In addition, the cost of all health care services continues to rise and I believe we encourage the careful use of services through mechanisms such as coinsurance and deductibles. Medicare coinsurance for coverage of mental health services parallels that of private insurers. Deductibles and coinsurance emphasize the partnership of government and beneficiary by compelling beneficiaries to pay a share of the total cost.

Question

C. Would you support better health care for rural and inner city citizens through better Medicaid coverage, a fairer Medicare payment system, more support for health programs targeted at the underserved, and increased access to private insurance?

Answer

The proposals in the President's FY 1991 budget indicate his commitment and mine to better health care for all Americans and touch on several approaches you mention. We continue to target our most vulnerable citizens poor mothers and their children through the Medicaid program. We are proposing a managed care initiative to encourage comprehensive care for all Medicaid recipients. We believe the Medicare prospective payment system promotes fair, cost-effective delivery of health care. However, our budget recognizes the special circumstances of the innercity "safety net" hospital and the rural hospital and proposes to continue disproportionate share adjustments, sole community hospital status payments, and rural referral center payments. propose to continue activities, such as rural research and demonstration set-asides, and rural health clinics programs, which are aimed at addressing the health care needs of rural Americans. We are committed to working with the private sector to increase access to affordable health insurance for the working poor, Medicare beneficiaries with long-term care needs, and citizens with AIDS.

We

Chairman Roybal

ELDERLY HEALTH CARE COSTS

Question #3

A. As the Committee study shows, the elderly's pocketbooks are being emptied due to rising health care costs. Do you agree there is a major problem here? Would the Administration support a cost containment strategy that goes beyond employers and government and contains costs for all Americans?

Answer

I do agree that there is a major problem in the cost of health care. National health care expenditures are spiraling out of control we spend more money per capita for health care than any nation in the world. Our society pays more for health care, has more hospital beds, more doctors, more modern technology, more of all the "hardware" of health care. Unfortunately, all our citizens cannot readily access this vast system of health

care.

Independent of any particular options to solve the uninsured problem, we need to understand the effects and effectiveness of various approaches to cost containment utilization review, case management and prepaid care, competition-based selective contracting with providers, beneficiary cost-sharing, medical effectiveness research, tort reform and consumer education. Over the past decade the Federal Government has taken steps to attempt to hold health care cost escalation. Ideally, cost containment should be derived though market relationships. In addition, we cannot overlook the role of personal responsibility in the need for and use of health care services. However, a guiding principle to any health care reform is that change must encourage appropriate, medically effective and cost effective health care services. Any cost containment strategy that we support will include these considerations.

Question

B. Considering the great pressure that health care costs already place on the elderly, especially those between 100 and 200 percent of poverty, how can the Administration justify its proposal to increase the Medicare Part B premium faster than the Social Security COLA?

Answer

We are proposing that the Part B premium be increased either by the Social Security COLA or sufficient to cover 25 percent of aged program costs, whichever is greater. For 1991, the COLA would provide a slighter higher increase than one based on 25

percent of program costs ($29.90 vs. $29.70).

We propose to use the current law COLA increase for the 1991 Part B premium as a responsible way to contribute to the Federal deficit reduction. Beneficiaries would continue to be protected by a "hold harmless" provision that would prevent a reduction in their Social Security checks as a result of the premium increase.

After 1991, we project that the premium would be based on 25 percent of program costs. This level of contribution is far less than the 50 percent level envisioned in the original Medicare legislation. It is, however, a sufficient level to give beneficiaries an important stake in helping to assure that services are used prudently.