etting National Priorities-The 1974 Budge@ f Alternative Approaches Administration Proposals it is impossible to discuss the future of federal Many of the major grants for health services are being terminated or reduced. It is useful to think of grants for health services except in the context of these grants in two categories. First, there are grants the availability of health insurance. If a federally under which the federal government shares the con- supported health insurance program that covered struction and operating costs of various kinds of the poor and near-poor fairly comprehensively were public health services and assists state and local enacted, some of the current grants for support of public health agencies in controlling communicable various kinds of health services would be unneces- diseases. The administration approach seems to saay. That is, an institution that provided treatment have been: reduce or eliminate most federal pro- could charge for its services and people could use grams that support specific kinds of health services their insurance to pay the charges. (except for the drug abuse program, which is ex- With the availability of such insurance, neighbor- panded); provide continuing general support, at or hood health centers now supported by federal grants slightly below prior levels, to state and local public could look to patient charges for their financing. health agencies for health services and disease con- Similarly, community mental health centers, which trol but increase state discretion as to the use of now receive federal grants for construction and funds; and retain federal control over the programs staffing, could derive part of their support from such that provide special health services for poor neigh- charges. The latter institutions perform three func- borhoods in inner cities and rural areas. tions. They provide an alternative and generally Under this approach the Hill-Burton grants for preferred means of caring for many of the long-term hospital construction were eliminated; grants for mentally ill who were previously confined to large community mental health centers and alcoholism state hospitals; they undertake community activities clinics will be phased out gradually as long-term such as mental health education; and they provide agreements for federal support expire; and those mental health services to a broader segment of the grants for maternal and infant care under which the population who do not need long-term intensive care. federal government currently selects the projects It is this third service for which they could recover to support will be converted into state formula charges from patients supported by health insurance. grants. On the other hand, the federal government The other two functions, traditionally financed by will continue unchanged its project grant program state governments, would have to continue to be for neighborhood health centers and other health services in poverty areas. underwritten by public support. In the second category of health grants, those for Providing adequate financing to people for the planning, innovation, and development, a similar purchase of health care, however, does not eliminate approach was followed. The $125 million regional the need for federal intervention. Experience has medical program was terminated. Under this pro- amply demonstrated that the existing medical care gram the federal government supported, on an indi- system does not respond quickly to new demands vidual project basis, regional cooperative efforts placed upon it and that it leaves poor urban and (usually led by the major medical schools in a region) rural areas without adequate health resources. With- for such purposes as disseminating knowledge of out specific action by the federal government, the U@to-date medical techniques and coordinating introduction of a national health insurance program planning for the use of corn lex medical technology. may accelerate the rise in medical prices and divert @ p resources away from poor areas which already suffer On th.e other hand, the broad grants to state health from a shortaee of health care. Two kinds of reforms agencies for planning their own public health pro- are needed: first, federal developmental support grams were retained, after a slight cut, as were federal grants for research and development in for new types of medical care delivery which prom- health services. ise to use medical resources more effectively and distribute them more equitably; and second, federal *Health Services incentives for health care personnel to locate in Brookings Institution areas where such care is scarce and for an increase 1775 Massachusetts A venue, N. W., Washington, D. C, in.the number of health professionals recruited from 20036, $3.95. minority groups. VOL. 38, NO. 1 29 coyin. raea. icII4 :3cLyl; 3e,(I) There are five major kinds of innovation in the be required to meet the test of the marketplace. govern- After the initial subsidized years they should make delivery of health care which the federal ment now supports through some type of separate it on their own, at least in providing health care grant. Neighborhood health centers (principally in covered by insurance, financing the costs of such inner cities) and community mental health centers care (including the cost of capital) from fees. As have been mentioned. Grants are also made for time passes, the experience of different kinds of projects to improve health service delivery in remote institutions should help the federal government rural areas. Although the financing of their ongoing judge which kinds of developmental grants to em- operations could be fully or partly borne by charges phasize and which to reduce. levied on patients under a comprehensive health in- For all five of the areas concerned, the 1974 bud- surance system, it is unlikely that new centers would get provides about $530 million in grants. Of that spring up without federal developmental support. amount some $125 million represents the fiscal Health maintenance organizations (HMOs), which 1974 cost of carrying out long-term (eight-vear) provide comprehensive medical services for a de- agreements