Senator CHAFEE. Thank you, Senator.

Now, I believe Senator Leahy will be here later.

Next we will have Mr. Bert Seidman, director of the Department of Social Security of the AFL-CIO.

STATEMENT OF BERT SEIDMAN, DIRECTOR, DEPARTMENT OF SOCIAL SECURITY, AFL-CIO, ACCOMPANIED BY RICHARD SHOEMAKER, ASSISTANT DIRECTOR

Mr. SEIDMAN. Thank you, Mr. Chairman.

My name is Bert Seidman. I am director of the Department of Social Security of the AFL-CIO, and with me is Richard Shoemaker, who is an assistant director in the same department, and is our expert in the health field.

Senator CHAFEE. Mr. Seidman, 1 minute, if you would, please.

Senator JAVITS. I was going to suggest that we include the whole statement in the record and also suggest that Mr. Seidman brief the statement for us.

Mr. SEIDMAN. I was going to read only the summary, which is very short. I am not going to read the whole statement, by all means, but I would appreciate having the full statement and the appendixes included in the record. I should have mentioned that at the start.

Senator CHAFEE. Without objection, it is so ordered.

Mr. SEIDMAN. Mr. Chairman, it gives me great pleasure to appear before this subcommittee today on behalf of the AFL-CIO. As you know, Mr. Chairman, organized labor has supported health planning in the past, and we expect to do so in the future.

Many amendments to the health-planning law have been proposed by many organizations, among which are those proposed by the Consumer Coalition for Health. This coalition developed out of the Consumer Conference on Comprehensive Health Planning last June, which was cosponsored by the AFL-CIO. This coalition, we are confident, will play an important role in achieving effective consumer participation in the health-planning process.

The AFL-CIO opposes any major structural modification

Senator CHAFEE. Mr. Seidman, 1 minute, if you could, please. Regarding Consumer Coalition for Health, is the membership listed in your testimony?

Mr. SEIDMAN. The membership, I do not believe, is listed in our testimony. I believe that a representative of that organization will be participating in these hearings, and I am sure that he would be glad to give you that information-or, we could provide it after the hearing, either one.

Senator CHAFEE. Fine. Sorry to interrupt.

Please continue.

Mr. SEIDMAN. Well, as a matter of fact, Mr. Shoemaker does have it, and I could list them now, if you wish to have that information. Senator CHAFEE. Yes. If it is a long list, do not read it all, but just some of the representatives of the coalition.

Mr. SEIDMAN. Well, it includes, as I said, the AFL-CIO, a number of religious organizations, the Consumer Federation of America, the National Council of Senior Citizens, the Grey Panthers, the National

Consumers League, the National Farmers Union, the United Auto Workers, and a number of others.

Senator CHAFEE. Good. Thank you.

Mr. SEIDMAN. It is a broadly representative group with respect to the consumer interests.

As I was saying, Mr. Chairman, the AFL-CIO opposes any major structural modification in the planning law at this time. Not even all of the regulations have been promulgated. Only a handful of health systems agencies are fully designated.

Any major structural changes such as the Governors or the counties are proposing would mean further delays, in our judgment, in implementing the law.

We believe that health planning should be given an opportunity to work before major structural changes are considered.

The Labor-Management Group, on which AFL-CIO President George Meany and General Electric President Reginald Jones serve as cochairmen, have adopted specific recommendations with respect to health planning, health maintenance organizations, and prospective reimbursement of hospitals.

These position papers are attached to my statement in appendix A. Both labor and management agree that both should be represented at all levels of planning as major purchasers of care through the collectiveb argaining process and as consumers.

Consumer representatives on health planning agencies have many handicaps in bringing their influence to bear on the health planning process.

For instance, they must review voluminous proposals on their own time, while providers can do this as part of their job. Consumers, therefore, need technical assistance and training.

Also, planning decisions affect providers very directly, but consumers indirectly. At any given meeting, therefore, providers often outnumber consumers. To achieve real equity, therefore, consumers should comprise 60 percent of health-planning bodies.

One of the major deficiencies of the present planning law and of the present renewal bill S. 2410 is that only need is used as a criterion for determining whether a capital expenditure can be made for a health facility.

Not all health capital expenditures increase health care costs. Some reduce costs. Cost effectiveness as well as need should, therefore, be considered by planning agencies in determining whether new equipment or a new facility should be built.

Congress had adopted two strategies for containing health care costs. The Planning Act adopted a strategy of regulation. The Health Maintenance Organizations Act adopted a strategy of competition.

There is no reason why both strategies cannot be adopted at the same time. Unfortunately, planning is in some instances interfering with the development of health maintenance organizations. Eight case histories illustrating the problem are attached to my statement as appendix B.

The AFL-CIO strongly recommends to the Congress that this conflict between planning and HMO development be resolved. In our detailed testimony, we indicate how we think this can be done.

Let me now briefly comment on some specific provisions of the bill. Cost effectiveness should be added wherever the word "need" occurs in the statute. Conflict of interest provisions of the bill should specifically provide that physicians and representatives of hospitals not be allowed to vote on issues concerning the development or expansion of prepaid group practice plans.

