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IN POOR HEALTH: THE FEDERAL COMMITMENT

TO VULNERABLE AMERICANS

MONDAY, MARCH 5, 1990

U.S. HOUSE OF REPRESENTATIVES,
SELECT COMMITTEE ON AGING

Washington, DC. The committee met, pursuant to notice, at 10 a.m. in Room 345, Cannon House Office Building, Hon. Edward R. Roybal (Chairman of the Select Committee on Aging) presiding.

Members present: Representatives Roybal, Synar, Vento, Wyden, Skelton, Hertel, Stallings, Bilbray, Rinaldo, Regula, Blaz, Morella, Duncan, and James.

Staff Present: Richard Veloz, Staff Director; Gary Christopherson, Director of Health Legislation; Yvonne Santa Anna, Professional Staff Member; Valerie Batza, Executive Assistant to the Staff Director; Carolyn Griffith, Staff Assistant; and Diana Jones, Staff Assistant.

OPENING STATEMENT OF CHAIRMAN EDWARD R. ROYBAL The CHAIRMAN. The hearing will come to order. The purpose of today's hearing is to examine the Federal commitment to the health of all Americans of all ages. The hearing title, "In Poor Health,” speaks both to the problems of vulnerable Americans and to the state of the Federal commitment to helping them.

With respect to Americans of all ages, the evidence is irrefutable. They are in poor health today, and the prospects for the future are no better unless we intervene.

With respect to the Federal Government, its commitment to vulnerable Americans is in poor health as well. Again, it will get no better until the administration and we in the Congress of the United States intervene aggressively.

There is, however, one ray of hope. One promising ray of hope is our witness here today, Dr. Louis Sullivan, Secretary of the Department of Health and Human Services. I believe he shares my deep concern for the more vulnerable members of our Nation. I believe he is committed to addressing the health and long-term care problems of all vulnerable Americans throughout this country. I only hope that he can quickly translate that personal concern and commitment into a renewed and energized Federal commitment.

As of Friday, there is a second ray of hope and that is the Pepper Commission's recommendations. Although not perfect, I support them and will work to get them enacted. If enacted, these health

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and long-term care recommendations will provide a significant measure of security for Americans of all ages.

In today's hearing, we will examine some of these problems; and this committee will then make a recommendation, not only to other members of the committee, but to the Congress as a whole.

[The prepared statement and attachments submitted by Chairman Roybal follow:]

IN POOR HEALTH

THE FEDERAL COMMITMENT TO VULNERABLE AMERICANS

OPENING STATEMENT

EDWARD R. ROYBAL, Chairman

House Select Committee on Aging

10:00 a.m., March 5, 1990
345 Cannon House Office Building

Today I have called this hearing to examine the federal commitment to the health of vulnerable Americans of all ages. The hearing title, 'In Poor Health,' speaks both to the problems of vulnerable Americans and to the state of the federal commitment to helping them.

With respect to vulnerable Americans of all ages, the evidence is irrefutable. They are in poor health today and the prospects for the future are no better -- unless we intervene.

With respect to the federal government, its commitment to vulnerable Americans is "in poor health" as well. Again it will get no better until the Administration and Congress intervene aggressively.

Having spent three decades fighting to improve the health of vulnerable Americans, there are still rays of hope. One promising ray of hope is our witness here today, Dr. Louis Sullivan, Secretary of the Department of Health and Human Services. I believe he shares my deep concern for the more vulnerable members of our nation. I believe he is committed to addressing the health and long term care problems of vulnerable Americans. I only hope he can quickly translate that personal concern and commitment into a renewed and energized federal commitment.

As of Friday, there is a second ray of hope, the Pepper Commission's recommendations. Though not perfect, I support them and will work to get them enacted. If enacted, these health and long term care recommendations will provide a significant measure of security for Americans of all ages.

RELEASE OF NEW HEALTH CARE COST STUDY.

I am releasing today a study of health and long term care costs entitled "Emptying the Elderly's Pocketbooks Growing Impact of Rising Health Care Costs." This study documents the growing problems facing current and future elderly as they lose ground in the face of rapidly rising health and long term care costs. Unless the federal government steps in, an average elderly person will soon see over one-fifth of their limited incomes going for health and long term care.