to support community mental health fined population in exchange for a fixed annual centers; even though the administration proposes payment for each person served, are believed by to phase this program out as the agreements expire, many to offer a promising means of improving the funds will have to be made available for a number efficiency and effectiveness of the health care sys- of years to honor the agreements. Similarly, the total tem.3 The administration proposes $60 million in includes $135 million to carry out previous agree- developmental grants in the 1974 budget, a sum it ments on hospital construction under the terminated estimates will assist in the establishment or improve- Hill-Burton program. ment of about 120 HMOs. Under the alternative proposed here, the grants The Hill-Burton grant program has provided financing the delivery of ongoing services or the financial assistance for the construction of hospital construction of facilities would be replaced with a bed facilities and, increasingly in recent years, for new, flexible grant program for developmental pur- @t ambulatory and outpatient facilities at hospitals. poses. With the need for expanding the availability This program is terminated in the 1974 budget. Its of services in areas where they are inadequate and two basic objectives should be considered separately. the acceleration of demands on the system resulting More hospital beds are no longer needed; indeed, from a new health insurance system, total annual there are now too many in the United States. The commitments of perhaps $500 million, to be reached occupancy rate in community hospitals has been by fiscal 1976, would be appropriate. Further ex- declining since 1969 and is now below 80 percent. pansion thereafter might be warranted depending Not only does this excess capacity drive up the cost on how successfully the new institutions meet the of medical care but it encourages hospital treatment needs of the population they serve. The net addi- of health problems that could be taken care of more tional cost of the new program would be about $250 efficiently and effectively on an outpatient basis-in million in fiscal 1976 and $225 million in 1978, doctors' offices, in clinics, or at home. There is, how- over and above the expenditures projected by the ever, a need for expansion of outpatient and ambula- administrations tory care; it is often a better way of dealing with The development of new institutions for the im- illness and is particularly important in poor sections proved delivery of health care would itself attract of central cities, where there are few private phy- more physicians and allied health professionals into sicians. But providing such support through con- areas where such care is scarce, but several addi- struction grants is inefficient. Subsidizing construc- tional steps would contribute to this end. tion leads to overinvestment in facilities and too Members of minority groups suffer particularly little support for operation and maintenance. from lack of medical care, in part because many of Instead of these five separate grant programs- them live in low-income areas and in part because of some supporting initial development, some ongoing the shortage of medical personnel willing to serve services, and some capital construction-what is inner city areas heavily populated by blacks and needed is a single broad grant program under which other minority groups. Federal efforts to increase the the federal government can furnish the seed money supply of medical personnel from minority groups for the initiation and development of more effective would serve three purposes: providing members of means of delivering health care, according to the these groups with greater professional opportuni- needs of particular areas and population groups. ties; taking advantage of an underutilized resource - Under a federally supported health insurance sys- bright young people from minority groups-to in- tem, the institutions developed should ultimately crease the supply of medical personnel; and training 30 CONNECTICUT MEDICINE, JANUARY, 197 le more likely to practice among minority has varied, obviously, from one to another, and peop groups. In a society where there were no distinctions performance is exceedingly difficult to measure. of color or race, this last objective would be irrele- Moreover, health care in the United States is a $77- vant. The problem of bringing additional health billion-a-ycar industry. That it cannot be revolution- urces to the poor, whatever their race, would be ized through the expenditure of $125 million a year reso the same. But until that point is reached, the availa- on RMPs is hardly surprising, and not in itself an bility of health care for minority groups may remain indictment of the program. related to the availability of minority health person- The planning, innovation, and knowledge-dis- nel. Pursuit of these objectives would involve pro- semination functions of the RMPs have several viding financial incentives for members of minority characteristics: (1) unlike service delivery programs groups to attend medical and other health profes- they cannot be supported by the marketplace, even sional schools, and perhaps financial incentives to with insurance; (2) medical schools and other health medical schools to admit a greater number of stu- centers have no funds to support such efforts on dents from minority backgrounds. This effort, how4L their own-continuing support must come from ever, would increase the suppl5L of medical services public sources; (3) the major need for improvements to minority communities only after a fairly long in health service delivery varies substantially from period of time. There is also a need, particularly in area to area; and (4) the funds now devoted to RMPs this interim period, for supporting programs train- are large in comparison with what states budget for ing minority paraprofessional personnel to work in health planning and with other federal funds avail- community health organizations. Since the cost of able for health planning and development purposes. such training should not be part of the charges levied It is unlikely that