(00:00:00) in my own personal experience when I was Secretary of H, ew, I went out and talked to my daughter's seventh grade (00:00:10) class. (00:00:12) And I took them for about 15 minutes about health promotion and disease prevention and drugs and alcohol and at the end of the talk each little girl about twenty two little girls in the class came up to shake hands (00:00:27) with me. (00:00:29) I said to one of them. How did you like it? She said it was boring. Klaudia. My daughter was so embarrassed for her father. She just grabbed my jacket like that and she said daddy daddy. Don't pay any attention to her. She's a smart. Aleck. The only thing she ever does is repeat what every other girl in the class says So I ever since then I've been humbled when I speak about health care. This year Americans will break the two billion dollar a day Barry in health care spending by Year's End the nation's annual will be spending at an annual rate in excess of three quarters of a trillion dollars. That's more than enough to provide all the health and long-term care. Our people need yet instead of mounting efforts to do just that a growing number of politicians and Health Care Experts seem bent on continuing to ration care for decades. We've ration Care by our wallets those with the thickest wallets get the best care many of those with empty wallets get little or none for the future many experts proposed to distribute care more intelligently and more fairly by subjecting most of the population to the rationing now reserved for the poor. Rationing is a McCobb dance of Despair choreographed by the failure of half-hearted efforts to rein in health care costs by extravagant waste by refusing to provide timely care to the poor and by self-indulgent lifestyles. Wanting to play God rather than serve him these experts now claim the wisdom to decide who should suffer how much pain how long who should walk in who should limp who will live and who will die and when it's no accident that the most aggressive rationing scheme Oregon's is aimed at and limited to the poor the state's Medicaid beneficiaries. the willingness of our people to spend 750 billion dollars on Health Care this year should be an opportunity to release the poor from rationing and give Americans all the Care they (00:02:52) need (00:02:54) That kind of tab might be acceptable if we were buying better health care for all our people or at least care for many more of them after all Healthcare spending grew as a proportion of GNP just after Medicare and Medicaid then we gave the elderly and most of the poor access to care about 25 million people were brought into the Health Care System. But since the late 1970s Healthcare share of GNP has more than doubled. The number of people with access to care has actually dwindled at its peak in the late 70s Medicaid covered 75% of the poor people today only about 40% are covered and the number of Americans without health insurance has soared to some 37 million. Preventable disease abounds childhood ailments like mumps and measles are on the rise malnutrition is up. Tuberculosis is back in our city slums. It is an unconscionable cop-out to resort to rationing by any means the current scheme of wealth or any new one based on age a lottery of diseases or computer quantifications of pain or the odds of success when we can have care for all our people with a little efficiency prudence and prevention. First efficiency at least 25% of the money we spend on health care as wasted. That's a hundred and eighty billion dollars this year including 40 billion taxpayer dollars. (00:04:31) We have tremendous excess (00:04:32) capacity in the system hospitals are operating in an average just about just above 60% of their capacity many are operating at less than 50 percent. We have somewhere between 400 and 500 thousand excess hospital beds the cost probably about fifteen billion dollars a year. (00:04:52) There are (00:04:53) 10,000 mammography machines in operation. That's four times the number we actually need to recover the cost of this excess capacity owners charge an average of more than $100 for each mammogram without that excess capacity. The cost would be less than $50 every Community Hospital need a multimillion-dollar magnetic resonance imager the two million dollar lithotripsy a six million dollar pet. I am no Luddite those gangs that smashed machines in England over a century ago saw nothing in their day and their descendants will solve nothing in our time. We need new technology. We need it's miraculous diagnosis and cures, but when new technologies are proven effective and appropriate we should at least ensure that they substitute for the Technologies they replace In a study published in the Journal of the American Medical Association University of Pennsylvania Physicians found that the use of five new diagnostic procedures was not accompanied by any reduction in the test. Those procedures were designed to supplant while Lee's have cat-scans of the head. For example nearly doubled over the three-year period studied the use of brain scans and skull x-rays, which the CAT scan should have replaced remain (00:06:15) constant. And the red tape (00:06:18) in our system the red tape produces billions of dollars of red ink, we have created a Dante's Hell of manipulation and regulation insurance company medical Auditors and government bureaucrats push and shove each other to look over the shoulder of every Doctor Who's bills they pay they monitor every patient provider procedure and prescription forcing doctors and nurses to become Masters of the Universe of regulatory manipulation rather than Masters of the Universe of medicine in their efforts to hold down costs employers and insurers have