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Institute of Medicine (US) Committee to Study Decision Making; Hanna KE, editor. Biomedical Politics. Washington (DC): National Academies Press (US); 1991.
Richard A. Rettig
In the final days of the 1972 presidential campaign, Congress passed and sent to President Richard M. Nixon the Social Security Amendments of 1972. Nixon signed the bill on Monday, October 30, just one week before he was overwhelmingly reelected in his race against Senator George McGovern.
The 1972 social security legislation had begun its journey the previous year in the U.S. House of Representatives as H.R. 1. One of its chief elements had been welfare reform, a response to the administration's proposed family assistance plan. The other principal element, however, was a review and extension of Medicare and Medicaid, the first time since the 1965 enactment of Medicare that Congress had returned to that historic legislation to improve on its earlier works. (In fact, as we shall see, the Medicare and Medicaid provisions that were part of the social security amendments had almost become law in 1970.)
An eleventh-hour Senate floor amendment to the bill became Section 299I of the final legislation. For more than 90 percent of the nation's population, this provision extended Medicare coverage to those with chronic kidney failure. The language of this brief amendment is found in an appendix.
The purpose of this paper is to review how and why Congress enacted this historic entitlement, the first (and perhaps the last) designed to cover a particular diagnosis.
I was asked to write this paper in the fall of 1989. Because I had previously written about the antecedents to and legislative history of the 1972 Medicare kidney amendments (Rettig, 1976), I was able to suggest the approach that has resulted in this paper. A workshop was held on December 18-19, 1989, at the National Academy of Sciences, with the principals involved in the 1972 legislation. 1 The workshop was chaired by Carl W. Gottschalk and supported by Institute of Medicine (IOM) staff. Participants were provided with historical materials before the meeting; several brought additional documents from personal files. The discussion focused on how Congress came to adopt the Medicare kidney disease entitlement. The meeting transcript was used to prepare a draft of this paper. The draft paper was reviewed by all participants and was also discussed at a meeting of the project committee at the National Academy of Sciences Beckman Center in March 1990.
Memories are often unreliable sources of details about events that occurred many years ago. As a result, specific factual claims have been corroborated from documented sources. The workshop basically served as a lengthy interview with a number of key individuals that clarified the major assumptions, underlying processes, and contextual factors that influenced the legislative outcome.
A brief review of the evolution of federal government policy regarding hemodialysis and kidney transplantation is useful at this point. An extended treatment can be found in the literature (Rettig, 1981, 1982). In 1944, in Nazi-occupied Holland, Willem Kolff first succeeded in prolonging the life of a patient using his primitive artificial kidney machine. (The surviving individual was his seventeenth attempt, all the others having died.) After the war, Kolff sent four of his machines to Europe and the United States, where they provided a basis for successful treatment of acute renal failure in the Korean War.
In 1960, Belding Scribner of the University of Washington in Seattle, working with Wayne Quinton, an engineer, invented a permanent vascular access device and placed his first patient on long-term, continuous, intermittent hemodialysis. That patient, Clyde Shields, lived 11 years. In 1963, when the hemodialysis procedure for treating chronic kidney failure was barely three years old, the Veterans Administration (VA) announced its intention to establish approximately 30 dialysis treatment units in VA hospitals across the country. These efforts, among others, would later prompt the Bureau of the Budget to question the fiscal implications of dialysis. In fact, when the Gottschalk Committee was formed in the mid-1960s, for example, Pierre Palmer, the Budget Bureau staff officer assigned to it, was the examiner for the VA hospital program.
The National Institutes of Health (NIH), through the National Institute of Allergy and Infectious Diseases, established a program in transplant immunology in 1964 in response to the discovery that immunosuppressive drugs prevented rejection of transplanted kidneys. In 1965 the National Institute of Arthritis and Metabolic Diseases initiated the artificial kidney/chronic uremia program, one year after the establishment of an artificial heart program in the National Heart Institute.
Also in 1965 the Public Health Service (PHS) started the Kidney Disease Control Program (KDCP). The program awarded 12 grants to establish dialysis centers across the country on a declining, step-funded basis. Alarmed by the cost implications of center dialysis, it then awarded 14 home dialysis contracts in 1966. Still seeking to dodge the fiscal implications of even this least costly treatment, in 1969 it let seven organ procurement contracts for organ procurement and combined kidney transplantation/home dialysis programs. In 1969 the PHS KDCP was administratively transferred to the Regional Medical Program, a transfer ratified by legislation in 1970.
Several years after the VA dialysis program had begun, and as various plans for a PHS dialysis program were being debated within the executive branch, the Bureau of the Budget, prompted by the White House Office of Science and Technology Policy, established an expert committee to review growing federal government obligations in the treatment of end-stage renal disease (ESRD). The group, later known as the Gottschalk Committee, after its chairman, issued the Report of the Committee on Chronic Kidney Disease in 1967 (Bureau of the Budget, 1967). The effect of that report is examined below.
The culmination of these events, for the purposes of this paper, was the enactment by Congress, in the Social Security Amendments of 1972 (P.L. 92-603), of Section 299I. This legislation authorized Medicare entitlement for individuals with a diagnosis of chronic renal failure who were fully or currently insured under social security: it also authorized coverage for the spouse and dependent children of fully or currently insured individuals. Persons with a diagnosis of chronic renal failure were “deemed to be disabled” for purposes of coverage under Parts A and B of Medicare.
One question of great historical interest that has been asked repeatedly was whether the Gottschalk report influenced the events of 1972. Gottschalk, chairman of the expert committee, and George Schreiner, a member, elaborated on the 1967 report during the December 1989 workshop; the other participants dealt with the legislative events of 1972. The question posed at the workshop was this: Is there any evidence that the Gottschalk report influenced the thinking of any major actors in 1972 or that it influenced the 1972 congressional deliberations in any way?
The answer has three basic parts. First, the key congressional staff had not read the Gottschalk report; indeed, they were unaware of its existence. This lack of awareness extended to the members of Congress. Second, the report greatly influenced the medical community. Prepared by a distinguished committee, it essentially declared that hemodialysis and kidney transplantation were established therapies for the treatment of ESRD, thus resolving the debate about the “experimental versus established” status of these treatments. It also sanctioned the work of many clinicians who were then treating patients. Third, the 1967 report recommended a Medicare entitlement for chronic kidney failure patients that was quite similar to the entitlement that was adopted in 1972. The particulars of the report anticipated many features both of the legislation and of the program that was later established.
What explains the report's lack of influence on the key congressional actors of the drama? For one thing, the Bureau of the Budget established this expert committee as a secret group. Although its existence and the identity of its members became known in a short time, it was not a public body (Medical World News, 1967). Therefore, when the committee submitted its confidential report to the Budget Bureau in September 1967, the members were graciously thanked by letter by the director, Charles L. Shultze, but they were not publicly acknowledged.
The report was “released” in November by the National Institute of Arthritis and Metabolic Diseases, which had reproduced copies of the report for limited public distribution. The audience, however, was a medical research and public health one and not strongly connected to the new Medicare program. In addition, the National Kidney Foundation at that time had no Washington representative to publicize the report's conclusions. The report, therefore, did not reach enough of the right people.
Furthermore, the Medicare establishment had other concerns. The Bureau of Health Insurance of the Social Security Administration was preoccupied with the initial tasks of administering the fledgling Medicare program. The House Ways and Means Committee and the Senate Finance Committee were also concerned mainly with Medicare and Medicaid start-up problems. Receptivity to expanding Medicare to individuals under age 65 for treatments that very recently had been regarded as experimental was low.
The “Big Four” in dialysis in the 1960s included George Schreiner, Willem Kolff, John Merrill, and Belding Scribner. Kolff had invented the artificial kidney machine, and Scribner had invented the vascular access device that made continuous dialysis possible. Merrill led the nation's premier kidney transplant group at the Peter Bent Brigham Hospital in Boston. Schreiner conducted research and ran a major nephrology training program at Georgetown University in Washington, D.C. In addition, he was a founder of the American Society for Artificial Internal Organs in 1954, served as its president in 1959-1960, and for 29 years edited the Transactions of its annual meeting. He was also a founder of the American Society of Nephrology in 1967. In 1966 and 1967, he served as a member of the Gottschalk Committee.
Of these four, Scribner and Schreiner played important political roles in the development of federal government policy, the former as the outside advocate, the latter as the Washington strategist and tactician. Scribner, within a few months after his first three patients were rehabilitated by chronic hemodialysis, became the country's leading spokesman for treating patients by dialysis. His efforts resulted in Seattle's receiving the first dialysis center grant from the PHS in 1964, thus paving the way for the creation of the KDCP the following year. Seattle also pioneered home dialysis treatment, setting the stage for a PHS home dialysis contract program in 1966 and 1967.
