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