deployed Legions of doctors and nurses to check up on other doctors and nurses who are diagnosing patients prescribing treatments and setting hospital stays the cost to insurance companies doctors and hospitals to document the eligibility of patients obtain approval of Hospital admissions and other procedures and Bill page. It's will this year for the first time in our history top 100 billion dollars insurers say they've got to set their bureaucratic traps because of fraudulent and abusive claims that cost them in the government 60 billion dollars in 1989 10 percent of healthcare spending that year. In rebuttal Consulting companies now offer seminars to doctors on how to maximize their reimbursement and there's even a newsletter which has sprung up this year to advise Physicians on billing strategies. And and the rising number of Americans without health insurance presses doctors and hospitals to scramble for ways to recoup some of the costs of the uncompensated care they provide. Most ominously threatening to our world-class medical centers is the explosion of paperwork demanded from doctors and Hospital administrators. It has become demoralizing and it's discouraging some of our best young minds from entering medicine and encouraging top Specialists to retire early most ominously for patients this bureaucratic jigsaw of reimbursement denies them care as their legitimate medical needs don't fit the insurers puzzle and nowhere incidentally is that denial of care more devastating than in the area of mental health and psychiatric care. (00:08:44) Unnecessary (00:08:45) tests millions millions of unnecessary procedures and tests are performed each year half the coronary bypass has most cesarean sections and a significant proportion of other procedures such as pacemaker implants and hysterectomies are unnecessary or of questionable value a physician editor of the journal American of the American Medical Association is convinced that more than half of the 40 million tests performed each day. Do not really contribute to a patient's diagnosis or therapy many procedures and tests are performed because of our medical malpractice protection racket too many are performed because doctors simply don't know the precise circumstances under which many procedures work. How doctors are paid is another Factor privately insured patients are far more likely to receive sophisticated coronary care that uninsured patients the odds for example of a privately insured patients receiving angiography for the same symptoms are eighty percent higher than (00:09:52) uninsured patients (00:09:53) higher income women have C-sections twice as frequently as women in lower-income groups regardless of age race, ethnic group, even regardless of complications of the pregnancy. And doctors who operate their own equipment such as X-ray and ultrasound use Diagnostic Imaging four times more often than those who refer patients to radiologist these doctors operating their own equipment. Also charge more for the same procedures the authors of this New England Journal of Medicine study found. It wasn't an isolated incident. They examined 66,000 episodes of care provided by 6400 Physicians and listen to this state. (00:10:40) The I quote the (00:10:41) greatest single curse in medicine is the curse of unnecessary operations and there would be fewer of them if the doctor got the same salary whether he operated or not. That's not some government budget here corporate Chief Financial Officer or wild-eyed reformer speaking in 1990. That is a quote from. Dr. Richard Cabot a professor at the Harvard Medical School speaking in 1938. Our medical malpractice system does more than generate unnecessary tests and procedures it drives some of our best doctors from the profession of the roughly eight billion dollars in annual premiums will doctors and hospitals will pay this year less than half will end up in the hands of injured patients more only only a fraction of patients who actually suffer injuries will ever receive any compensation. Medical professionals should be held accountable for negligence and incompetence but not for disappointment and grief over events. Only God can control State Should limit the amount of financial recovery too modest payment for pain and suffering as California has and Link legal damages to the cost of healthcare compensation for lost income and lingering disability and they should sharply reduce contingent legal fees. Malpractice premiums and the cost of defensive medicines they spawn a man to about 30 billion dollars a year in health care (00:12:14) spending (00:12:17) defensive medicine flourishes because there are no agreed upon standards as to what constitutes appropriate care. A recent doctors do not understand know for sure. When a coronary bypass is appropriate when these other procedures are appropriate. It is essential to find out what works and what circumstances such standards can provide a safe harbor for Physicians protecting them from malpractice claims. The Physician Monopoly over the practice of medicine was once a legitimate and much needed reform that came out of the flexner report today. It is an economic Monopoly that denies Americans the efficiencies of modern technology nurses and physician assistants are prohibited from performing many common procedures and making many routine examinations and diagnosis far less expensively and just as competently as doctors, these Healthcare professionals can perform a host of tasks including annual physical examinations Health assessments diagnosing and treating many wounds sprains and common respiratory ailments nurse midwives can handle normal deliveries as effectively adopt as doctors and it far less cost indeed midwives are