Schreiner, in addition to bearing the above responsibilities, was also active in the National Kidney Foundation, serving as its president from 1968 to 1970. After that, he served several years as chairman of its legislative committee. In 1969, he hired Charles Plante, his next-door neighbor, as Washington representative of the foundation. Plante had worked on Capitol Hill for the senators from his home state of North Dakota from 1954 to 1966 and had spent two years in the Peace Corps before returning to Washington in 1969.
An initial step taken by the Schreiner-Plante team was to hold a meeting in 1969 and develop a five-year plan of legislative activity. The plan emphasized several courses of action: increasing NIH funding for kidney research and obtaining a new kidney institute; establishing ESRD-related activities, and securing funding for them in the Regional Medical Program of the PHS, the Vocational Rehabilitation Program, and the crippled children's program; and obtaining coverage for the treatment of ESRD.
Bills to increase the federal government's role in financing the treatment of kidney disease were introduced in every session of Congress from 1965 onward. Most bills proposed to amend the Public Health Service Act; several pertained to vocational rehabilitation and other federal programs. Scribner's advocacy, for example, found strong support from the two powerful Washington State senators, Warren G. Magnuson and Henry M. Jackson. From 1965 onward, Jackson routinely submitted legislation to finance treatment of ESRD. 2 In addition, others, like Senator John Tower (R-Tex.) and Congressman Edward Roybal (D-Calif.) consistently sponsored kidney legislation during these years. Clearly, kidney disease became an item on the legislative agenda of the U.S. Congress during this time.
It was not until 1970, however, when the Heart Disease, Cancer, and Stroke Amendments of 1965 were modified by the inclusion of “and Kidney Disease” in the law's title and throughout its text that this activity resulted in legislation. Another important feature of the process was that no congressional hearings on kidney disease were held during this period (1965-1970), revealing the deliberateness with which Congress approached this issue.
In the 1960s several things were occurring simultaneously in the field of kidney disease treatment. The formation of the American Society of Nephrology in 1966 reinforced the development of the nephrology specialty within medicine. The Gottschalk Committee report, in 1967, sanctioned dialysis and transplantation as established therapies, thus resolving the conflict between clinicians who wished to treat patients and researchers who thought dialysis experimental. These several stimuli resulted in an increase in the number of physicians entering nephrology as opportunities for treating uremic patients grew.
The number of treatment centers was also steadily increasing. The Seattle Artificial Kidney Center, founded in 1962, pioneered the development of dialysis treatment centers. In 1963 the VA committed itself to developing 30 treatment centers. A number of centers were directly supported by the PHS from 1965 through 1968, and still more were later assisted by planning efforts of the PHS Regional Medical Program. Most centers were financed through a patchwork of funding sources—PHS programs, NIH grants, state kidney programs (being enacted in Illinois, for example, and elsewhere), and community fund-raising drives.
Relations between treatment units and academic medical centers, which provided most of the physicians for such facilities, proved complicated. In Seattle, the University of Washington sought to limit its involvement in dialysis, a policy that gave rise to the Seattle Artificial Kidney Center. In Minneapolis, the Regional Kidney Disease Program at Hennepin County Hospital, predominantly a dialysis effort, reflected the resistance of the University of Minnesota School of Medicine to housing the effort on their premises. John S. Najarian, chairman of surgery, believed that kidney transplantation was a cure but dialysis only a holding procedure. 3 In Boston, a controversial breakaway from Harvard University's Peter Bent Brigham Hospital resulted in the establishment of National Medical Care, Inc. But whatever the local reasons, the nation's dialysis treatment capacity continued to grow during this time.
Most important, the number of patients was also increasing. Nephrologists trooped to Seattle in the early 1960s to learn how to perform dialysis, and programs sprang up across the country, each growing over time as means were found to finance treatment. During the time the Gottschalk Committee was at work, 4 there were fewer than 1,000 patients being dialyzed in the entire country, but that number had increased to approximately 10,000 by the time the 1972 legislation was adopted.
As the number of physicians, treatment facilities, and patients increased, so too did local newspaper and television coverage of dialysis and kidney transplantation. In turn, members of Congress heard from and about constituents who needed dialysis, much of the information coming through local newspapers. Individual physicians, of course, made their views known to their own representatives and senators. The foundation for political action was being laid.
The National Kidney Foundation, through the efforts of Schreiner and Plante, focused these developments in the legislative arena much like a parabolic reflector gathers signals from many sources and focuses them on a single point. The foundation provided full-time professional representation of its cause to members of Congress and their staff, supplied them with continuous information, and pursued all available legislative and executive opportunities to advance the cause of kidney disease.
The section above notes the stimuli to the 1972 legislation. What can be said about other “receptor sites” in Congress? Were representatives and senators prepared to hear from the advocates of kidney disease?
The legislative process in 1972 differed greatly from that of today. Power was concentrated in committee chairmen to a much greater extent than is now true, both for legislation and for appropriations. Congressional staff agencies, which are now prominent features of the scene, were much less important. The General Accounting Office (GAO) was beginning to shift from a traditional audit and accounting emphasis to one of program and management analysis. In the Library of Congress, the Legislative Reference Service provided strong constituent support to individual congressmen; the current Congressional Research Service, by contrast, provides professional staff support to committees. The Office of Technology Assessment was created in 1972.
Most important, the 1974 Budget Reform Act had not yet been passed. Consequently, the Senate and House budget committees were not yet in existence and thus had not yet disrupted relations between legislative and appropriations committees. The annual budget reconciliation process of today had not been established, and the Congressional Budget Office, which was authorized by this law, did not exist. The end result was that a more deliberate, patterned approach to legislation and fiscal matters occurred in 1972.
In this context, the Committee on Ways and Means was clearly the most powerful committee of the House of Representatives. In addition to its legislative authority, until the early 1970s the chairman and his Democratic colleagues on the committee had the authority to make all committee assignments for House Democrats. Wilbur Mills (D-Ark.), its chairman, was arguably the most powerful member of the House Democratic leadership. Understandably, assignment to the Ways and Means Committee was highly prized and went only to individuals who had shown themselves to be responsible legislators over several terms in the House.
The legislative jurisdiction of Ways and Means included the Internal Revenue Act (the tax code), international trade and tariffs, general revenue sharing, and the Social Security Act (including old age, survivors, and disability insurance, cash assistance programs, and Medicare and Medicaid). As one workshop participant said, the Ways and Means Committee, together with the Senate Finance Committee, “raised all of the federal government's revenue and spent half of it.”
The House Ways and Means Committee had, and still has, an important advantage over the Senate Finance Committee. The Constitution stipulates that all revenue legislation must originate in the House of Representatives. That requirement was extended over time to include all those matters under its jurisdiction. Administration proposals affecting taxes, social security, and Medicare, for example, are submitted first to the Ways and Means Committee. It serves as the architect, one might say, for legislation that reaches the Senate.
In 1970, the House of Representatives, following the lead of its Ways and Means Committee, sent to the Senate the proposed Social Security Amendments of 1970. The Senate Finance Committee deliberated at length, adopted a bill that the Senate passed, and returned a substantially amended bill to the House in the week between Christmas 1970 and the new year. The Senate announced, however, that it had no time to go to conference to resolve differences. It was “take it or leave it” politics. Although the legislation contained many provisions desired by members of the House, they rejected the Senate proposal rather than yield on such a fundamental procedural matter. No bill was passed as the ninety-first Congress adjourned.
Under Wilbur Mills, the Ways and Means Committee's style was well known. There were no subcommittees; all committee work was done by the full committee. Deliberately, every three or four years, the committee took up one of the major statutes under its jurisdiction—tax, international trade, social security, or Medicare. It then devoted great attention to the issues before it (many of which had accumulated since the last time they had been addressed), holding extensive hearings on any given subject. Members debated general legislative issues in executive session until consensus on the main provisions was established, and then, within an agreed-upon framework, the legislative and executive branch staff wrote language that could be implemented.
Mills seldom sponsored legislation himself. Rather, he allowed a bill to emerge from the deliberative processes of the committee. The legislation that went to the floor of the House had a bipartisan seal of approval; Mills took great care to ensure that John Byrnes (R-Wis.), the ranking minority member, and all of the committee Republicans agreed to it. 5 Mills's objective was to achieve unanimity of the committee as a preliminary step to carrying the full House.
One tradition of the Ways and Means Committee was to hear any citizen who wished to address the committee. Mills did not engage in selective hearings that were restricted to those advocating a point of view or to organizations representing major constituent interests. Consequently, hearings of the Ways and Means Committee always included statements by a number of interested individuals.
