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Newark, N.J.

The subcommittee met, pursuant to notice, at 9:50 a.m. in room 725, 970 Broad Street, Newark, N.J., Senator Harrison A. Williams, Jr. (chairman of the full committee), presiding.

Present: Senator Williams.

Staff present: Becky Beauregard and Cullen Dwyer.


Mr. WILLIAMS. I'm delighted to have this gathering this morning for the hearing of the Senate Subcommittee on Health and Scientific Research. We are, of course, here to discuss national health insurance issues, which face all of us. We are here to get the benefit of New Jersey experience, New Jersey wisdom, and New Jersey enlightenment.

It is often said that the American medical care system is the best medical care system in the world. For those of us who can afford to pay for that care and those of us covered by health insurance policies, it is the best. For less fortunate Americans, it is not. Too many New Jersey citizens have inadequate insurance, and worse, too many have no insurance at all. For these individuals, there is the constant fear of illness and expenses accompanying that illness. Other deficiencies plague our health care delivery system. Health care inflation has taken its toll everywhere It has consumed an ever increasing share of the budgets for Federal, State and local governments. More importantly, it has consumed an ever increasing share of the American family budget.

The Congress enacted medicare to assist the elderly on fixed incomes, but today the elderly pay more for their care out of their own pockets than the year medicare was enacted.

There are shortages of health care personnel in many areas of our State, including Newark, the city we're in today. These deficiencies in our existing health care delivery system must be corrected.

The overall committee that I have the honor to be chairman of, the Committee on Labor and Human Resources, shares responsibility for the development of national health insurance legislation with another committee of the Senate, the Finance Committee. Many alternative proposals are pending before the subcommittee that we are here with, the Subcommittee on Health and Scientific

Research. I have personally expressed a preference for one of the bills that has been referred to us. It is S. 1720, the Health Care for All Americans Act. The principal sponsor and the author of the bill is Senator Kennedy. I know that the scope of the bill is large, and I am aware that it may need to be revised as the national health insurance debate proceeds.

Today I am here to explore the effects of S. 1720 and other bills on New Jersey's unmet health care needs. The witnesses who will appear before the subcommittee are well qualified to respond to these difficult questions and from a variety of perspectives. I'm confident that each will offer unique insights into the everyday problems of health care delivery. Certainly this testimony will help the subcommittee in developing a final piece of legislation that will build on the strengths of our present health care system to control costs and assure access to quality care with a minimum of Government involvement.

Because of my personal interest in learning what the people of New Jersey think about national health insurance legislation, I hope you will feel free, all of you who are gathered here today, to ask questions of me and the witnesses. In order to make this possible, cards will be available for your written inquiries. These questions will come to me and I hope we will have time to address ourselves personally to them. Any that we don't have time to address this morning we will try to respond to in writing. The Senate is in session today, and I must be back for the afternoon part of the session.

So, I am very pleased, as I look at the list of witnesses we have, to see that we have the right people to help us in our deliberations on national health insurance legislation. Of course, it's important to begin the hearings here in New Jersey with the commissioner of New Jersey's Department of Health. We welcome with our thanks and with great pleasure Joanne E. Finley, commissioner, New Jersey Department of Health. Joanne?

All the electronic equipment is being placed so that everything you say will be preserved. While you are being seated, I want to say that we were exhilarated this morning with a visit to the ironbound health screening van over on Wilson Avenue, where it was stopped this morning. There we saw some of the things that are made possible by concerned governments and dedicated people. It was an enlightenment to see this screening process. The mobile unit goes twice a week to youngsters, where they are, and gives them a series of health tests. The screening takes nearly an hour, and picks up early health problems. It was a revelation in what I would consider one of the elements of very, very positive health care through the preventive means of screening. It was right by the day care center that has been put together in the community and right up the street from the community school. It was good to start a day of enlightenment by learning that programs we are sponsoring are in place and working well.

So, we welcome you, Commissioner Finley, and look forward to your statement.


Dr. FINLEY. Senator Williams, you just made my speech for me, because I'm going to certainly stress the fact that unless any national health insurance piece of legislation includes emphasis on prevention and the kind of program you heard about this morning, which the New Jersey Department of Health is also very proud of-unless it includes emphasis on that sort of project and innovation, it's not much of a health insurance bill.