increasingly used in rural areas and we are malpractice insurance premiums have made the practice of obstetrics prohibitively expensive. (00:13:50) Answer (00:13:52) nurses can be especially helpful in the follow-up necessary to help alcohol and substance abuses and in assisting physicians in their health promotion and disease prevention efforts in rural areas in this country nurse practitioners provide virtually all the primary care that those of us in urban areas go to pricey internists to (00:14:13) receive. And prevention (00:14:17) two-thirds of all disease and premature death in this country is preventable but less than three tenths of one percent of our national health bill is spent for health promotion and disease prevention. The priorities are obvious quit smoking stick to proper diet control drinking stay away from drugs exercise learn to handle stress and take preventive measures like regular check-ups. America's don't like Americans don't like being preached to but they can be persuaded. It's a wonderful wonderful story that Churchill's doctor tells in his biography in his book about Churchill in which he says Churchill came to see him. One day and said I feel terrible. I'm wheezing. My eyes are watering. I have awful headaches trouble sleeping at night and the doctor said, mr. Prime minister. You've got to stop smoking. It doesn't cigars a day and drinking a bottle of cognac (00:15:13) every night and (00:15:15) the doctor describes Churchill is looking at him chillingly and said my dear doctor if I wanted to do that I wouldn't need (00:15:21) you. (00:15:27) And the cost of these preventable diseases and incidents is enormous just one example the cost of teen pregnancy in the United States of preventable health risk is 22 billion dollars a year in Medicaid benefits food stamps and welfare (00:15:44) payments. (00:15:46) Before the Advent of modern medicine counseling played a major role in the doctor-patient relationship partly because Wonder drugs and Miracle surgery weren't available doctors must reclaim their role as Educators and advisors and be paid for performing it and we patients must understand that fees spent for this service are often better spent than those which only pay a doctor to do something to us put another way doctor must doctors must give us more of that old TLC tender loving care and less of the new TLC technology Librium and cat-scans prevention does work a study of the health promotion program here at General Mills found that the cost of absenteeism of those who participated in their program were 40% less than those who did not and within two years the risk of heart attack among women who quit smoking is the same as those who never smoked. (00:16:47) Managed care this (00:16:48) is a great Center in this country for managed care and you've been ahead of the curve for many years. (00:16:54) But now the (00:16:55) free choice era of American Medicine is indeed drawing to an end in 1984 just 7 years ago 85 percent of all employee health coverage was by unmanaged fee-for-service plans, which afforded the employee wide-open choice of any healthcare provider in 1990 last year only 20 percent of employees enjoyed that kind of freedom. (00:17:23) And a word about (00:17:24) addiction addiction is public health Enemy Number One in America, its economic cost easily exceeds 300 billion dollars in healthcare disability payments lost productivity accidents and crime the true cost in health care alone is probably a hundred billion dollars. The number of people involved gives new meaning to the word awesome 54 million Americans are hooked on cigarettes 18 million are addicted to alcohol or abusive about a million addicted to heroin (00:18:01) at least 10 million (00:18:02) Americans abused barbiturates and other sedative hypnotic drugs 66 million of our citizens of use marijuana, five and a half million use it more than once a week 23 million have tried cocaine 2.4 million use it every week more than half a million users loosen the Jen's like LSD and PCP at least half a million years crack. No one knows how many millions of these people are dependent in one way or another on those drugs and these numbers I've used are the numbers of the administration the drug abuse policy office the numbers of the Senate and House Healthcare committees are higher. (00:18:42) In New York City (00:18:44) alone. There are 750 thousand heroin cocaine and crack addicts about one in every 10 New Yorkers drugs. And/or alcohol are implicated in 80% of the nation suicides and two-thirds of the nation's murders rapes child molestations and assaults to say nothing of the millions of robberies to pay for expensive drug habits, and the senseless vandalism of high school and college students hopped up on beer and pot. In New York City Bob morgenthau told me a couple of years ago that 80 to 90% of the men arrested for felonies test positive for hard drugs. 