The Senate Finance Committee had comparable legislative jurisdiction, which was exercised under the chairmanship of Russell B. Long (D-La.). (Long, however, did not play the same political role in the Senate Democratic leadership as Mills played in the House.) The Committee was organized into subcommittees in the early 1970s, and the Subcommittee on Health was chaired by Herman Talmadge (D-Ga.), who worked closely with the chairman.
The Senate Finance Committee lacked the internal cohesion of the House Ways and Means Committee. On welfare reform, for example, a major element of the social security legislation in 1972, Long favored a fiscally conservative bill that emphasized work by welfare recipients. Abraham Ribicoff (D-Conn.), although supporting the work provision, favored a financially more generous bill. The administration's original proposal, the family assistance plan authored by Secretary of Labor Daniel P. Moynihan, represented an intermediate position. Each of the three parties had roughly one-third of the Senate votes. No one was prepared to compromise to assemble a majority, and the resulting three-way deadlock defeated welfare reform.
Finally, it is important to note that congressional staff, although fewer in number than today, exercised great influence and were a tightly knit group with close ties to the executive branch. William Fullerton joined the Ways and Means Committee in 1970 as its first professional staff person; in 1972, he was the only such staff attached to the committee. His counterpart in the Senate, Jay Constantine, had joined the Senate Finance Committee in 1966 as its first professional staff person on Medicare, Medicaid, and welfare. In 1972, he was aided, especially in the ESRD amendment, by James Mongan, a physician, and Paul Rettig from the Social Security Administration (SSA), who worked at the Senate Finance Committee on a daily basis during this time.
Congressional staff ties to the SSA's Bureau of Health Insurance were strong. Irwin Wolkstein, the bureau's deputy director for policy, had worked on health insurance issues since before the 1965 enactment of Medicare and Medicaid. Fullerton had worked for him at SSA, as had Rettig. In 1969, Constantine recruited Fullerton from the Legislative Reference Service of the Library of Congress to coauthor Medicare and Medicaid: Problems, Prospects, and Alternatives. This report greatly influenced the proposed legislation of 1970, which, although not enacted at that time, was basically adopted in 1972. In short, both committees' staff constituted a group of individuals with strong personal and professional ties to each other and with effective working relationships to the executive branch.
Several features characterized the setting in which the 1972 legislation was enacted. First, there was a strong commitment among the members of Congress to pass a bill. They had no desire to repeat the experience of 1970 when legislation was not passed because the Senate refused to go to conference. Second, the policy debate focused much attention on national health insurance. Senator Edward M. Kennedy (D-Mass.) had become chairman of the Subcommittee on Health of the Senate Committee on Labor and Public Welfare in January 1971 and immediately began to discuss national health insurance. The Nixon White House responded with legislation of its own. In a message to Congress on February 18, 1971, President Nixon proposed the National Health Insurance Partnership Act of 1971, one of the most important of the many proposals put forward at that time (U.S. Congress, House, Committee on Ways and Means, 1971b). There is some feeling that Nixon's action came out of his fear of the possibility of a Kennedy candidacy for the presidency the following year (Rettig, 1977).
Reflecting this interest in national health insurance, the House Ways and Means Committee, after passing H.R. 1 in the summer of 1971, held 21 days of hearings in October and November on national health insurance proposals, including that of the administration (U.S. Congress, House, Committee on Ways and Means, 1971a). In February 1972, the administration submitted extensive amendments to its original proposal (U.S. Congress, House, Committee on Ways and Means, 1972). In the Senate, although Finance Committee Chairman Long did not favor comprehensive health insurance measures, he did advocate insurance against the catastrophic costs of health care, indicating the broad interest in expansion of the existing Medicare and Medicaid programs.
The legislative agenda in 1971 and 1972, however, was dominated by H.R. 1, not by national health insurance. This legislation, as noted earlier, dealt with social security, Medicare, and welfare reform. Perhaps the bill's most important amendment to Medicare, marking its most significant expansion since 1965, was the extension of Medicare coverage to the disabled. President Lyndon Johnson had proposed such an extension in 1967, two years after Medicare had been enacted, but then it was regarded as too soon to be seriously considered. In 1970, however, it had been part of the bill that failed enactment for procedural reasons. Its passage in 1972 was a foregone conclusion.
The Senate Finance Committee first considered H.R. 1 in July and August 1971, as soon as the bill was sent over by the House (U.S. Congress, Senate, Committee on Finance, 1971). These hearings were limited to administration witnesses and focused mainly on the family assistance plan. Senator Long noted with asperity that two-thirds of the bill consisted of Senate amendments adopted in 1970. He noted that the most controversial feature of the legislation was the welfare reform proposal of the administration, as modified by the House.
The Senate committee resumed hearings again in January and February 1972, and the opening statements of Long and Ribicoff foreshadowed the welfare reform deadlock mentioned above (U.S. Congress, Senate, Committee on Finance, 1972a). That deadlock, and the ensuing controversy and behind-the-scenes negotiations, delayed Senate action on the bill until members had returned to Washington from the summer recess.
Despite these maneuverings, the facts were that major legislation amending the Social Security Act was proceeding through both the House and the Senate in 1971 and 1972, and the Nixon administration was participating in all aspects of the process. There was no uncertainty about whether there would be legislation. The only question was the kind of bill a Democratic Congress would send to the White House and its acceptability to a Republican president.
The formal legislative history of Section 299I is quite brief. The provision was not considered by the House Ways and Means Committee in hearings or in any executive session on H.R. 1. The Senate kidney amendment was added to H.R. 1 on the Senate floor, with no prior hearings, on a Saturday morning, September 30, 1972. The joint House-Senate conference committee agreed to the Senate amendment barely two weeks later. On October 30, the brief kidney provision was included in the 300-page bill signed by the President. The informal legislative history, however, is far more complicated.
The House Ways and Means Committee, as part of its hearings on national health insurance, devoted the end of the morning of November 4, 1971, to testimony about ESRD (U.S. Congress, House, Committee on Ways and Means, 1971c). It particular, it heard from representatives of the National Association of Patients on Hemodialysis (NAPH). These included Shep Glazer, vice president of the group and a dialysis patient from New York; William Litchfield, a dialysis patient from Houston; Roland Fortier, an NAPH member from Connecticut; Peter Lundin, a medical school student who was also a dialysis patient and NAPH member from California; June Crowley, a dialysis patient from New York; and Abraham Holtz, a dialysis patient from New York.
Glazer made an official statement for NAPH, and then spoke about his personal situation:
I am 43 years old, married for 20 years, with two children ages 14 and 10. I was a salesman until a couple of months ago until it became necessary for me to supplement my income to pay for the dialysis supplies. I tried to sell a non-competitive line, was found out, and was fired. Gentlemen, what should I do? End it all and die? Sell my house for which I worked so hard, and go on welfare? Should I go into the hospital under my hospitalization policy, then I cannot work? Please tell me. If your kidneys failed tomorrow, wouldn't you want the opportunity to live? Wouldn't you want to see your children grow up? (U.S. Congress, House, Committee on Ways and Means, 1971b)
The most dramatic moment of the hearing, however, came when Glazer was briefly dialyzed before the committee. This event was widely publicized afterwards and was believed by many to have been decisive in the decision of Congress to enact the kidney disease entitlement.
In fact, great ambivalence surrounded this dialysis “session.” The hearing record, for example, mentions only that a dialysis machine was brought to the hearing room but not that Glazer was dialyzed (U.S. Congress, House, Committee on Ways and Means, 1971b). The session had been arranged by Glazer and Ways and Means Chief Counsel John M. Martin, who consulted William Fullerton, the committee staff person for health. Neither was enthusiastic; indeed, Martin was afraid of what might happen if Glazer died in front of the committee. Nor did the other members or their staff think it was especially appropriate. Plante remembers that the senior staff aide to Barber Conable (R-N.Y.), when he saw Glazer being dialyzed, exclaimed “What the f—is going on here?” But the committee had a tradition of hearing anyone who wished to testify, and it chose not to change its rules in this instance.