In response to this and other studies by this Committee, this nation should enact a cost containment system that contains costs for all Americans, not just employers or federal and state governments. Only this action will protect poorer and middle income Americans of all ages.

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PURPOSE. The purpose of this hearing is to examine long-term federal health policy and the future impact of these policies on vulnerable populations, including the elderly, the poor and near poor, and people with disabilities.

From one perspective, the hearing will highlight the impact of federal health policy on vulnerable multigenerational families in terms of Medicare and Medicaid coverage, affordable out-of-pocket costs, health care access in rural and central city areas, quality of care protection, prevention and treatment of disabling diseases, From another perspective, the hearing will examine the plans of the Bush Administration, as represented by Health and Human Services Secretary, Dr. Louis Sullivan, for addressing the health and long term care problems of vulnerable Americans through the remainder of the 1990s.

WITNESS

The Honorable Louis W. Sullivan, M.D.,
Secretary, U.S. Department of Health and Human Services, Washington, D.C.

BACKGROUND INFORMATION.

In carrying out its responsibility as the House Select Committee on Aging, the Committee is concerned with health and aging policies affecting both today's and tomorrow's elderly.

On one hand, the Committee focuses attention on multigenerational issues such as the uninsured and underinsured, care for the homeless, access for rural and inner city residents, care for the mentally ill, the special problems of racial and ethnic minorities, the need for careful cost containment, the absence of effective quality assurance for many services and many patients, deficiencies in drug and alcohol abuse treatment, inadequacy of care for poorer pregnant women and infants, and the plight of the poor and near poor. On the other hand, the Committee examines issues disproportionately affecting the elderly, including long term care affordability and adequacy, care for the homebound and nursing home residents, rising out-ofpocket health care costs, Alzheimer's Disease and other diseases causing cognitive impairment, and the special problems of frail elderly, older women and older racial and ethnic minorities.

Today's hearing will examine how this nation treals the health of its most vulnerable citizens and assess the adequacy of the federal commitment to protecting their health. As the title of the hearing, "In Poor Health," indicates, there remain major unaddressed and inadequately addressed health problems and, historically, the federal commitment has fallen far short of solving these problems.

THE HEALTH OP VULNERABLE AMERICANS AND THE PEDERAL COMMITMENT.

Alzheimer's Disease and Other Cognitive Impairment Disease Victims. On its path to premature death, these illnesses rob as many as four million people of their independence (due to cognitive impairment) and burn up the financial and emotional resources of the caregivers and society (as much as $50-80 billion annually.)

Federal Commitment: Support for Alzheimer's Disease research has increased slowly in the 1980s, but still is only about $130 million annually as compared to $600 million to $1.5 trillion each for cancer, cardiovascular diseases and AIDS research. (For long term care, see below)

The Frail Elderly. Health care utilization is greatest in the last year of life and among the oldest of the old. Those age 85 and older have a three-fold greater risk of losing their independence, seven times the chance of entering a nursing home, and two-and-a-half times the risk of dying compared to persons 65 to 74 years of age. This growing elderly population is expected to place great burdens on Medicare and on Medicaid (the only public program which provides any significant financial support for long term nursing home care).

Federal Commitment: The Frail Elderly Community Care Amendments of 1990 H.R. 3933 would provide frail older persons access to the kinds of long-term care services they want and need the most: adult day care, adult foster care, home health aide, homemaker, and chore services. The "Frail Elderly" bill was adopted as part of the FY90 budget reconciliation bill. It was dropped from the budget bill in part as a response to Administration objections.

The Long Term Care Underinsured. There is a huge financial risk for any American needing long-term care. The risk is especially great for the elderly living alone. Elderly Americans are at great risk from the high cost of long-term care when you consider the following facts. Most elderly have very limited annual incomes (1988 elderly median income for females was $7,103 and for males was $12,471), while annual nursing home costs can exceed $25,000. A similar financial imbalance is produced when the elderly need extensive amounts of home care which can cost $40 or more per day or nearly $15,000 per year. As a result, elderly Americans face impoverishment or, if they are less unfortunate, spending down to Medicaid coverage, within only weeks after entering a nursing home or beginning to receive extensive home care services. The Medicare long-term care benefit is virtually non-existent Medicare pays only 1.7% of nursing home costs, mostly short stay, and does not pay for any long term home care. Private insurance pays about 1% of nursing home stays, but the fact remains that an overwhelming majority of older Americans cannot afford the cost of a basic long term care insurance policy.