3/4 of the people in state prisons are there for alcohol or drug-related crimes or crimes committee while Under the Influence for the first time in our history this past year 1990 more than half the people in our federal prisons were there for drug-related crimes? We have more people in prison in the United States of America than any country except China and the Soviet (00:19:53) Union because of addiction (00:19:58) We need a National Institute of addiction in the National Institutes of Health. It's been very difficult to get our minds persistently concentrated on preventing and treating addiction partly because the problem is so incredibly complex partly because the funding for it has been so erratic (00:20:15) if we make a (00:20:16) commitment as we have done with respect to cancer and heart and lung (00:20:20) disease and the largest cause of cancer and heart and lung disease incidentally is probably addiction to cigarettes and abuse of alcohol (00:20:29) if we make that kind of a commitment. I think we can do something about it. Unfortunately for our health care System purchases of care are so frustrated by relentlessly Rising costs that they spend more time figuring out how to dunk costs on one another then how to provide quality medicine at reasonable cost. The FED seek did not more Medicaid costs on the state's the states on the big cities government at all levels on the private sector and much of the business Community is now engaged in an attempt to dump costs back on the government. Instead of scheming how to get somebody else to pay the bill or constructing bureaucratic maze ways to ration care. We should be focusing on how to eliminate senseless waste in our Health Care system and share its benefits with all of our citizens. I've given a few examples of how we can use our resources more efficiently. If we convert it to productive use just a portion of the hundred eighty billion dollars. We waste each year we could afford even the most ambitious proposals to provide healthcare for all our people clearly. We must act like GK Chesterton. I do not believe in a faith that befalls people. However, they act I do believe in a faith that befalls (00:21:49) them unless they act (00:21:51) the alternatives to action is a grim future. Many workers and retirees will lose their employer-based coverage or have a drastically reduced something that's happening. Now in the wake of the changes in accounting rules Medicare beneficiaries will wait and longer and longer lines for lower and lower quality Care millions of citizens will continue to be denied access to care Millions more will fall victim to addiction and only the wealthiest Among Us will be able to afford long-term care (00:22:22) that future is not fantasy and (00:22:25) it's not far away fortunately the money needed to avoid it is already allocated to healthcare. We need only spend that money wisely. If we do we can provide higher quality care for all our citizens at the same price. We're now paying to provide a declining quality of care for only some and whether we Act is not a decision to be left to Physicians and politicians. It is a decision for all of us as Citizens and particularly for you as leaders in your community too, many of us. Don't try because the task seems so difficult. Sometimes impossible of course will make mistakes plenty of but we must not fear (00:23:14) failure. (00:23:16) What we should fear above all is the Judgment of God in history. If we the most affluent people ever on this Earth free to act in any way. We wish choose not to distribute these resources fairly choose not to distribute them efficiently, or worse if we choose not even to (00:23:37) try. Thank you. Well now take a number of questions from the audience. I think they need the microphone will get a microphone. One moment. question from John Burbridge I was waiting patiently for you to give us the solution to all of these problems. Just for starters. Do you think there's a place for the states to solve these problems or will it require a federal solution? (00:24:32) I think that these battles will in good measure before doubt Community by Community (00:24:41) state-by-state (00:24:45) more than they'll be for doubt on the federal level. I don't think there's some federal magic wand for (00:24:49) example, (00:24:51) we've had excess Hospital (00:24:52) capacity in this country for probably 15, maybe 20 years now. There have (00:24:59) been all kinds of suggestions about to the federal government about how (00:25:02) to read read close hospitals and what have you they haven't had much success in doing it. (00:25:09) We know as a as a matter of just quality medicine and common sense that (00:25:15) most of the (00:25:15) rural areas in this country with hospitals at 30% capacity would be better off with a good Primary (00:25:21) Care Clinic and a helicopter to take them to a decent Hospital than they are now. I think that (00:25:29) solving that problem in our society is going to take a lot of different things. I would suggest for example that insurers and employers who pay for health insurance say that we're not going to fund hospitals. We're not going to reimburse hospitals at their full level that are (00:25:47) below 50% capacity will only reimburse them for 25% of their costs. We want our people to go to more efficient hospitals and get better quality care. I (00:25:58) think I think Medicare should do the same (00:26:01) thing. So I think it would take action both in the private and the public sector. (00:26:06) Secondly. I'm very (00:26:07) wary of the ability of the national government. To deal with this problem in its entirety (00:26:15) for a couple of reasons. I do think personally. I've only just tell you what where I would come out (00:26:20) ultimately. (00:26:22) I think I would take advantage of the part of the system that exists now that works by (00:26:27) and large which is the employer based coverage. I would mandate coverage of employees. I would (00:26:34) provide significant help to small (00:26:36) business so that we don't put too much of a (00:26:39) burden on the remember the same kinds of (00:26:41) arguments that small businesses making now about HealthCare coverage (00:26:45) were made when the minimum wage was put in (00:26:46) place in the 1930s and we have a lot of small businesses surviving and I would have a minimum health care bill just the way we had a minimum wage Bill I'd make it part of the employment relationship. (00:26:58) For poor people and old people and the (00:27:01) unemployed