Glazer, at a New York NAPH press conference on November 3, the day before the hearing, had announced his intention to undergo dialysis before Chairman Mills and the Ways and Means Committee. The National Kidney Foundation opposed the effort—directly in discussions with Glazer and indirectly through Eli Friedman, advisor to NAPH. Schreiner and Plante had been lobbying Congress assiduously, seeking support for kidney treatment programs from all sources—the tax committees, the health legislative committees, and the appropriations committees. They feared that an accident would cancel all the progress they had made, and Schreiner stressed this possibility when he tried to dissuade Glazer from dialyzing before the committee. Given these activities, Schreiner's incredulity was all the greater when he received a telephone call at home on the evening before the hearing. Glazer had arrived in Washington, D.C., from New York, and was calling to ask Schreiner if a Georgetown University dialysis machine could be brought to the hearing room the next morning for use at that time (Institute of Medicine, 1989). Schreiner, suppressing his anger, trucked a machine over to the Longworth House Office Building on Capitol Hill. Barred from attending the hearing by the National Kidney Foundation, which did not wish him to lend its prestige to the event, he sent a Georgetown nephrology fellow, James Carey, to act as attending physician. If any untoward event occurred, Carey was instructed by Schreiner to clamp the blood lines, turn off the machine, and declare that the dialysis session was over.
Several years later, Carey disclosed to Schreiner that Glazer had gone into ventricular tachycardia during the dialysis session before the committee. Carey had immediately clamped the lines. The “treatment” was very short, perhaps five minutes in all, long enough to open the blood lines but hardly a dialysis session. Nevertheless, the few members of the committee who were present characterized the episode as “excellent testimony.” They were thinking broadly about national health insurance at the time, however, not about doing something special for dialysis patients. Indeed, Fullerton recalls that a parent of a child with hemophilia made a far greater impression on the committee. The national press, on the other hand, had been handed a dramatic story and publicized it widely. The myth that Glazer's treatment had been decisive in the decision by Congress to enact Section 299I had been established.
On November 11, one week later, Schreiner and William J. Flanigan, a nephrologist from the University of Arkansas in Little Rock, hometown to Wilbur Mills, testified before the committee on behalf of the National Kidney Foundation (U.S. Congress, House, Committee on Ways and Means, 1971d). Flanigan cited the disparity between the few patients with end-stage renal failure who were actually being treated and the many who could benefit, adding the following:
Just over two decades ago we did not have the artificial kidney machine, and kidney transplant became a technique just one decade ago. Today we have both therapies because of research, both with and without Government support. These life saving procedures cost money and they save lives. It seems to those of us who each day work in the field of kidney disease that too many years have already gone by without a national program of catastrophic insurance or a National Health Insurance Act with provisions for catastrophic coverage.
The events of the previous week were neither mentioned by the National Kidney Foundation representatives nor raised in the perfunctory questioning after the testimony. The testimony simply added one more statement to the hearing record in behalf of national health insurance.
It was noteworthy, then, when Mills introduced a personal bill, H.R. 12043, on December 6, 1971, to amend the Social Security Act and provide financing for individuals with chronic kidney disease. The bill proposed to amend Title XVII rather than Title XVIII (Medicare) or Title XIX (Medicaid), as would have been more appropriate. (Fullerton remembers modeling the bill after Title V, which applies to maternal and child health.)
This proposed bill, far more than the amendment enacted in late 1972, reveals Mills's thinking about this issue. The purpose of the bill was “to assure that any individual who suffers from chronic renal disease will have available to him the necessary life-saving care and treatment for such disease and will not be denied such treatment because of his inability to pay for it.” The bill provided for a budgeted program, not an entitlement; it authorized appropriations of “such sums as may be necessary” to financially assist U.S. citizens or “aliens lawfully admitted . . . for permanent residence.” Financial assistance was to be “for any part of such costs which [such individuals] are unable to pay from funds otherwise available to them,” but only to the extent that such payments “do not exceed the cost of the least expensive form of dialysis which is or would be medically sufficient.” In addition, a project grant program was proposed to assist in the development “of new and improved methods of treatment, with emphasis on less costly methods,” “the establishment of hemodialysis centers, but including only those centers which make home dialysis equipment available to those who require” it, training of personnel, and educational programs regarding the prevention of chronic renal disease.
What was going on? There were probably at least two things operating. First, Mills, who practically never submitted a personal bill, was signaling his sympathy for action on kidney disease. The degree of his commitment to the precise language of H.R. 12043 was unclear at that time. Mills had heard from Arkansas constituents and individuals across the country, however, and recognized a genuine problem that needed attention. Fullerton recalls that the chairman began to get calls during this time from people about to die who needed help. Mills's administrative assistant, Gene Goff, handled the Arkansas constituents and took a personal interest in the issue; Fullerton dealt with the others. It bothered Mills, as it did Fullerton, that the congressman had to get involved with life-and-death matters (Institute of Medicine, 1989).
Second, it was about this time that Mills decided to seek the Democratic presidential nomination, a decision he announced a few months later. Coincidentally, perhaps, substantial legislation emerged from the Committee on Ways and Means during 1971 and 1972—expansion of Medicare to include the disabled and general revenue sharing—flowing from a congressional consensus that Mills was powerful in shaping.
The Senate Finance Committee held hearings on H.R. 1 in July and August 1971 and again in January and February 1972. During this time, the supplemental security income benefit was developed on the Senate side. The Senate Finance Committee did not report out a bill, however, until September (U.S. Congress, Senate, Committee on Finance, 1972b). In the intervening period, discussions went forward on all aspects of the proposed legislation.
Although neither the House nor the Senate version of H.R. 1 contained a kidney disease provision, the summer of 1972 was an active one for the National Kidney Foundation. For example, the 1972 Republican Party platform included a plank on the coverage of kidney failure treatment. Unbeknownst to the foundation, Bryce Harlow at the Nixon White House apparently had been responsible for this plank provision on behalf of Mamie Eisenhower, then a member of the Kidney Foundation board.
More important, Schreiner, Plante, and other foundation officials had had contact with Senate Finance Committee Chairman Long and with Herman Talmadge (D-Ga.), chairman of the Senate Subcommittee on Health. Following a February 1972 visit, E. Lovell Becker, then president of the National Kidney Foundation, wrote to thank Long for meeting with him, Plante, and another Kidney Foundation physician. In a letter dated February 28, 1972, Becker included “some basic information on the incidence of kidney disease and the costs of hospital dialysis, home dialysis and transplantation.”
In the early months of 1972, Charles Plante had his first encounter with Vance Hartke (D-Ind.), during which the senator indicated his support for the Kidney Foundation's legislative agenda. On February 22, Hartke introduced S. 3210 on behalf of himself and Alan Cranston (D-Calif.), a bill to amend the Public Health Service Act “to provide assistance to certain non-Federal institutions, agencies, and organization for the establishment and operation of cooperative community programs for patients with kidney disease for the conduct of training related to such programs, and to provide financial assistance to individuals suffering from chronic kidney disease who are unable to pay the costs of necessary treatment” (U.S. Congressional Record, 1972a). Hartke's action foreshadowed the events of September, although S. 3210 would amend the Public Health Service Act, not the Social Security Act.
Plante maintained regular contact with Constantine and Mongan on the Senate subcommittee staff and with Fullerton on Ways and Means during the spring and summer of 1972. The staff of both committees, in turn, were in touch with Irwin Wolkstein in the SSA Bureau of Health Insurance. Although no kidney provision was formally under consideration, it was being discussed as part of a much larger, more comprehensive package of Medicare amendments.
The key discussions at the Senate Finance Committee staff level occurred during this period. Constantine was inclined against a kidney disease amendment. Why favor this treatment, he asked, over the long-term treatment of cancer? Mongan, the physician, counseled against opposing a kidney provision. It was the one situation, he argued, where the only thing separating individuals from life and death was money. He suggested that it be looked at as a pilot for catastrophic health insurance. Constantine yielded; he would not recommend against such a provision if it were offered.
Notwithstanding Hartke's earlier expression of interest, there was little indication by late summer that he might offer a kidney disease amendment to H.R. 1 on the Senate floor. When that possibility arose in early September, Schreiner went to Long, concerned that Long—not Hartke—should receive credit. Long replied, according to Schreiner, “Do you want to credit me or to have a bill? Let Hartke do it; we may need him for something else.”
The Senate Finance Committee report of September 26 revealed the complexity of legislation that dealt, among other things, with old age, survivors, and disability insurance, Medicare, Medicaid, maternal and child health, social security benefits, supplemental security income, jobs for families, child care, aid to families with dependent children, and general revenue sharing; the document was nearly 1,300 pages long. Listed first among the health-related provisions of the House bill that were basically adopted without change by the Senate was the extension of Medicare coverage to disability beneficiaries (U.S. Congress, Senate, Committee on Finance, 1972b).
In this provision, the committee was responding to the obvious needs of the disabled, who used medical services at greater rates than those who were not disabled but who were also much less well off financially. On the other hand, by requiring that an individual be disabled for 24 months before Medicare eligibility began, the provision regulated the share of the costs to be borne by Medicare.