Regional public planning bodies or units of general local governments should be required to establish governing bodies for health planning which meet the same requirements as those for a private HSA.

Board members should be reimbursed for their legitimate expenses associated with attending meetings. Genuine consumer representatives should be eligible to serve on HSA boards, whether or not they also serve on Blue Cross, Blue Shield, or hospital boards.

Labor and management should be represented on HSA boards, since they are major purchasers of care through the collective-bargaining process.

The definition of provider should include nonprofessional employees as well as professional personnel. HSA's should be allowed to accept contributions from other tax-exempt institutions, but not from third parties.

Programs to close facilities should include provisions for severance pay, retraining, and reemployment of laid-off employees.

In this connection, we would suggest that such provisions be patterned after the Urban Mass Transportation Act of 1974, with the Secretary of Labor having the administrative authority.

Mr. Chairman, may I say parenthetically that we noted with great interest in the statement of Senator Kennedy at the opening of these hearings his reference to the bill's provisions to incentive payments to encourage the development of long-term care services. We also welcomed his willingness to consider suggestions for provision of funds to insure that there are adequate private care centers, outpatient departments, and inpatient services in poverty areas.

We will be glad to cooperate in achieving these goals.

Other sections of S. 2410 which we have not specifically mentioned have our support or at least, our neutrality. We hope that Congress will act as quickly as possible on this legislation with due consideration for the improvements we have suggested.

Senator CHAFEE. Thank you, Mr. Seidman.

Do you currently have trouble getting labor representatives to serve on the HSA boards? In other words, are they willing to do it?

Mr. SEIDMAN. I have not heard of any difficulty in getting labor representatives to serve on HSA boards, but we have found in a number of communities that those who are making the selections to HSA boards have ignored the labor movement-in some cases, management, also-in choosing representatives for the HSA's. And we think that labor and management are very important purchasers of care to the collective-bargaining process and ought to be represented on these boards.

They represent a very important element in the community.

Senator CHAFEE. I think that is a good suggestion, and I think also your suggestion about the criteria being not solely need but also cost effectiveness on new construction is a good point.

Now, Senator Javits had some questions; and if you could just wait a minute or so, Senator Javits will be right back.

Mr. Seidman, when the consumers serve on the various boardsHSA boards, for example-do you think they are effective, or do you think the consumers need a peculiar type of training?

Mr. SEIDMAN. Well, I think that, of course, the qualifications of consumer representatives and their knowledge of the field varies a great deal from one area to another. But I think that there are many consumer representatives who could be a lot more effective if they did have training, and also if there was staff assigned to them who had a particular interest in the consumers and had a particular responsibility toward them.

The providers who serve on these boards tend to know the field. After all, this is their business. But for consumers, it is a part-time volunteer type of activity, and unless they happen to have been on an HMO board, or a hospital board, or a Blue Cross board, they may not know a great deal about the issues that come before the HSA Board. But they learn about them very quickly, and I think that they should have there should be both an educational program for consumers who come on these boards and staff assigned to them.

Senator CHAFEE. Now, in your suggestion about reimbursement of board members, you include solely expenses, nothing for their time; in others words, they would not receive a fee, just reimbursement for their expenses?

Mr. SEIDMAN. Well, I think people who are required, for example, for daytime meetings, to take time off from their jobs, might need more than just their expenses. But it would depend on the situation, I would think.

If, for example, all the meetings are in the morning, then we have in mind reimbursement of lost time as well as expenses.

Senator CHAFEE. I see.

Senator Javits has a couple of questions.

Senator JAVITS. Mr. Seidman, thank you so much for waiting.

My impression of what you have submitted is very favorable. I think it is extremely pertinent. Am I to assume-because I have not had a chance to read your statement-that the backup, the proof of what you want, is in the statement?

Mr. SEIDMAN. Yes; we have more detail in the statement itself, to cover each of the points that we made in a kind of telegraphic form in the summary.

Senator JAVITS. Fine. Now, also, will you be available so that any of us especially myself-can come back to you for more data? Are you willing to really back up these recommendations with hard data and to obtain it, if you do not have it already?

Mr. SEIDMAN. We will certainly do our very best to do that.

Senator JAVITS. Lastly, I notice you are against "major structural modification in the planning law." And yet, when you develop your thesis, all you do not want is some new structure erected which introduces new parties.

Now, I do not consider that as a major element of this bill, though it is there, and we will evaluate it properly. I think the major elements. of this bill are the substantive elements.

So, are we to understand that, aside from changes in the procedures and the parties in charge, that you are generally favorable to the substantive elements of this bill?

Mr. SEIDMAN. We are favorable to most of the substance of the bill, and we indicate our reservations in our statement. What we do have some concern about is the proposal to change the HSA boards and the HSA's essentially from community types of organizations to organizations which are controlled largely by public officials. We do not thing that was the original intent, and we thank that would be a major structural change. We would like to see whether they can work out the way they are now.

[The prepared statement of Mr. Seidman and the appendix follow:]