I would have one program. I've combined Medicare and Medicaid and have the government run it now. (00:27:10) The reasons I wouldn't have a single National Health Plan run from Washington are really there are several but the 22 leading ones are one. I don't think the government can do it efficiently not because the government is just incompetent because this is Healthcare is one of our nation's three biggest industries. It is now probably the healthcare industry probably contributes as much if not more than any other industry including tobacco (00:27:35) and perhaps energy to the to the (00:27:38) Congressional and senatorial races in this (00:27:40) country. They are big political contributor. You have (00:27:43) medical equipment manufacturers pharmaceutical companies hospitals Physicians nurses the whole (00:27:50) system and the unions that represent them (00:27:54) in that kind of a situation our Congress in this day and age (00:27:58) is paralyzed. They just are just incapable. They (00:28:03) can't put in the kinds of screens that almost any large corporation (00:28:06) has now to eliminate (00:28:08) unnecessary care in the (00:28:10) Program why they can't handle the pressure (00:28:13) all that money and (00:28:14) secondly and with respect to Medicare that the people who vote most in this country are old people and the combination the one-two punch of their biggest (00:28:24) contributors and their largest voting Bloc is too much for them to deal with and secondly, we're very pluralistic society. We have all kinds of views (00:28:33) on all kinds of things and I just look at the abortion battle in this country any decision on abortion whether you have fun some or none (00:28:43) or all whatever is going to be enormously controversial different people have different views sincerely held I don't think we want one person in Washington making those decisions, especially (00:28:55) I think the abortion issue is a tea party compared to what we're going to see in terms of taking care of the elderly who have who have serious illness and I don't think we (00:29:06) want one person setting the rules for who gets what (00:29:10) when they're over 80 and sick. He's very hard (00:29:13) to do that when I was (00:29:14) secretary. I (00:29:16) stopped heart to Medicare funding of heart transplants (00:29:20) in (00:29:20) 1977. They cost about three about (00:29:23) $400,000. I thought it was just too much (00:29:26) my success of reinstated (00:29:28) funding of heart transplant operations. Because she thought it was just not right not to pay for them for people and a (00:29:36) few years ago. Doc Bowen when he was secretary (00:29:39) again, stop Medicare funding for heart transplants. I don't think you want one person making those kinds of decisions in a pluralistic society. I think they should be made state by state or Community by Community. I know we have a question from David Rod born one of the models that has been looked at periodically as the Hawaii State Health Care system, which covers about 98 percent of the state's population. Although some of those are at a lower level of benefits than others. I wonder if you could assess that it would seem that some of the things you just described would fit the Hawaii (00:30:12) mom. Well, I think they would I think you have to remember one thing (00:30:15) about Hawaii you have are more than one thing (00:30:18) but the most important thing to remember about it is it is the healthiest state in the (00:30:22) country it is it it's (00:30:24) people are far healthier, for (00:30:26) example than people living in industrial States like New York and, Michigan But it's by it is the (00:30:33) healthiest state in the (00:30:34) country and that has a significant impact on their health care bill. (00:30:39) But yes, I think Hawaii is an example of a system. It's (00:30:42) not exactly what I described similar and it does work so that I think I think a system like that will work and you know in the real (00:30:51) world in Britain Britain has socialized medicine the doctors are on the payroll and nurses are (00:30:57) on the payroll of government owns the hospitals that happened because at the time they (00:31:01) put their Health Care system in place. That was the way it was it was right at the end of World War II all the doctors were in the military and the (00:31:08) government had taken over the voluntary hospitals, which had collapsed from the weight of War casualties Germany (00:31:14) it system is basically run by through the union trusts the unions in Germany do what the employers do here. (00:31:22) They had been the source of the healthcare benefit just as our employers and managers (00:31:27) are here. That's why I think we'll build on the existing (00:31:30) system. Thank you. Mr. Califano. Our next question is from Selma Schwartz. Mr. Califano, I hope you'll excuse me, but I'm going to use a dirty word to dirty words socialized medicine. That's what they have in Germany. That's what they have in Britain. That's what they have in Canada. And I don't know how many other countries of the world and you are talking about socialized medicine, but carefully avoiding the term. I would like to know how your solution would differ from these successful. Methods of taking care of everybody when they need care sometimes the lines are long but they get along in America to thank you. I (00:32:24) I think Britain does have socialized medicine if by that term you mean the government does everything Britain has a much more homogeneous society than we (00:32:33) have and (00:32:35) our society is much more heterogeneous. I don't think that kind of a system will bring as anything except enormous (00:32:42) controversy over