The Finance Committee added 49 provisions to the House bill. The two most prominent were professional standards review organizations and coverage of maintenance drugs by Medicare. The former would be enacted; the latter would be rejected. There was no provision for kidney disease included in the bill reported out by the committee. However, in a section at the very end of the report entitled “Additional Views of Senator Vance Hartke,” Hartke discussed kidney disease (U.S. Congress, Senate, Committee on Finance, 1972b).
In what must be the most tragic irony of the twentieth century, people are dying because they cannot get access to proper medical care. . . . More than 8,000 Americans will die this year from kidney disease who could have been saved if they had been able to afford an artificial kidney machine or transplantation. These will be needless deaths—deaths which should shock our conscience and shame our sensibilities. . . . We have the opportunity now to begin a national program of kidney disease treatment assistance administered through the Social Security Administration, and I propose that we take that opportunity so that more lives are not lost needlessly.
The last sentence clearly anticipated the events that would follow in swift succession.
The National Kidney Foundation representatives—Schreiner, Plante, and Lovell Becker, the current president—had no reason to expect that a kidney provision would be included in the Senate bill as the Finance Committee took it to the Senate floor in the final week of September. They flew off to San Francisco on Friday, September 29, to attend a major conference on kidney transplantation organized by Samuel Kountz, the transplant surgeon at the University of California, San Francisco. Before leaving, they made a precautionary check and were assured that nothing was likely to happen.
On their arrival in San Francisco, however, the foundation representatives received a telephone call from Washington indicating that Long had agreed to let Hartke offer a kidney entitlement amendment the following morning, Saturday, September 30, and their presence was requested. Schreiner, who was already committed to a dinner at Norman Shumway's, the Stanford heart transplant surgeon, and scheduled to deliver a paper at the transplant meeting, remained in San Francisco. Plante took the “red-eye” flight back to Washington.
Plante arrived at the Senate early Saturday morning and remembers the day as “dark and stormy.” He first helped Howard Marlow, Hartke's staff aide, prepare the senator's remarks for introducing the amendment on the floor. He also discussed with Mongan the precise wording of the amendment, which had not been entirely worked out.
The Senate, after perhaps 30 minutes of floor debate, voted 52 to 3 in favor of the Hartke amendment, with 45 senators absent and not voting (Rettig, 1976). Dissenting votes were cast by Wallace Bennett (R-Utah), the ranking minority member of the Finance Committee, James Buckley (R-N.Y.), and Sam Ervin (D-N.C.).
Was the Senate action capricious or a considered step of the world's greatest deliberative body? From the discussion at the Institute of Medicine's December 1989 workshop, several factors stand out. First, the extension of Medicare coverage to the disabled was an essential prerequisite for a kidney disease amendment. Without it, a special provision for kidney disease would have violated basic equity. Given the disability framework, however, chronic kidney failure could be viewed as a disabling, life-threatening condition. 6
Second, Russell Long's long-standing interest in insuring people against the costs of catastrophic health problems made him responsive to the financial implications of kidney disease, especially for working individuals. Of the staff, Mongan was pivotal. He persuaded Constantine to treat the issue as a “pilot” for catastrophic health insurance. Together, with substantial help from the Kidney Foundation, they persuaded Long.
Third, the kidney entitlement was adopted at a time when national health insurance, or at least catastrophic insurance, was anticipated shortly. The kidney amendment, although consistent with this broader agenda, was an issue that deserved immediate attention. As Long put it on the Senate floor:
The next Congress will tackle health insurance issues, and I am sure during that debate we will deal with health insurance problems in general, and I hope that specifically we will deal with the problem of insuring against catastrophic illness. I am cosponsoring this proposal at this time because these very unfortunate citizens with chronic renal failure cannot wait for Congress to debate these broader issues. They need help—it is critical—and that help must come now as many of them, without assistance, simply will not be alive for another two years. (U.S. Congressional Record, 1972c)
Finally, the human face of the issue that presented itself to Long and his colleagues, and to Wilbur Mills and other members of Congress, was that of a working member of the community, married, a father, and a responsible citizen—the Shep Glazers of the world. The only thing between them and death was money. That, at least, could be supplied by the Congress of the United States. For Long, providing life-saving benefits to these individuals was consistent with his commitment to catastrophic health insurance, his emphasis on work, and his general populist outlook.
Both the Senate and House were determined to send a bill to the White House before election day, but time was short. The staff prepared a report for the Joint House-Senate Conference Committee that analyzed both the House and Senate bills, focusing on the differences between them (U.S. Congress, Conference Committee, 1972). In addition, House Ways and Means Committee staff prepared a provision-by-provision document solely for the benefit of the House members.
The conference began on Thursday, October 12, and continued through Saturday evening, October 14. Amendment number 328, providing coverage of “certain specified drugs, purchased on an outpatient basis, which are necessary in the treatment of the most common, crippling or life-threatening disease conditions of the aged,” had been added by the Senate (U.S. Congress, Conference Committee, 1972). The administration, however, opposed the coverage of drugs. Indeed, some observers thought that this amendment alone, if accepted, risked a presidential veto. The administration and the pharmaceutical industry, which also opposed the provision, lobbied strongly against it with Mills and his House colleagues. As the provision was not in the Ways and Means bill, and would have cost a great deal, the House resolved before the conference to reject this proposed amendment.
The Senate bill also included the kidney disease amendment, but the House bill did not. Mills was sympathetic to the kidney provision, as he had indicated at the end of 1971; he was quite unsympathetic to the drug provision. As Long presented the case for the drug provision, Fullerton recalls whispering to Mills, “Tell him that if they are prepared to recede on this one, we're ready to talk turkey on the kidney provision.” Mills conveyed that message, and Long yielded. Although he believed strongly in the drug benefit, he knew he did not have the votes. He also knew that the Ways and Means Committee was prepared to accept the kidney provision.
Soon the conference turned to the kidney provision. Discussion was brief. The Hartke amendment had included a six-month waiting period between the application for entitlement (following the first treatment for chronic kidney failure) and the period of eligibility for benefits. The House proposed to shorten that to three months, which the conference accepted.
Thus, the conference included Section 299I in the Social Security Amendments of 1972, at that time the longest single piece of legislation Congress had ever adopted. After adoption by both the House and Senate, the bill was sent to the White House and signed by President Richard M. Nixon on October 30, 1972.
One persistent criticism of the ESRD program has been that its total costs were grossly underestimated. What lies behind this criticism? In retrospect, the basic misestimation involved the incidence and prevalence of individuals with permanent kidney failure. Although “unit costs,” as measured in Medicare expenditures per patient treatment year, have always been high, usually in the range of $25,000 to $30,000 nominal dollars (unadjusted for inflation), the steady growth in the patient population has driven program costs higher and higher. Even though these unit costs have been controlled in an impressive way over time, total Medicare expenditures are substantial. In addition, initial estimates in 1972 dollars have usually been compared with nominal dollars in later years.
The basic reason for the criticism, however, is that initial Medicare ESRD costs were wrong, or not reported, or not inclusive of induced costs, and exceeded initial expectations. The kidney disease amendment of October 1972 was an obscure event to most Washington observers. After all, a presidential election dominates news and public awareness both inside and outside the Washington beltway. Not until January 1973, when the New York Times carried a story about the low estimates and ran an editorial, “Medicarelessness,” was this issue forcefully injected into public consciousness. Let us attempt to disentangle this complex aspect of the story.
First, Senator Hartke was the only source of public information about estimates. On the Senate floor on September 30, drawing heavily on information from the National Kidney Foundation, he discussed costs at length:
In terms of indirect costs of mortality—lost future income—kidney disease is the highest ranking killer, costing the country $1.5 billion annually. Additionally, more that $1 billion has to be spent each year for hospital and nursing home care, professional services, and drugs. Surprisingly, this amount exceeds the annual medical services costs for maternity care, or for all forms of cancer. (U.S. Congressional Record, 1972b)
Hartke added information about the epidemiology of the disease and the insurance coverage of its victims:
Approximately 55,000 Americans are now suffering from chronic renal disease. Twenty to 25,000 of these people are prime candidates for dialysis or other life-saving kidney treatment. Of these people, less than one-third have any insurance coverage of their own, and most of these people have coverage for no more than 2 years.
Although the unit costs of dialysis were high, the senator was optimistic that technological advance could be expected to bring them down:
The cost of dialysis is $22,000 to $25,000 per year per patient in a hospital; $17,000 to $20,000 in a hospital-related dialysis center; and $19,000 in the first year of home dialysis with a subsequent cost of about $5,000 per year. There is substantial evidence available, however, indicating that these costs will continue to go down each year with new advances in the technology of artificial kidney care.
