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Chairman Roybal


Question 13


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?


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


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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.


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?


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.

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Mr. Regula


The leadership of this committee will introduce a preventive health care measure very shortly. The bill will incorporate testing for a broad range of services under Medicare including colorectal exams, serum cholesterol, blood pressure, and basic mental health screening examinations. The program will be conducted as a demonstration. If a specific service meets certain cost and quality standards, then it will become a permanent part of the Medicare program as determined by the Secretary of HHS. Would you support such an initiative? I would also request that the Committee may have a response from your Department after reviewing this legislation?


I certainly recognize the value of preventive services. One of the problems in assessing the benefits of preventive services is the difficulty of establishing a cause-and-effect relationship between preventive services and improved health status. We are currently conducting a demonstration which will assess the importance of preventive services for Medicare beneficiaries, including many of the preventive services included in your proposal. We would want to complete our evaluation of the prevention demonstration before undertaking additional activities. An interim report is scheduled for Spring 1991, with a final report based on additional patient follow-up information to be completed the following year.

I have asked my staff to review your prevention bill, and we will provide you with our comments when that is completed.


36-336 (128)


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