Federal Commitment: Long term care protection is limited to Medicaid recipients (generally the poor or those who become medically impoverished). In 1988, some limited improvements were made in Medicaid protection for spouses of nursing home residents.

The Medically Vainsured. There has been increasing public and congressional concern over access to health care in the United States. Health care costs continue to rise while an estimated 31 to 37 million Americans under age 65 are uninsured. Children are especially likely to be uninsured as a group, representing approximately one-third of the 37 million uninsured in America.

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Federal Commitment: To date there does not exist an Administration policy on the uninsured. President Bush recently appointed the Secretary of The Department of Health and Human Services, Secretary Louis W. Sullivan M.D., to head a Domestic Policy Council to review recommendations by the U.S. Bipartisan Commission on Comprehensive Health Care and other proposals. Secretary Sullivan has appointed an Advisory Council on Social Security and a departmental task force to work on the issues of long-term care and coverage of the uninsured and underinsured.

Nursing Home Residents. At present, 1.3 million elderly persons are residents of nursing homes. Projections show that by 2030 there will be 3.8 million elderly residing in nursing homes. Data from a recent National Institute of Mental Health (NIMH) survey shows that 668,000 people with serious mental health problems currently reside in nursing homes (5060% of all nursing home residents). Approximately 72,000 of these patients suffer from serious mental illness without a physical disorder. These numbers alone suggest the enormity of the problem and the need to find solutions for both the present and the future. Though Medicare covers some mental health services, mentally ill nursing home residents have very little access to those services. Medicaid mental health benefits, which vary from state to state, are also failing to meet the mental health needs of the elderly population. Though changes are occurring in State funded programs, most feel that care for the mentally ill, including the elderly, in both institutional (including nursing homes) and non-institutional settings is inadequate.

Pederal Commitment: In recent years, the Medicare program has expanded coverage for mental health services by covering additional providers and extending non-institutional benefits. However the continuation of a 50 percent coinsurance plus the lack of a specific strategy for getting services to nursing home residents means problems are likely to continue. In the case of mental health block grant funding, very few of the funds are used to reach the elderly and even less to reach out to nursing home residents. An attempt to set-aside mental health funds for the elderly passed the House a couple of years ago but was lost in a House-Senate conference.

Payers Unable to Afford Rapidly Rising Health and Long Term Care Costs. An aging population is finding it increasing difficult to pay for necessary health care services. Elderly out-of-pocket health and long-term care costs have risen from 12.3 percent of elderly income in 1977 to 18.2 percent of income in 1988. In 1977, the average senior citizen used just under three months worth of Social Security to cover his or her out-ofpocket health and long-term care costs. By 1988, it took the average senior citizen four and one-half months worth of checks to cover those health costs. Other health cost indicators, such as the Medicare Part A hospital deductible, jumped from $124 to $540 over four times the level in 1977 and twice the one-half month Social Security payment for 1988. Lastly, between 1983 and 1989, medical price increases rose twice as fast as did the average monthly Social Security payment and the Consumer Price Index for Urban Wage Earners (CPI-W), the basis for setting Social Security COLAs.

Pederal Commitment: In the President's 1991 Budget, the Administration proposes $51.7 billion 'savings' from Medicare program cuts and premium increases over the next 5 years. The Administration proposes a permanent increase in the Part B premium by tying it to increases in overall Part B costs. If the Administration gets all of their Part B cuts, the premium would rise an average of 9.6 percent annually as compared to average Social Security COLAs of 3.7 percent. If Medicare Part B is not cut, the premium would rise an average of 10.0 percent annually. In both cases, the elderly lose ground. Another source of concern is over the access and quality consequences for the elderly if the Administration's other Medicare Part B and Part A cuts are enacted.

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