Remarkable success in transplantation, coupled with declining costs, would also affect total program costs:
Perhaps more exciting is the remarkable success that transplant surgeons are having with kidney transplants. It is estimated that over 2,000 procedures will be performed this year in the United States. Of these, 85 percent will be successful. It is also important to point out that the 15 percent rejection rate means kidney mortality and not human mortality. These people are placed back on the artificial kidney machine to await another tissue-typing for another transplant. At the present time, the average costs of a transplant are $15,000. Again, we can look at the substantial reductions in the cost of transplantation. For example, Dr. Sam Kountz, 7 a transplant surgeon at the University of California, has reduced his costs to $8,000 per transplant or no more than any major surgical procedure.
Treatment, Hartke argued, would rehabilitate a major proportion of the patients:
Sixty percent of those on dialysis can return to work but require retraining and most of the remaining 40 percent require no retraining whatsoever. These are people who can be active and productive, but only if they have the lifesaving treatment they need so badly.
Then, regarding program costs, the senator stated the following:
Final cost estimates for this vital amendment are now being worked out. Preliminary estimates indicate an annual cost of approximately $250 million at the end of 4 years with the first full year cost at about $75 million.
It is possible that these costs could be covered by the slight actuarial surplus in the hospital insurance trust fund and the slight reduction in costs now estimated for the regular Medicare program for the disabled. However, if it is finally determined—and I think it can be, before these considerations of H.R. 1 are concluded—that a Medicare tax increase of a small amount is necessary, it would be quite normal.
When the actuaries complete their work, and if they indicate the need for an increase in the Medicare tax, I would be more than glad to propose a further amendment to that effect in the interest of responsible legislating.
The need for this amendment is urgent. We will do what is required to pay these costs.
That is what the pending amendment provides—a chance for thousands of Americans to remain alive and be productive. The $90 to $110 million that this amendment will cost each year is a minor cost to maintain life. And it is a minor cost when compared to the rewards which society will reap from people who can return to the workforce rather than wither and die.
I think this is one instance in which medical technology has given its blessing to a wonderful Nation, and what we need now is to implement this blessing, to make sure that the amendment is adopted.
Where did Hartke get his numbers? The National Kidney Foundation supplied him with figures from the spring of the year onward. The low estimates on dialysis came mostly from Scribner in Seattle, who was advocating home dialysis as the right course. In addition, Samuel Kountz, a kidney transplant surgeon at the University of California, San Francisco, an enthusiastic advocate for transplantation, was predicting falling transplant costs over time. Furthermore, the discussions of cost invariably reflected the expectation that technological change would lead to falling costs. In short, much of Hartke's information came from the advocates for treatment, fiscally responsible individuals themselves, who argued that treatment could be done economically. The situation was one in which few epidemiological data existed; the Gottschalk report analyses, which might have been updated, were basically unknown by key policymakers; and political action clearly overtook expenditure estimation.
The statements by Hartke on the Senate floor, then, stand as the most “official” estimates of the expenditure impact of the kidney provision. In fact, a more formal estimation process did exist. When major legislation was being considered by Congress, it was customary for the appropriate officials in the executive branch to consult closely on the probable costs of such legislation. Today, the Congressional Budget Office, established by the Congressional Budget Reform Act of 1974, provides estimates to congressional committees on pending legislation. In the case of the Social Security Amendments of 1972, this responsibility fell to the Office of the Actuary of the SSA. The health actuaries of the SSA worked with the House Ways and Means Committee, the Senate Finance Committee, the Joint Committee on Taxation, and the conference committee to cost out the various provisions under consideration.
In 1972, as today, the focus of cost calculations for amendments to the Social Security Act was the amount of increase in the Federal Insurance Contributions Act (FICA) payroll tax that was required to finance new provisions. The FICA (or social security) tax consists of two parts: the social security contribution and the health insurance contribution. The estimated increase in the FICA tax required to finance new or expanded benefits is called the “percent of payroll”; payroll refers to the national wage base against which the tax is applied. Thus, for members of the House Ways and Means and Senate Finance committees, the estimates question is embedded in the larger issue of how much the FICA tax must be increased to finance program expansion. This question differs from that of how much has to be appropriated in the budget for programs financed out of general revenues.
The numerous provisions of H.R. 1 required a good deal of actuarial work to estimate. Substantial calendar time was available, however, to cost out the House provisions, as H.R. 1 was completed in mid-1971 and the joint conference committee did not meet until October 1972. Moreover, many of the House provisions remained unchanged from the aborted 1970 legislation, and the Senate had already agreed to many of these. The health actuaries also worked closely with the Senate Finance Committee in the summer of 1972. As the provisions of the Senate bill became clearer, they received appropriate attention.
The full Senate bill was not reported out of the Finance Committee until September 26, early in the week that it went to the Senate floor. Neither the Senate nor the House bill contained the kidney provision, so estimates had not been prepared for this last-minute amendment. Gordon Trapnell, director of health insurance studies in the Office of the Actuary, SSA, recalls that he had never heard of ESRD before that week.
Consequently, not until Thursday evening, September 28, did Trapnell hear from Mongan, asking for an estimate. 8 Hartke, Mongan informed Trapnell, had introduced a provision that would cover patients for dialysis or kidney transplantation after a six-month waiting period. The National Kidney Foundation had estimated the cost of the proposal at $35 million to $75 million in the first year. Could Trapnell get back to the committee staff within 24 hours with some idea of what the cost of such a provision might be?
Trapnell called Mongan the following afternoon. The estimate was difficult to make, he said, “both because of the poor data that was available and because of the unusually large number of highly volatile variables involved, such as technological advance, [and the] very expensive nature of transplant operations and dialysis.” The SSA Office of the Actuary estimated the first-year cost, on an incurred basis, in the range of $100 million to $500 million, increasing substantially in later years to a level several times the initial amount (Trapnell, 1973).
The working assumption, shared by legislative and executive branch officials (including the actuaries), was that Senate floor amendments to social security legislation were usually symbolic gestures of support for particular constituencies. Such amendments were regarded as prime candidates for removal from a bill in conference with the House. In this case, however, it became clear after the Senate action on September 30 that the kidney amendment had a good chance of being adopted (Trapnell, 1973).
Consequently, in the first week of October, the health actuaries were asked by both committees for estimates for the conference committee. Trapnell recalls preparing these for zero, three-, and six-month waiting periods and projecting these estimates 25 years into the future. His staff then computed the average tax rate required to finance the hospital insurance cost of the provision, the resulting average annual cost, and the cash cost in each of the first five years (using the zero, three-, and six-month waiting periods). 9
How did Congress respond to the uncertain cost estimates? Trapnell's memorandum provides a useful glimpse of the scene:
The conferees met to resolve the differences between the Senate and House versions of H.R. 1 toward the end of the next week and discussed the kidney disease provision on Saturday night, October 14, 1972, around 9 o'clock in the evening. When the staff brought out the provision, Chairman Mills looked up and said, “I have the greatest sympathy for those people; what does it cost?” He and Senator Long had in front of them a piece of note paper on which appeared the first year incurred cost (for HI [Hospital Insurance] and SMI [Supplementary Medical Insurance] together) and the average tax rate for HI for a zero, three months, and six months waiting periods. I was summoned to the end of the table opposite Mr. Mills and Senator Long by Mr. Ball [Commissioner of Social Security Robert Ball] to answer their questions. I pointed out that the cost was expected to increase many times over the 25 year period for which hospital cost tax rates are set and that this was why the average cost provided was so much higher than the first year costs. I also pointed out that the Senate provision effectively had no waiting period due to the impossibility of determining when the onset of chronic kidney [disease] occurred; but dialysis would substantially reduce the costs, as indicated in the estimates provided (average cost of .09% with no waiting period, .06% with a three month waiting period, and .05% with a six month waiting period). I further explained that the relatively larger drop from a zero to 3 month waiting period than from a 3 month to 6 month waiting period was due to the concentration of inpatient dialysis in the first month or so and that nearly all transplants occurred six months or more after the beginning of dialysis. I also explained that there was a very large difference between inpatient, outpatient, and home dialysis care. Mr. Mills selected the 3 month waiting period as being the most cost effective and turned to Long (who nodded) and then to the other conferees saying “that's all right with you, isn't it?”—and they nodded. Thus the care of persons suffering from chronic kidney disease became law.
