TABLE 4 Per Capita Contribution by Counties to Medicaid Program and Administrative Costs IN .18 13.17 32.89 14.67 - P&A total - 9.70 .25 OH VA WI California and North Carolina reported program and administrative costs as one figure. Florida UPDATE--- OTHER STATES WHICH HAVE COUNTY I. Inpatient Hospital Care II. The counties in Flordia pay 35% of the non-federal share for inpatient hospital care recipients beyond 12 days following admittance. This amounted to $4,306,546 in FY '76 (total expenditure: $45,871,447). Skilled Nursing and Intermediate Care The counties pay 35% of the non-federal share for recipients costing more than $170 a month. This cost can mot go above $55 a month per recipient. The FY '76 cost to counties in Florida was $8,651,433 (total expenditure: $73,900,070). The counties also pay 50% of the administrative expenses which occur at the county level ( eligibility determination, caseworkers, overhead costs, etc.) The counties paid 45% of the cost for county nursing care. There Senator KENNEDY. We will recess on these set of hearings until June 16. Thank you. [Whereupon, at 1:09 p.m., the subcommittee recessed, subject to the call of the Chair.] HOSPITAL COST CONTAINMENT ACT OF 1977 FRIDAY, JUNE 17, 1977 U.S. SENATE, SUBCOMMITTEE ON HEALTH AND SCIENTIFIC RESEARCH Washington, D.C. The subcommittee met, pursuant to notice, at 10:34 a.m., in room 4232 Dirksen Senate Office Building, Senator Edward M. Kennedy (chairman of the subcommittee), presiding. Present: Senators Kennedy, Nelson, Javits, and Schweiker. Committee staff present: Stuart Shapiro and Robert Wenger, professional staff members; David Winston and David Main, minority. Senator KENNEDY. We will come to order. This is a continuing hearing of the Senate Health Committee on the issue of the administration's cost control programs that have been developed by the Carter administration and directed toward hospitalization generally. The Finance Committee has been holding hearings on the Talmadge proposal dealing only with the medicare and medicaid program which, in effect, deals with about half of the total of hospitalization programs. The administration wanted to address this particular aspect of the growth of hospital costs in this country, which we have seen rise at a rate in excess of 31 percent in the last 2 years. It is one of the areas of the Consumer Price Index which has risen most rapidly. It is important that we get a handle on hospital costs, as well as on the growth of health-care costs generally. The Congressional Budget Office estimates that this country will be spending $250 billion by 1982. I am impressed but concerned by the fact that more and more is being expended in the medicaid-medicare area. It is putting important limitations on other areas of the health-care budget, primarily in the areas of health education, health prevention, the issues of drug and alcoholism control, reductions in child and maternal care, and reductions in immunization programs. So the issues that we are reaching in terms of cost controls go far beyond just the dollars and cents which are involved, but are very much related to the issue of quality of health care and must be viewed in that particular way. I would say that I do not think any of us are under the illusion that the proposal which has been advanced by President Carter and introduced as S. 1391 is an end-all. It is an interim measure. I would have serious reservations about its consequences over a significant period of time, but it is devised as a measure which, if implemented, according to the administration, will save the American consumer $42 billion by 1983. (359) Without effective cost-control programs, the American taxpayer ought to be prepared to pay much more in terms of dealing with the unnecessary hospital beds and unnecessary utilizations of drugs and surgery and many of the other areas of waste through hospital administration. That is not an easily achievable goal, but it is one which we want to work on with those in the health professions to try to find out how we can best achieve it and do it. [The complete text of Senator Kennedy's statement follows:] OPENING STATEMENT OF SENATOR KENNEDY Senator KENNEDY. Last year, Americans spent nearly $140 billion for health care-three times the amount we spent 10 years ago. At that current rate of increase, health spending will grow to more than $230 billion in 3 short years. Health care has become so expensive that Americans are now working more than 1 full month of every year just to pay for their health care-2 weeks' wages for hospital care alone. The cost of this hospital care-which accounts for 40 cents of every dollar Americans spend on health care has escalated even faster. Last year the Nation's total hospital bill jumped to $55.4 billion or more than $1,000 per family. Next year, without any control, the figure is predicted to increase dramatically to almost $64 billion. We can no longer just sit back and watch health costs continue to escalate at past rates. For too long we have allowed hospitals to be reimbursed at whatever level they wanted. Their budgets have been open ended, and they have had no economic incentive to hold down costs. Ironically, our reimbursement system tends to encourage hospitals to add expensive new facilities, personnel and technologies. We've encouraged more hospital beds than are needed, and today the consumer is bearing the burden of paying for the costs of greatly underutilized facilities, services, and equipment. A recent study by the prestigious Institute of Medicine documented that this Nation as a whole has at least 100,000 more hospital beds than it needs. These beds which should be closed or used for other purposes are costing all of us well over $2 billion per year. This open ended reimbursement has also encouraged the massive proliferation of expensive equipment in both hospitals and doctors' offices. The 1,000 CAT scanners now installed or on order have the capacity to scan over three million patients a year, and most often this expensive procedure has little efficacy and could have been avoided by a careful physical examination by the doctor. Today well over 500 hospitals now maintain expensive open heart surgery facilities yet in less than one-quarter of these institutions were 200 procedures performed annually. In most cases less than 100 cases were performed annually, and this goes on in the face of the guidelines of the American College of Thoracic Surgeons which state clearly that 200 procedures are needed to justify operation of a facility and maintain quality. We're pouring so much money into hospitals right now for extra beds, for unneeded tests, for unnecessary surgery that we haven't had money to spend on basic preventive health care. It's more humane, and it would be a lot less expensive to prevent illness than to put some |