the years. I (00:32:45) do think we should cover everybody in this country. But but in a by and large, you know, we do have the best health care system in the world in terms of quality (00:32:56) medicine and superb medical centers (00:33:00) by and large the private sector with some help from the government has built that system and I would keep that part of it in place. Germany system is run by the unions. (00:33:13) It is administered (00:33:14) by the Union's it is not administered by and large by the federal government. There are also two big differences between their cultural differences which are very important. Our staffing of hospitals for example is probably three to one for 213 employees for one patient in Germany. It's one-to-one. If you go (00:33:34) into a German hospital I mentioned this last night you (00:33:38) When lunch time comes or dinnertime our breakfast the card is rolled off the elevator the trays are on at somebody rings a bell and every patient that can get up and walk because up and gets their meal takes it to their bed eats it and takes it back and brings the meal to the other patients something you would not see an American Hospital the Canadian system Canadians doctors are paid much less than American doctors Canadian nurses are paid much less than American nurses the Canadian system is also I think we should begin to recognize in an increasingly deep trouble their costs are rising as fast as ours. The the provinces are straining under the burden a Canadian province the head of a Canadian province. If you sit down with him will sound exactly like a governor in the (00:34:27) United States (00:34:28) saying my God, I can't handle his health care budget. It's busting (00:34:32) my provincial budget. (00:34:34) So I think we have to be realistic about that, but I do I think everyone should be (00:34:39) covered. You are listening to a broadcast of Minnesota Mead featuring Joseph califano sponsored by the law firm of Oppenheimer wolf and down lightly. Now. We have a question from Howard Swift Harold Swift. (00:34:57) You mentioned that the impact on Mental Health Care has been particularly devastating. Could you comment further in that place? Well, I think that I think that the insurers have (00:35:08) really (00:35:12) increasingly made it very difficult for Psychiatry psychiatrists a mental health hospitals people being treated for substance abuse (00:35:21) to to recover (00:35:24) the costs partly because it's so different. They think it's so difficult for (00:35:28) them to measure and into and when you (00:35:30) start squeezing down on costs, these are the easiest ones to squeeze down on you don't (00:35:35) have a break in the arm, which you can see on an (00:35:37) X-ray, you know remember (00:35:40) in (00:35:41) Basically, we had life insurance that we didn't have Commercial Insurance in this country for years. Even after the Blue Blue Shield and Blue Cross started because the commercial insurers couldn't figure out how to plot the odds took them a while to learn how to plot the odds they then learned how to what they learned how to plot the (00:35:58) odds and and they watch the blues grow and the southwest and we have commercial insurers. There are (00:36:04) now in trouble again on plotting the odds and I think the easiest Target is (00:36:08) mental health and they unfairly go after it and I (00:36:11) think we pay a fearful (00:36:12) price in this country for that incidentally. Thank you. Mr. Califano. Our next question comes from Arthur (00:36:18) sethrie. (00:36:19) Mr. Califano, would you (00:36:21) discuss a bit the changes that were made in Chrysler is employee health insurance plan the the largest single change we made was in the early 1980s when we put in screens requiring second opinions and setting standards for admission for hospitals for surgery and also limiting. The (00:36:42) number of days people would be in hospitals that saved us about actually (00:36:48) including the related doctors and surgeons fees (00:36:50) more than 50 million dollars a year. Secondly (00:36:55) we with respect to lab tests. We instead of letting doctor send lab tests wherever they wanted to we went out to laboratories on confer competitive bids. The highest bid was 30% less than we were then paying in that particular lab and we now require an employees if they want us to pay for the test and their Physicians to send their tests sent. Labs that (00:37:20) have the one the two Labs that have won the bidding for example in Detroit (00:37:25) thirdly. We moved aggressively to have our employees use generic drugs, wherever possible where people had chronic illnesses to use mail-order drug houses, which are far less expensive than (00:37:40) Pharmacists and and with (00:37:41) respect to pharmacists in cities where we had large concentrations of employees like Detroit or St. Louis (00:37:48) or Newark Delaware. (00:37:50) We put together we went to pharmacist and said, you know, if you want us to use you we (00:37:54) want good prices and our employees would use you (00:37:58) we we did a lot of other things with respect to our dental plan. We created a dental HMO and basically the only time you pay is if you don't go for your periodic checkup, or if you have children who are in the high (00:38:11) cavity years and they don't get fluoridated three times a year. Our (00:38:16) difficulties have come in in the cost of out. Patient care physician care that's still rapidly (00:38:23) rising and the costs related to substance abuse and alcohol. We have we have not it's been very difficult to find effective treatment programs that are long-lasting and we're still working on that. Mr. (00:38:40) Califano, we did not the other thing we