Several further comments are warranted about the estimation process. One concerns what was being estimated. Technically, the actuaries' estimates pertained to the narrow language of the kidney amendment, which established a Medicare benefit for individuals under 65 years of age, not for those who were 65 or older. It was presumed that the benefit existed for the elderly, however, because a Medicare benefit could not be established for those under 65 and not be available for the elderly. In fact, very few elderly persons were being dialyzed at that time and none were receiving transplants. Although the Bureau of Health Insurance had answered several inquiries in the previous year, the nature and extent of coverage for the elderly had not been clarified. Estimates by the actuaries of the cost of the entitlement were for those under 65 and failed to account for the “induced cost” that would result from increased treatment by the elderly as services expanded. Similarly, estimates of the impact on Medicare focused on the costs of treating kidney disease, not on the use of additional Medicare resources for other than renal conditions. Yet the entitlement was to individuals with ESRD for Medicare benefits—not just for kidney disease treatment.
Finally, the working problem for the actuaries and Congress was whether the increase in payroll tax was sufficient to cover the expenditure impact of the new provision. Trapnell remembers that the revenue side of the bill actually included more funds than were necessary. This was not widely publicized, however, because the actuaries discovered afterward that another, more costly provision in the legislation had been underestimated.
The demands of complex legislation like H.R. 1 for estimates of expenditure impact and the corresponding increases required in the FICA tax are substantial. Estimates must often be developed in a short time. All decision makers, whether they be actuaries, committee staff, or members of Congress, consequently reduce decisions to their simplest form and limit analysis to the bare minimum. For the kidney entitlement, the actuaries prepared their estimates in the final stages of the legislative process. They did so quickly and did not publish them widely. This was costly to the ESRD program for two reasons. The “estimates” used by Senator Hartke, which were provided by Scribner and Kountz and transmitted by the National Kidney Foundation, seriously underestimated the costs of the program. Neither the actuaries nor the congressional staff took them seriously; yet no one challenged them, and they became the only available public numbers.
Second, a controversy broke out in January 1973 between the Office of the Assistant Secretary of Health (OASH), an agency that felt considerably stronger after Nixon's landslide victory over George McGovern in early November, and the Democratic Congress. The leadership and staff of OASH harbored partisan distrust of the SSA Bureau of Health Insurance and of the close ties between the bureau's Medicare professionals and the key congressional committee staff. The front page of the New York Times was the arena for the clash (Altman, 1973; Lyons, 1973; New York Times, 1973). The controversy resulted in a new set of “estimates” by OASH that called into question the Hartke numbers. The political damage created by this challenge affected supporters of the legislation and stalked the program for years to come.
How did it happen that Congress enacted the kidney entitlement as one of the Social Security Amendments of 1972? In a previous paper I suggested a “tipping” process was at work, borrowing the concept from Schelling's discussion of changes in neighborhood composition (Schelling, 1972). “It was necessary,” I wrote, “for the cumulative effect of an increasing number of government programs to be felt. Moreover, it appears that widespread publicity of lives lost for lack of scarce medical resources was necessary, including specific dramatization of identified lives at stake. Finally, the number of patients being kept alive had to increase to the point where they simply could not be ignored” (Rettig, 1976). The growth in patients, physicians, and treatment centers created strong momentum for government action.
Broad-scale, across-the-board advocacy for kidney disease characterized the efforts of the National Kidney Foundation. It assembled the demands of patients and physicians and focused them on the PHS, including the research programs of NIH, vocational education, and the crippled children's program. The effort was neither one of scattershot nor one of reliance on hitting a single target but rather one designed to advance the cause.
And Congress was receptive. It had already authorized limited programs in the PHS. Furthermore, members had been hearing from constituents without the means to pay for life-saving treatment, and they had introduced numerous legislative proposals over a relatively long period of time. Authority over the Medicare statute involved a few representatives and senators, and a small set of staff aides, who effectively managed a broad legislative consensus that could not be resisted. The deliberate cycle of the policy process, in which issues accumulated and were addressed every three or four years, facilitated consideration of specific matters as part of major legislation like H.R. 1.
If the Medicare kidney entitlement had not been adopted in the Social Security Amendments of 1972, what would have happened? One can only speculate about the answer to this question. History is the record of the contingent possibilities that were selected and the vapor trail of those that were not. I believe that some public policy responsive to the needs of kidney disease patients would have been adopted. It might not have taken the form of a Medicare entitlement. In any event, it would have represented a peculiarly American adaptation to this country's particular dual “system” of publicly financed care for the elderly, the poor, and the disabled, and privately financed health insurance for the working population. One can imagine many scenarios.
Was equity violated by favoring kidney disease patients over others with arguably comparable claims? In retrospect, it appears so. At the time, however, as noted in this paper, it was widely expected that national health insurance or at least some form of catastrophic health insurance would be enacted within a few years of the 1972 legislation. Moreover, the extension of Medicare coverage to the disabled was seen by all key participants as a sine qua non justification of Section 299I.
What importance should attach to the estimates of program costs? Practically speaking, better estimates might have barred or slowed congressional action. But how are good estimates made about an unknown future under circumstances in which data are few, time is short, the agenda is long, and the fundamental political, not technical, issue is “What is to be done?”
And what kind of question is the estimation question in the first place? It would be strange indeed if the world were suddenly purged of the public and private programs that had involved serious early cost misestimates. Even though we aspire to rationality in the conduct of human affairs, it is hard to imagine a more draconian social decision-making criterion than adherence to predictions about unknown futures.
The estimation question, in fact, is more an issue about outcomes. The Medicare ESRD program reflects the benefits and burdens of modern medical technology. It is characterized by moderately high program expenditures, and thus genuine opportunity costs, with very high “unit costs” for a relatively few but nontrivial number of beneficiaries. It represents effective, life-saving treatment for many patients, but such treatment is transmuted into merely life-prolonging therapy for others with serious complications and comorbidities and low quality of life (as “objectively” measured by external observers) (Evans et al., 1985). These “outcomes” are sufficiently complicated to induce thoughtful reflection by all observers.
Finally, we must ask whether the medical, moral, and political bases for policy were sound. Medically, two effective treatments existed that saved lives and palliated symptoms but did not cure the underlying disease. Morally, this technology was financed to save lives. It is hard to conceive of a public justification for failing to intervene. Politically, Congress was responding to genuine constituent needs by providing funds from the public fisc, insuring individual citizens against one form of catastrophic illness, hardly an unreasonable thing to do. The bases were sound but vulnerable to repeated challenge. The kidney disease entitlement remains a focus for debate about the relative benefits and burdens of medical technology.
In June 1990, I interviewed former Senator Russell B. Long in his Washington, D.C., law office. The following summarizes my notes of Long's responses in that interview.
“It was clear from the beginning that government health insurance would involve costs beyond what anyone was telling you at the time. I thought, how do we move into this thing? It was clear that we would do something like England and other nations. To what extent can we keep it in the private sector? To what extent do we need to do it by the government?
“For starters, I thought we should do catastrophic cases. I sponsored legislation. It was not original with me; Paul Douglas [former Democratic senator from Illinois] had the idea long ago. But I could not have given a reliable estimate of the cost of cancer, heart disease, stroke. A majority of the committee were not willing to vote to report a catastrophic bill or bring it to the floor.
“Jay Constantine or Jim Mongan, or both, came to me to say that Senator Hartke was going to sponsor a kidney amendment. They thought it was meritorious and that I was well advised to accept it and perhaps join as a cosponsor. If the time is right, why not join? is my view. If you are for something, why not cosponsor it? Otherwise, I would have had to oppose it, defeat it, and explain why. It is one thing to say that something is premature. It is another thing if you are going to have to vote on the record. Often you would rather vote for something than explain why you voted against it.
“I can recall testimony by a doctor that impressed me. He testified that he had patients with kidney failure—hardworking people, good, responsible citizens, honest, salt-of-the-earth people. ‘What are my possibilities?' they would ask. ‘Kidney transplant, dialysis, or death,' he would reply. ‘What does it cost?' was their next question. When told, they responded, ‘There is no way to raise that kind of money. What am I to do?' “As chairman [of the Senate Finance Committee], I sat there and thought to myself: We are the greatest nation on earth, the wealthiest per capita. Are we so hard pressed that we cannot pay for this? A life could be extended 10 to 15 years. You're not going to make any money that way. But it struck me as a case of compelling need.
“My attitude on Medicare and catastrophic was that the government shouldn't start out paying bills that people were able to pay themselves. The overwhelming majority of middle-income people needed some help to pay the bills, but it was better to help them than to pay the bill. On catastrophic, though, it was an area where it was appropriate for the government to say ‘We'll take care of you.'
“My attitude at the time, probably not expressed on the floor but in committee or conference, was that the kidney amendments would give us some sense for the cost and impact of coverage for catastrophic illness. If it turned out a lot worse than the estimates, that ought to give us some basis for thinking about catastrophic illness. The cost of catastrophic will jolt you. Kidney may be a jolt, but it will be nothing compared to all catastrophic. For advocates of action, cost is not important. It is the right thing to do. If you have responsibility for paying the bill, though, it is a different matter.”
