have to r&cog-nizL- that they cannot -,o it alone. It must be based on a priri- ciple of geographic responsibility, and it must be strong enough to @,act frori the medical resources of the arcta----physici.,iris, hospitals, and others--the performance of defined health care functions on a gco-- graphic basis. Can this kind of community institution be reconciled with the broad themes of the new Administration? Perhaps it cannot, especially with the strong iiitergovernmental@relatioiis flavor of the New Federalism. If not, you in the health field will have to demonstrate how and why health care is different, requiring different approaches. It seems to me that the question is not whether sweeping changes in the organization and delivery of health care will be made, but rather who will make and direct them. The answer to this will depend upon the willingness or the unwillingness of the health f ield to face up to its awesome decisions. In conclusion, let me ask whether health care is an end in itself? Are we ultimately concerned only with the prolongation of life and the 15 ii-qproveiaent'of physical and i,@iet-,Lal health, narrowly etefined? Su cli a purpose, may motivate the individual researcher or the practitioner, but sociely's vision viust be greater and, if yoti move to a higher planes,.. I would sLi -est that our ultimate purpo@3c is to enhance the quality of living, in all its dimensions, and that everything we do should be vie-.!(-,d in this context.. An increasingly prevalent and corrosive characteristic of the spirit of the A:nierican citizen today is real or apparent individual despair and lack of confidence that he can deal. with the prol)le-i-ns of soc:Lety. Citizens, affected by this spiritual condition are unlikely to work to improve their health, education, or welfare because they do not believe that such improvement is possible. This lack of individual confidence extends to the efforts of government, and I think to all other organized efforts as well.. I believe that the restoration of trust, and OptilUiS!n--COTIfidence that the citizen is not helpless and that progress is possible--is an undertaking to engage the entire nation. Government, for its part, needs to develop and carry out strategies that will advance the re::)irt of the necessary sense of individual pride and progress. Placement of responsibility for health service programs in the community, where the people arms.. represent,- such a strategy. But it is for the people in the community to answer the hard questions, face the awesome decisions, and effect the changes that society demands of them tlirouch the action (not words and hopp-s) of citizens of a democracy.