Plenary Session Transcripts

Governors Attending:

Guests:

Discussion Subjects:

National health policy: which direction should the nation take?; state and federal initiatives in regulatory reform; new directions in state fiscal policy and for states in international affairs; and Title V regional commission legislation

Points of Interest:

Health care reform was a focus of the Governors' discussions. Senator Edward Kennedy of Massachusetts argued the urgency of adopting his proposed national health insurance plan, telling Governors that Medicaid costs threatened to bankrupt states, having become the most rapidly escalating costs in state budgets and the largest single item in many local government budgets. Along with these Medicaid increases, hospital costs were rising out of control, Medicare now paid only 44 percent of the average health bills of senior citizens, and 7 million families were projected to incur catastrophic health care costs totaling more than $6 billion in 1978. With states unable to handle continuing cost inflation, Senator Kennedy told Governors that the federal government was feeling the pinch. Compared to 1963, when 4.3 percent of the federal budget had been spent on health, in 1978 that figure would be 12.7 percent.

During discussion of health care reform, Governors expressed concern as to whether increased federal control of the nation's health care system would necessarily bring about better access and better quality health care at lower cost. Governor J. Joseph Garrahy of Rhode Island mentioned an alternative proposal advanced by the National Association of Insurance Commissioners (NAIC), which would provide for a choice of plans containing different levels of deductibles and coinsurance, guaranteed coverage through an association to create a pooling and reinsurance mechanism, establishment of state insurance regulatory oversight, and incentives for cost-conscious behavior on the part of health care providers.

Congressman John Anderson (R-IL) spoke to Governors about his bill, the Regulatory Reform Act of 1978, which would require the Administration to submit recommendations for the overhaul of major regulatory agencies or justify their present operations. Rep. Anderson also expressed the view that Congress should be more willing to give aid to states in the form of block grants and revenue sharing and to decentralize the administration of federal programs.

Governors talked about a federal task force report that had just been issued, recommending strengthening regional commissions and securing approval for pending regional commission applications (a process on which the Carter Administration had placed a moratorium).

During consideration of policy positions, Governors debated whether or not to restate their support for achieving a balanced federal budget. Some Governors were concerned that doing so might straightjacket Congress in the event that economic conditions warranted relaxation of balanced budget requirements. But with assurances that this would not be the case, the membership voted to adopt a policy position stipulating that a balanced federal budget should be achieved in the fiscal year ending September 30, 1981.

Memorable Quotes:

Senator Edward Kennedy of Massachusetts said: "I see national health insurance as the last, best chance of keeping the health care system under control. It is more than a financing method. It is a system that will allow the nation to budget its health care expenses prospectively and then live within it; it is a system that will provide incentives for alternative, less costly delivery models—such as HMOs; it is a system which will enable, through progressive reimbursement policies, an emphasis on prevention of disease...increasing individual responsibility for maintaining health; it is a system in which one can improve the quality of care. I see states as having a major role in the administration of a national health insurance program. Next month the Committee for National Health Insurance will make public a description of a new national health insurance proposal. That proposal will require implementation at the state level. It will recognize the diversity of your states and will seek to build upon it. It will remove much of the burden of Medicaid from your backs. It will involve you intimately in the budgeting and regulatory processes...Health care is a basic human right...Health insurance is the vehicle to realize that right. It is also the vehicle to control health inflation. Every other industrialized nation in the world, except South Africa, has realized that and adopted a program."

In response to Senator Kennedy's address on the rising costs of health care, Governor J. Joseph Garrahy of Rhode Island said: "I don't need to remind you that throughout our history health policy has been the responsibility of state government. One of the earliest exercises of our police power was through the enactment of quarantine statutes to control the spread of communicable diseases. Later, states began to restrict the entry of unqualified providers into the medical care system through licensure laws. Later still, states chose to regulate capital expenditures by health facilities to prevent unnecessary expenditures. More recently, a number of states have undertaken aggressive programs to contain the costs of medical care—through voluntary efforts or through laws that require the review and approval of hospital budgets and rates."

During their consideration of motions to support representation for the District of Columbia and Puerto Rico, Governor James Longley of Maine said: "I wonder if we are in effect suggesting something that we haven't practiced ourselves. It is a bit inconsistent that we suggest representation within Congress for something we haven't yet done ourselves. I would still support...a resolution admitting a representative of the District of Columbia to this organization."

Congressman John Anderson, sponsor of the Regulatory Reform Act of 1978, said: "I would suggest that certainly no one disputes the right of the federal government to perform a basic rule-making function to promote the health and safety of our citizens, to protect the consumer from making uninformed decisions, to foster orderly arrangements in the marketplace, or to carry out important social and economic policies and the like. But at some point, and I would suggest that we have long since reached that point, regulators and regulations develop a life of their own. Their reason for being becomes not so much social utility as bureaucratic inertia or the aggrandizement of power. Somehow you and I, working together, have to separate the regulatory wheat from the regulatory chaff."

Selected Policy Positions Adopted:
(1) Calling for rural development policy to go hand in hand with existing urban policy and to give special attention to small cities; (2)urging states to review current emergency-related programs in the context of comprehensive emergency management, and to adopt nomenclature—using the words "emergency management"—in keeping with the new federal emergency management concept; (3)supporting federal legislation to overturn the U.S. Supreme Court's decision in Illinois Brick, under which states were prevented from making monetary recoveries as anti-trust plaintiffs unless they purchased goods and services directly from the manufacturers who fixed the prices—something that states generally did not do, instead purchasing goods and services indirectly through suppliers; (4) expressing opposition to federal preemption of state authority to protect and manage resident fish and wildife; (5)seeking to require that the federal government reimburse state and local governments for the full cost of mandated programs; (6) supporting a policy change to permit states to make social security deposits to the Social Security Administration quarterly, rather than the currently required monthly deposits that cost states interest earned on the funds; (7)recommending that a balanced federal budget be achieved by the fiscal year ending September 30, 1981; (8) urging the encouragement of health maintenance organizations and prepaid care, not as an exclusive means of providing health care, but as an alternative that should be offered to the American people; (9) emphasizing the importance of the state role and flexibility in providing the states with responsibility for implementing federally-financed education programs; (10) supporting the activities of the National Commission on the International Year of the Child and the resolution of the United Nations declaring 1979 the International Year of the Child; and (11) supporting the right of self-determination for Puerto Rico.