[Question: what estimate were you given?]
“They gave me an estimate of approximately $1 billion a year. On estimates, look at the original Medicaid estimate of $200 million. A few years down the line it was at $20 billion. They initially looked at what the states were doing at the time. A minor change in the regulations can change things in a major way.”
[Question: In retrospect, do you have any second thoughts, any reservations, about the kidney amendment?]
“On this one, no. It was an idea whose time had come. It has done a lot of good. It has brought some of the same problems as Medicare and catastrophic, cost control problems. But it was something that the government should have been involved in.”
Chronic Renal Disease Considered to Constitute Disability
Sec. 299I. Effective with respect to services provided on and after July 1, 1973, section 226 of the Social Security Act (as amended by section 201(b)(5) of the Act) is amended by redesignating subsection (e) as subsection (f), and by inserting after subsection (d) the following new subsection:
“(e) Notwithstanding the foregoing provisions of this section, every individual who—
“(1) has not attained the age of 65;
“(2) (A) is fully or currently insured (as such terms are defined in section 214 of this Act), or (B) is entitled to monthly insurance benefits under title II of this Act, or (C) is the spouse or dependent child (as defined in regulations) of an individual who is fully or currently insured, or (D) is the spouse or dependent child (as defined in regulations) of an individual entitled to monthly insurance benefits under title II of this Act; and
“(3) is medically determined to have chronic renal disease and who requires hemodialysis or renal transplantation for such disease;
shall be deemed to be disabled for purposes of coverage under parts A and B of Medicare subject to the deductible, premium, and copayment provisions of title XVIII.
“(f) Medicare eligibility on the basis of chronic kidney failure shall begin with the third month after the month in which a course of renal dialysis is initiated and would end with the twelfth month after the month in which the person has a renal transplant or such course of dialysis is terminated.
“(g) The Secretary is authorized to limit reimbursement under Medicare for kidney transplant and dialysis to kidney disease treatment centers which meet such requirements as he may by regulation prescribe: Provided, That such requirements must include at least requirements for a minimal utilization rate for covered procedures and for a medical review board to screen the appropriateness of patients for the proposed treatment procedures.”
Altman, L. 1973. Kidney foundation criticizes articles on care costs . New York Times , January 19, p. 30.
Bureau of the Budget. 1967. Report of the Committee on Chronic Kidney Disease . Washington, D.C.Evans, R., D. L. Manninen, L. P. Garrison, Jr., L. G. Hart, C. R. Blagg, R. A. Gutman, A. R. Hall, and E. G. Lowrie. 1985. The quality of life of patients with end-stage renal disease . New England Journal of Medicine 312:553-559. [PubMed : 3918267 ]
Institute of Medicine. 1989. Workshop on the Kidney Disease Entitlement . Washington, D.C., December 18-19.
Lyons, R. 1973. Program to aid kidney victims faces millions in excess costs . New York Times , January 11, p. 1.
Medical World News. 1967. Secret panel weights U.S. kidney policy . August 15, pp.36-38. New York Times. 1973. Medicarelessness . January 14, p. 16.Rettig, R. A. 1976. The policy debate on patient care financing for victims of end-stage renal disease . Law and Contemporary Problems 40:196-230. [PubMed : 11661595 ]
Rettig, R. A. 1977. Cancer Crusade: The Story of the National Cancer Act of 1971 . Princeton, N.J.: Princeton University Press.
Rettig, R. A. 1981. Formal analysis, policy formulation, and end-stage renal disease . Case Study #1 in Background Paper #2: Case Studies of Medical Technologies; The Implications of Cost-Effectiveness Analysis of Medical Technology. Contractor report for the Office of Technology Assessment, U.S. Congress. Washington, D.C.
Rettig, R. A. 1982. The federal government and social planning for end-stage renal disease: Past, present, and future . Seminars in Nephrology 2:111-133.
Schelling, T. 1972. A process of residential segregation: Neighborhood tipping . In Racial Discrimination in Economic Life , Anthony Pascal, editor. , ed. Lexington, Mass.: Lexington Books.
Trapnell, G. R. 1973. Memorandum concerning cost estimates furnished to the Congress during consideration of H.R. 1 for the cost of chronic kidney disease amendment . January 18.
U.S. Congress, Conference Committee. 1972. H.R. 1, Social Security Amendments of 1972: Brief Description of Senate Amendments (prepared for the use of the conferees) . Conference committee print, 92nd Congress, 2nd Session, October 11, pp. 13-14.
U.S. Congress, House, Committee on Ways and Means. 1971. a. National Health Insurance Proposals . Hearings, 92nd Congress, 1st Session, October 19, 20, 26-29, November 1-5, 8-12, 15-19, Parts 1-13.
U.S. Congress, House, Committee on Ways and Means. 1971. b. National Health Insurance Proposals . Hearings, 92nd Congress, 1st Session, October 19 and 20, Part 1 of 13 parts, pp. 218-236.
U.S. Congress, House, Committee on Ways and Means. 1971. c. Statement of Shep Glazer, Vice President, National Association of Patients on Hemodialysis, et seq., National Health Insurance Proposals. Hearings, 92nd Congress, 1st Session, November 4, part 7 of 13 parts, pp. 1524-1546.
U.S. Congress, House, Committee on Ways and Means. 1971. d. National Health Insurance Proposals . Hearings, 92nd Congress, 1st Session, November 11, Part 10 of 13 parts, pp. 2226-2228.
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U.S. Congress, Senate, Committee on Finance. 1972. a. Social Security Amendments of 1971 . Hearings, 92nd Congress, 2nd Session, January 20, 21, 24, 25, 27, 28, and 31, February 1-3, 7-9, Parts 2-6.
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118 U.S. Congressional Record 4840-4842, 1972a. 118 U.S. Congressional Record 33003, 1972b. 118 U.S. Congressional Record 33009, 1972c.1. Workshop participants, with historical identities noted, included Carl W. Gottschalk, M.D., who had chaired the Bureau of the Budget Committee in 1966-1967 that prepared the Report of the Committee on Chronic Kidney Disease, Washington, D.C., 1967; Jay Constantine, staff director of the Subcommittee on Health, Senate Finance Committee; William D. Fullerton, professional staff, House of Representatives, Committee on Ways and Means; David McCusick, assistant actuary (for Medicare), Social Security Administration (SSA); Charles L. Plante, Washington representative of the National Kidney Foundation (NKF); George E. Schreiner, M.D., past president and chairman of the committee on legislation, NKF; Gordon R. Trapnell, chief actuary (for Medicare), SSA; Irwin Wolkstein, deputy director (for policy), Bureau of Health Insurance, SSA; and James J. Mongan, M.D. (who participated by telephone), professional staff to the Subcommittee on Health, Senate Finance Committee.
2. Senator Jackson had a personal interest in Scribner's work. In 1964, a close grammar school friend of Jackson's, Ms. Kay Sloane, had become one of Scribner's patients. She began dialysis in 1967 and lived until 1977.
3. Noteworthy of Najarian's efforts in this regard was the sponsorship in 1972 by Senator Walter F. Mondale (D-Minn.) of legislation that emphasized kidney transplantation.
4. Even with the small number of patients in 1967, the Gottschalk Committee deemed both dialysis and transplantation to be established treatments that were no longer experimental.
5. Byrnes, an avid fan of the Green Bay Packers, was informed of the status of a key Packer with kidney disease by the treating nephrologist in Neenah, Wisconsin.
6. Constantine credits Paul Rettig with inventing the formula that permanent kidney failure patients were “deemed to be disabled for purposes of coverage under Parts A and B of Medicare,” thus making the kidney amendment part of the larger disability provisions.
7. Kountz was also prominent as the only black transplant surgeon in the country. Moreover, he had come to San Francisco from Little Rock, Arkansas, his home state, and was known to Mills and his staff.
8. David McCusick, Trapnell's assistant, recalls receiving a call from Mongan at 9 a.m. on Saturday, September 30, before the amendment was taken to the floor, asking for an estimate. He recalls saying that within 10 years the provision would cost $2 billion a year, an estimate that Mongan, according to McCusick, did not believe. Mongan does not recall this conversation. No documentation exists to check these differing recollections about an obviously hectic time.
9. Gordon Trapnell's January 18, 1973, memorandum included attachments indicating estimates for the kidney disease provision of 25-year costs to the hospital insurance portion of the program and the cash cost for the first five program years. These attachments were missing from the copy of the memorandum that was available to me.
Richard A. Rettig is a member of the professional staff of the Institute of Medicine, National Academy of Sciences. He has written extensively about the Medicare End-Stage Renal Disease program.