RMPs will be continued with on insured patients, separate financial support by state funds once federal support is withdrawn. The the federal government would be necessary. At the federal government has provided the means of present time the costs of many community health launching these new organizations. Simply with- organizations are higher than would be justified by drawing its support will virtually ensure that most the provision of medical services only, because these of them disappear, whatever their merits. One al- organizations provide on-the-job training for com- ternative to the administration's proposal for elimin- munity residents in paraprofessional skills - efforts ating the program is to combine RMP funds with that should be separately financed and expanded the $148 million in federal funds now available to as the number of communit based organizations states and local communities for planning and carry- ,y- increases. The additional incentives needed to sup- ing out their own comprehensive health service port the entry into medical and dental schools of an projects, thereby allowing each state a choice be- additional 1,000 minority group members each year tween continuing to support RMPS and devising and paying for the training of 10,000 paraprofes- other mechanisms for accomplishing the same pur- sional personnel a year in community health organi- pose. This would add some $125 million a year to zations would require added budgetary expenses of the budget proposed by the administration. about $60 million. All of the above discussion assumes the introduc- The regional medical program (RMP), which the tion of a national health insurance scheme, which administration proposes to terminate, is a planning would, among other things, provide reasonably and innovation-spreading effort. There are fifty-six comprehensive coverage with zero or low deductibles regional cooperative arrangements supported by and coinsurance for the poor. If such a plan is not $125 million in annual federal grants' According to adopted, a strategy that included termination of the administration, "There is little evidence that on service grants to neighborhood health centers would a nationwide basis the RMPs have materially affect- not be workable, since the centers would then have ed the health care delivery syste .5 M. few sources of financial support. Similarly, the It is difficult to gauge the validity of this judg- administration's plans to terminate the Hill-Burton ment. Initially, the RMPs were established to up- program and to phase out support for community grade the treatment of heart malfunction and defects, mental health centers would lead to serious conse- cancer, strokes, and kidney diseasei subsequently, quences for the centers and for the expansion of they were broadened to deal with more general ambulatory facilities in urban hospitals. improvements in the health care system. Ideally, if there is no comprehensive insurance plan, they were to provide a mechanism by which medi- therefore, a second alternative must be considered. cal schools and other leading medical centers in an This would include continuation and expansion of area could take the leadership in improving health service grants for neighborhood health centers, care in their section of the country. Performance roughly tripling the level of support by 1978 and VOL. 38, NO. 1 31 making possible a substantial increase in coverage The education and training program for minority for the low-income population served by these health personnel and the integration of RMP funds centers; continuation of service grants for com- with state comprehensive health grants would also munity mental health centers; expansion of the be incorporated in this alternative. Measured in HMO development grants from the $60 million pro- terms of outlays this alternative would add $465 vided in the 1974 budget to $ 1 00 million in 1976 and million in fiscal 1976 and $945 million in fiscal 1978 $200 million in 1978; and conversion of the Hill- to the outlays projected by administration proposals. Burton construction grants into a new kind of grant (This alternative costs more than the first one prin- costing S 1 50 million a year and designed to encourage cipally because, in that approach, health insurance more ambulatory treatment in urban hospitals. Sup- would pay for some of the services financed by porting health service delivery through construction grants in the second alternative.) grants has the disadvantages discussed earlier. As a substitute, the federal government could agree to pay a specified portion of the annual costs of any expansion in ambulatory care and outpatient treat ment undertaken by hospitals serving areas with REFERENCES large concentrations of low-income people. Loan 3. See Charles L. Schultze and others, Setting Alational Pri- guarantees for construction would be made available orities: The 1973 Budget (Brookings Institution, 1972), pp. 232- as necessary. If these grants proved successful in 34,-for a discussion of HMOs. 4. The relatively low net Cost reflects the phasing in of the new substantially increasing the delivery of ou!pa!ient programs as some of the old programs are phased out. services, federal support could be increased in later 5. The Budget of the United States Govemment - Appendix, years. Fiscal Year 1974, p. 383. FOR PATIENTS OF ALL AGES. REGARDLESS OF RACE. COLOR OR CREED. WHO NO LONGER RE- OUIRE GENERAL HOSPITAL CARE AND WANT TO BE HELPED TO"GET UP AND GET WELL FASTER@ ol SOUND VIEW HAS AN ACTIVE RESTORATIVE AND REHABILITATIVE PROGRAM WHICH IS WELL KNOWN TO THE MORE THAN 150 AREA PHYSICIANS WHO HAVE ADMITTED THEIR PATIENTS To OUR FACILITY. OUR LARGE NURSING STAFF, PHYSICAL THE.RAPISTS. OCCUPATIONAL THER- APIST. SPEECH THERAPIST AND SOCIAL WORKER ARE CONTINUOUSLY INVOLVED. PLANNING AND ADMINISTRATING A REHABILITATION PROGRAM FOR EACH PATIENT. t THREE RESIDENT PHYSICIANS ARE AVAILABLE TO ASSIST THE @PATIENT'S PERSONAL PHYSICIAN* SOUND VIEW-SPECIALIZED CARE CENTER CARE LANF- WEST HAVEN (BETWEEN V.A. HOSPITAL AND NOTRE DAME HIGH) 934-7955 ONE IN STAFF FOR EACH PATIENT MEDICARE & BLUE CROSS "65" APPROVED t 32 CONNECTICUT MEDICINE, JANUARY, 1974 @ I I