did we did use we did use increased co-pays and deductibles to encourage people to go into more efficient health care plans and the fee-for-service wide (00:38:52) open Blue Cross Blue Shield plan. And (00:38:55) as a result of that we have about 70% or more of our white-collar employees in those plans. (00:39:02) The UAW employees are under a Union contract and we and we're unable to do that with them. Sorry. Yes question from Tim Stoddard in 1991 Caterpillar corporation spent about a hundred ninety six million dollars on Health Care related costs premiums (00:39:26) if next week you woke up in someone said congratulations, you're CEO of (00:39:29) caterpillar and the Comptroller came to you and said the bill next year is 215 million dollars. And sales are down. If you were to Institute a 543 Point corporate program to reduce those costs. What would they be (00:39:44) if I can reduce those costs? I want a terrific set of stock options. I'll tell you that. I mean, I don't know what caterpillar is now doing the biggest dollars are are in as I said the biggest initial hit we got at Chrysler was with respect to hospital care keeping (00:40:04) people out of the hospital at didn't have to be there and getting them out. As soon as we could (00:40:09) I would have a seat would not in the short run affect life, but I certainly would have a serious health promotion program directed (00:40:18) at smoking alcohol and substance abuse as well as diet. I would do the kinds of things. I just mentioned with respect to Chrysler. I mean, you know in Detroit, I can't remember the exact numbers now, but I think in (00:40:33) those years and 81 or 82 when we went out to the labs, we're trying about 12 to 15 million (00:40:38) dollars in the lab tests just in the Detroit area and we brought that down by three or four million dollars. I think you can do a lot of things (00:40:49) where there are. I think they're increasing direct contracts with hospitals (00:40:54) and Physicians and I think I think that's important too. (00:40:58) I think it is important to have (00:40:59) economic incentives for people to take care of themselves IE. I would charge smokers more for health insurance. I'd make their copay higher than non-smokers excessive drinkers will (00:41:11) deliver tests are so (00:41:11) sophisticated now that you can tell Pete went you can measure the extent to which your people might be damaging cells. Our next question is from glorious Eagle. Thank you. Mr. Califano. Thank you for mentioning the devastating impact of denial of coverage on Mental Health mental illness and addiction in Minnesota Studies have shown that we have about 400,000 uninsured and underinsured. Those are largely persons who are employed. If you're very poor you're covered. If you can afford it you're covered if you're working at low wages or self-employed, you're not the legislature passed the beginning of a healthcare access Bill recently our hmos managed health care plan organization also came out with a plan. To cover the underinsured and uninsured and this is a small business plan. So is the legislators it included Insurance reform and so forth and so on my question is all of us recognize that even on a sliding fee scale basis and a small business subsidy and so forth. This is an expensive plan for states to undertake there has to be some form of federal partnership. Yeah, and well arcing with the states on this issue, is there any way that we can work with the federal government and create a partnership to get this done (00:43:07) if I could wave a wand and if you could deal with the political (00:43:10) difficulties, I mention of trying to change things with so many vested (00:43:16) economic interests. I think I would there are so many simple efficiencies we could put in place if we had the screens and Medicare for Unnecessary hospitalization and unnecessary tests and treatments that we have in most large corporate plans, you're talking about Savings of billions of dollars. I think the federal if the federal government went to the states in a plan like this and said, okay will contribute a billion dollars. If if you bring your night your Statewide Hospital capacity up to 90% If you do ABCD all these things that we know will make the System more efficient. (00:43:57) I think those things can (00:43:58) be done. You make a very important (00:44:00) point I should have mentioned and that is that (00:44:03) the 37 million people who are uninsured two-thirds of those people work or our dependence of workers and the things that get a Chrysler (00:44:13) or an American Airlines or a u.s. Steel revved up or (00:44:16) when they are not that they want to uh, they want our that they're paying their paying by because shifting for employees for large retailers for hotels (00:44:26) and what have you on the addiction (00:44:29) point I should make another point. I mean, I do not think we can deal with the health care cost problem in this (00:44:36) country until we deal with addiction and abuse of everything cigarettes and booze to drugs it accounts for half the hospital beds that are filled in this country right now, you think of the heart disease the cancer the accidents the liver the kidney problems and my own sense I was Going to Bob broken before I mean, I personally am going to try and start a center on addiction and substance abuse to find (00:45:03) out what works to get our (00:45:04) people to understand what an unbelievable price. We're paying for this in this country and to find out what works in prevention or in treatment. (00:45:13) Of the millions of Americans that need (00:45:15) treatment about 10% will get it (00:45:18) of that 10% 25% on average some programs are better than others. But