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Statement on Signing the Health Maintenance Organization Act of 1973

December 29, 1973

IT IS with great pleasure that I today sign into law S. 14, the Health Maintenance Organization Act of 1973. This legislation will enable the Federal Government to help demonstrate the feasibility of the HMO concept over the next 5 years.

Expanding the geographic distribution of health maintenance organizations is an integral part of the National Health Strategy that I first proposed nearly 3 years ago. S. 14 is somewhat broader than the Administration's proposal, but it nevertheless contains the essential concepts and principles that I support. It will provide initial Federal development assistance for a limited number of demonstration projects, with the intention that they become self-sufficient within fixed periods.

The national health insurance bill that I will be submitting to the next session of this Congress will allow patients to use such insurance to join HMO's. For that reason, it is particularly important that this demonstration effort get underway immediately and build upon the momentum which has already been achieved in this field.

Health maintenance organizations provide health care to their members on a prepaid basis with emphasis on essential preventive services. The establishment of HMO's will allow people to select for themselves either a prepaid system for obtaining health services or the more traditional approach which has served the American people so well over the years.

The Health Maintenance Organization Act makes Federal demonstration assistance available both to organized group practices and to medical foundations which provide prepaid care, further encouraging a diversified medical care system. HMO's which receive assistance under this act would agree to provide a comprehensive package of basic benefits, including essential preventive services, along with a list of supplemental benefits for which the enrollee could make an extra payment.

Under S. 14, the Government would provide financial assistance to help various groups determine the feasibility of developing an HMO in their area, as well as assistance for planning and initial development. HMO's would be required to operate competitively without Federal subsidies at the end of an initial period of Federal support.

S. 14 represents one response to the challenge of finding new. and better ways to improve health care for the people of this country. It will build on the partnership that exists between the Federal and private sector by allowing both the provider and the consumer of health services to exercise the widest possible freedom of choice.

The signing of this act marks another milestone in this Administration's national health strategy. The major task of providing financial access to health services should be addressed in the next session of this Congress with the enactment of an appropriate and responsive national health insurance act.

Note: As enacted, S. 14 is Public Law 93-222 (87 Stat. 914).

The statement was released at San Clemente, Calif.

The White House also released a fact sheet and the transcript of a news briefing on the Health Maintenance Organization Act of 1973 by Caspar W. Weinberger, Secretary, and Charles C. Edwards, Assistant Secretary for Health, Department of Health, Education, and Welfare.

Richard Nixon, Statement on Signing the Health Maintenance Organization Act of 1973 Online by Gerhard Peters and John T. Woolley, The American Presidency Project

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