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mone replacement therapy.

(4) Screening services for pregnant women, in

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cluding ultra-sound and clamydial testing and ma

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(5) One-time comprehensive assessment for in

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(d) REPORTS TO CONGRESS.-Not later than October

17. 1, 1993, and every 2 years thereafter, the Secretary shall

18 submit a report to the Committee on Finance of the Sen

19 ate and the Committee on Ways and Means and the Com

20 mittee on Energy and Commerce of the House of Rep

21 resentatives describing findings made under the dem

22 onstration projects conducted pursuant to subsection (a)

23 during the preceding 2-year period and the Secretary's 24 plans for the demonstration projects during the succeeding

25 2-year period.

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(e) AUTHORIZATION OF APPROPRIATIONS.—There

2 are authorized to be appropriated from the Federal Sup3 plementary Medical Insurance Trust Fund for expenses

4 incurred in carrying out the series of demonstration

5 projects established under subsection (a) the following

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12 SEC. 506. OTA STUDY OF PROCESS FOR REVIEW OF MEDI

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CARE COVERAGE OF PREVENTIVE SERVICES.

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(a) STUDY.—The Director of the Office of Tech

15 nology Assessment (in this section referred to as the “Di

16 rector”) shall, subject to the approval of the Technology

17 Assessment Board, conduct a study to develop a process

18 for the regular review for the consideration of coverage

19 of preventive services under the medicare program, and

20 shall include in such study a consideration of different

21 types of evaluations, the use of demonstration projects to

22 obtain data and experience, and the types of measures,

23 outcomes, and criteria that should be used in making cov

24 crage decisions.

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(b) REPORT.-Not later than 2 years after the date

2 of the enactment of this title, the Director shall submit

3 a report to the Committee on Finance of the Senate and

4 the Committee on Ways and Means and the Committee

5 on Energy and Commerce of the House of Representatives

6 on the study conducted under subsection (a).

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Chairman STARK. Good morning. The Subcommittee on Health of the Committee on Ways and Means will begin today its series of hearings on health insurance with a discussion of reform of private health insurance.

Thirty-five million of our fellow citizens must do without the basic protection of health coverage, the rising level of interest in the problems of the private health insurance system is, therefore, not surprising. The biggest problem is that 35 million people don't have it.

Private health insurance is in total disarray. The system is characterized by a phrase, which is, "you dare to use it and you will certainly lose it." It is characterized by a mentality which spends all of its time identifying how to exclude anyone who might need health care, and not enough time aggressively managing the costs.

Probably, if there aren't any in the room today, we can blame it all on actuaries who are so good at what they do that they could pick exactly the members of this audience that are in the 20 percent of America's public who will cost 80 percent of America's health care. And if you are in that 20 percent group, they won't sell you any insurance. That is how they make their money, and they do such a good job at it, that they are making a lot of money.

Their wide use of experience ratings for premiums, as opposed to community rating, means that many groups face prices so high that insurance is unaffordable. Excluding those of you with preexisting conditions, segregating you into high risk categories, using “loss leader” initial pricing, all serve to fragment and distort the insurance marketplace.

These discriminatory practices will have to end if we are to assure that health insurance is available at a reasonable cost. However, we would be kidding ourselves if we thought the insurers' discriminatory practices are the fundamental obstacles to providing every American with decent health insurance.

The basic problem with health insurance in this country is that it is increasingly unaffordable. The Congressional Budget Office tells us private insurance premiums are increasing more than 12 percent a year. At that rate of growth, more and more businesses are forced to terminate or severely reduce their health insurance coverage. And unless we respond to the problem of skyrocketing costs, anything we do with private health insurance quickly becomes meaningless.

We have several choices. With community rating, we could reduce the high premiums imposed on some groups. However, due to the irrefutable law of averages, the result of this action would be to increase premiums for others who are at the lower end of the cost spectrum.

There are people above the average and below the average. Those below the average will get jammed with higher cost, those above the average will come down. The result could well be to increase the number of insured. Certainly those at the low end of the spectrum whose premiums are increased could very well get dropped off the scale, and then we would even further exacerbate the problem, because the average would just go up.

Or we could take a cosmetic approach, which the administration will outline for us, and others are urging, which doesn't do much of

anything to the high-cost groups but doesn't cost the low-cost groups anything. In either case, insurance premiums would continue to skyrocket and more and more firms would be forced to drop or scale back their coverage. So in terms of our goal of assuring universal coverage, we would have accomplished nothing.

I believe we can respond comprehensively to the crisis in health care. We don't need to adopt strategies which respond only to a small part of the problem and ignore the major issues which confront us. As I have repeatedly stated, our goal in this effort must be to assure that every American is covered. Every American. The reason for doing anything that does not advance us towards that goal or, worse, doing something that may impede us toward achieving that goal, eludes me.

To that end, I hope our expert witnesses can enlighten me and the committee. I look forward to hearing their suggestions as to how we should proceed to reach our goal of access for all.

Our first witness this morning is Kevin Moley, Deputy Secretary of the Department of Health and Human Services. He has submitted to us a written statement and without objection it will be included in the record in its entirety.

We welcome the Secretary back to the committee and ask that you proceed in any manner you are comfortable, to expand on your written testimony or enlighten us in any way you choose.

STATEMENT OF HON. KEVIN MOLEY, DEPUTY SECRETARY, U.S.

DEPARTMENT OF HEALTH AND HUMAN SERVICES Mr. MOLEY. Mr. Chairman, thank you. I do have a written statement. I would, however, as you indicate, ask that it be entered into the record.

Chairman STARK. It will be entered.

Mr. MOLEY. In the interest of your time and that of the committee's, I will refrain from reading it. I would like to say, however, parenthetically, that we are in agreement with much of what you just said. There have been many good ideas emanating from the committee in respect to small market reform from yourself, from Mrs. Johnson, Mr. Chandler, and others on the committee.

The administration would like to move with the part of the President's plan that relates to small market reform this year. There are other things in combination with it that we think would make a significant impact on reducing the number of uninsured in the country.

I stand ready to answer your questions. Thank you, Mr. Chairman.

Chairman STARK. Great brief statement. [The prepared statement follows:]

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