on average (00:45:24) 25% will complete the course of treatment and of that 25% about (00:45:30) half will be drug or alcohol free six months to five years later depending on when you measure it. Now if that were surgery or that were pharmaceutical we wouldn't let it on the market. We wouldn't let the surgeon put the knife in his hand. (00:45:42) So we have to deal with that problem a question from Tom Boorman plants. Mr. Secretary Your solution sounds much like the Democratic Senate plan of Mitchell and Kennedy and and I have two questions one is (00:46:00) do you differ with their proposal in any significant specs and second? What are the chances of that being seriously debated in an election year and then what are the (00:46:13) As I guess for passage of something at the federal level over the next three to five (00:46:16) years one. It also sounds very much like the plan Nixon (00:46:20) proposed in the 1972 (00:46:25) and very much like a plan. I actually I proposed this (00:46:27) kind of a plan not in the (00:46:30) detail that we have it today in (00:46:32) 1979 and Senator Kennedy attack me for abandoning the basic Democratic principle of national health insurance at the time. (00:46:43) I differ with respect to what the Democrats have introduced in several respects. The most notable would be that there isn't much (00:46:51) Cost Containment that stuff for real though that will produce dollars. You can produce enough dollars to cover everybody if you if you get the right incentives in there and they face the difficulties of getting people to support their plans, so they don't have much Cost Containment in it. (00:47:07) My viewers to what's going to happen in the Congress? I think nothing can happen unless the president makes (00:47:13) this an overriding interest of his whether it's Bush or Democratic (00:47:18) president. And when I say overriding interest, let me let me just tell you refresh your (00:47:23) Recollections as to Medicare and Medicaid. (00:47:27) President Johnson proposed though in 1964 and we couldn't get any action on them and the end of 1964 the house had passed a significant social security increase was an election year anticipation of the (00:47:40) election. The senate had when the (00:47:43) bill went to conference Lyndon Johnson worked to kill the Social Security increase just before an election in order to have the pent-up desire for it to help get Medicare and Medicaid past when we can't when Congress came back in 1965 1968 you recall that was the greatest landslide in the history of the (00:48:04) country 61 to (00:48:05) 39% Johnson won by even with that Landslide and in the wake of Kennedy's assassination. We couldn't get the bill out of the house Ways and Means Committee and and with the Social Security increase awaiting action. Finally. (00:48:20) We have remember (00:48:21) vividly a meeting in the president's office in which Larry O'Brien presence that we got to get this out of the Ways and Means Committee. (00:48:27) And Larry O'Brien said we (00:48:28) can't get it out unless we give doctors their reimbursement usual customary (00:48:33) fee, which gave them the power, of course to raise their fee level every (00:48:38) year something the insurers the private insurers of this country had refused to give them up to that point so we can't get out unless we give doctors that reimbursement unless we give hospitals a reimbursement they want which is Cost Plus. LBJ said what'll it cost and Wilbur Cohen? Who was then the undersecretary of H, ew said about half a billion dollars Johnson said only five hundred million dollars do (00:49:01) it and we did it and we got that bill out (00:49:05) and I was one of his two or three overriding (00:49:09) commitments. If you want to get action (00:49:12) on this score with these kinds of economic (00:49:14) forces playing on the Congress. It'll only come when the president decides that he has that kind of an interest in it and I'm (00:49:21) not criticizing George (00:49:23) Bush. It's got whatever president is in there has to put it put it there. (00:49:32) So I think a large change of the kind I'm talking about is a long way off. I think the system is under such (00:49:39) pressure that something serious will happen in the 90s, but I think it'll be closer to the end of the decade than now. That's all the (00:49:49) time. We Ki. I've said a lot about doctors. I feel I should say. I must say one thing about lawyer since I am a lawyer and I want to I want to be objective here. This is a and I'll close with this. This is verbatim actual out of the 1793 census of the United States. Excuse me. The 1793 census contained the following description of Grafton County, New (00:50:23) Hampshire. I (00:50:26) quote we have a county of over 3,000 square miles of population of 6,000 549 Souls of which 90 our students at Dartmouth College and 20 or slaves. We have 25 Incorporated towns all in thriving condition, including 14. Gristmills 5 Sadler shops 7 Millwrights 8 Physicians 17 clergyman and not a single lawyer for this happy State of Affairs. We take no credit unto ourselves, but render all the glory unto God that was absolutely excellent. The ending was superb. I might was a great pleasure to have you here. We have a tradition at the Minnesota meeting. We don't give a commemorative plaque to your box of commemorative plaques But what we do have is a Minnesota meeting peace pipe, which created by Minnesota artist Robert Rose bear and as you probably know the peace pipes a symbol of the human body, which we must maintain and order for World Peace if we don't drop it and then event. Thank you very much for enjoying for joining us and it was absolutely excellent. Thank you again, (00:51:49) sir.