At any rate, I'd like to express the gratitude of both myself and Gov. Brendan Byrne for the opportunity to share with you and through you the Congress. New Jersey's very strong support for a program of national health insurance. We're pleased that you've chosen New Jersey for the site for the first of these committee hearings. We believe it's appropriate that New Jersey was chosen, since we feel we're one of the most advanced States in the Nation in terms of our capacity to participate in a program of national health insurance.

We welcome the introduction of President Carter's legislation, and of course we are pleased that Senator Kennedy has also introduced his bill. We feel that this is beginning again. As you very well know, we're starting all over again. But it's beginning the dialog, and we certainly hope this time we'll make it, because the establishment of a national health insurance program is very high on the priorities of our State.

First, I would like to outline for you briefly the readiness of New Jersey and the specific foundation pieces that we have in place and from this what we have learned about what it takes to gear up to be able to really effectively run a national health insurance system. From this experience, I can pinpoint the specifics of various bills that are going to be before your committee noting the directions we feel are important and the areas about which we have some concern in some of the bills. We understand that the job of your committee is to pick the best, and therefore to shape a workable piece of legislation.

Much of the progress in shaping a health care delivery system in this state, including the kind of projects that you just mentioned in the Ironbound, has come during the tenure of Governor Byrne. He has understood and supported our efforts in the health department to develop both rational planning and cost containment, and now stands ready to take the steps that are necessary to finish shaping New Jersey's readiness for a national role.

But though we've moved forward and we feel we have a very sophisticated approach to health care delivery, our Governor and I are well aware of the gaps, the arbitrariness, the exclusions, and the inequities of our country's system, and how these impact on the lives of people in our State. So I have been encouraged from the start to involve myself in deliberations that can shape and promote an effective piece of national legislation.

As a former staff person to two Congressmen and one Senate committee, as a former member of the faculty of the Department of Epidemiology and Public Health at the Yale University School of Medicine, and as a public health official in Cleveland, Philadelphia, New Haven, and certainly now New Jersey, I've watched and

prayed, really, for a national health insurance system to come to our country. I have also learned a great deal about the machinery that must be in place in order to administer a successful system. Let me touch briefly on some of the steps New Jersey has already taken and the foundation pieces of an effective system of national health insurance we have in place. We have in our State a well-developed health planning process providing for rational and cost-effective allocation of resources. Our law, the Health Care Facilities Planning Act of 1971, predated Federal legislation and made our State among the first in the Nation to undertake an expanded governmental role in health care systems reform.

We have completed our first State health plan under Federal laws. We've moved toward regionalization of services and we've grown more skillful, and I think more equitable in our application of a certificate of need program. Certificate of need, after all, is not an end in itself, but it's only a tool to implement good planning decisions. We've involved a knowledgeable and capable group of providers and consumers and legislators, all to share responsibility in this health planning process. And we believe that we have a citizenry in this State that's sensitive to the issues of health, willing and anxious, really anxious for the advent of a national health insurance program. They understand that this has to be legislation that will deal with their real needs and that it has an affordable price tag.

As you very well know, health care cost containment has been a primary goal in our State. We're now implementing an expanded hospital ratesetting program that covers all payers and will set rates prospectively. Under a Federal grant, we have developed a system of ratesetting based on diagnosis-related groups and we believe this more accurately reflects a hospital's true costs and certainly costs as they're related to what a hospital must do to make its kinds of patients get well.

The health department's program of inspection and certification of health care facilities has also recently received considerable praise from the Federal agencies for whom we do this inspecting and certification. This is another foundation piece for administering a national health insurance system and the assurance of quality care.

Most of the bills currently before Congress do recognize this role for the States, but I think I've also emphasized other roles that our State at least is ready to play.

Finally, we have an alternative systems program in our health department. Although State seed money is modest, we have been able to help start innovative alternatives to hospital care and even to establish an occupational health program in one of our HMO's. A health resources distribution fund in the amount of $500 million is envisioned in S. 1720, one of the bills your committee will consider and the one that you mentioned specifically. This fund would be used for grants for projects to improve the quality, accessibility, and efficiency in the provision of health care services. In New Jersey, we would really be ready to move ahead rapidly to take maximum advantage of the State's portion of that resource.

On the basis of our extensive experience in New Jersey, what is it that we believe all States need to see in a national health

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