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The CHAIRMAN. The Chair now recognizes Mr. Rinaldo.

STATEMENT OF REPRESENTATIVE MATTHEW J. RINALDO Mr. RINALDO. Thank you very much, Mr. Chairman. Mr. Chairman, I commend you for calling this hearing today to examine the

Ι impact of Federal policies on vulnerable populations, and I want to especially welcome Secretary Sullivan in his first appearance before the committee.

Mr. Secretary, you face a tough task, as we all know, in administering one of the largest departments and seeking to help millions of Americans at a time of continuing budget deficits, but I think everyone here has been impressed by your commitment and your convictions. In my view, you are doing an outstanding job, and we certainly look forward to working closely with you on some of these issues over the next few years.

This committee has worked in a bipartisan fashion in the past in its approach to such issues as retirement income, health and other matters, and it's no different with the topic we are dealing with this morning. While the administration has called for a $542 billion cut in Medicare spending, no one realistically expect that reduction to be enacted. And frankly, it shouldn't be.

Just a few weeks ago, for example, I met with representatives of the New Jersey Hospital Association, and I am sympathetic with their situation. Anyone that was at that meeting would have to be. When Congress enacted the DRG system in 1983, it was supposed to hold down the escalation of inpatient costs, but we have seen the reimbursement levels restrained year after year below the rate of inflation in the health care industry, not for policy reasons, but for budgetary reasons. It's time we stepped back to assess the impact of this decision and started focusing on the policy implications of what we do.

That is why I am particularly glad that you are here with us today. You have set a top priority of protecting vulnerable Americans, and that is something that we should all support. Nearly half of Medicaid dollars currently pay for nursing home care, and that is important, particularly when you realize that Medicare pays for virtually no long-term care.

But there are many other areas that also need to be addressed. Secretary Sullivan, you have set an ambitious agenda in targeting services to the poor, and I think you are right in that direction, and you are certainly to be commended. You are right on target in seeking to improve infant mortality and reducing excess deaths among minorities.

I remember very well when Congress, in 1983, debated the Social Security refinancing package, and that package raised the age for eligibility for full Social Security benefits to 67 years of age. Many people, however, pointed out that the life expectancy for a black male was only 65. We have to make sure that our Federal policies don't discriminate; and just as importantly, we have to be certain that all Americans receive the health care they need and are entitled to. Again, I want to express my appreciation to Secretary Sullivan for joining us this morning. I look forward to your testimony. And, Mr. Chairman, I yield back the balance of my time.

The CHAIRMAN. Thank you, Mr. Rinaldo. Mr. Synar.

STATEMENT OF REPRESENTATIVE MIKE SYNAR Mr. SYNAR. Just briefly, Mr. Chairman, I want to welcome the Secretary with us and commend him for the outstanding job that he's done not only in this area but in the tobacco forefront.

It's that type of leadership which is very welcomed by this Congress, and we look forward to working with him.

The CHAIRMAN. Thank you, Mr. Synar.
The Chair now recognizes Mr. James.

STATEMENT OF REPRESENTATIVE CRAIG T. JAMES Mr. JAMES. Thank you so much for appearing and helping us understand some of the problems, Dr. Sullivan. I hope some of your testimony, or some of the answers to your questions will help us address this new report.

You may not be prepared yet on it, the Pepper Commission Report, have some comment if you might as to what direction the administration, et cetera, should go in that regard.

And thank you so much. I look forward to hearing your testimony. The CHAIRMAN. Mr. Regula.


And Dr. Sullivan, we welcome you. We appreciate your leadership in the office. I look forward to hearing your comments on the potential for the bill we will be introducing on preventive medicine for the seniors.

I think perhaps that is a field that has great opportunity for long-term savings and also for enhancing the quality of life for our senior citizens.

I yield back.
[The prepared statement of Representative Regula follows:)



Mr. Chairman:

I commend you for calling this hearing which will provide us the

opportunity to discuss with Secretary Sullivan what priorities we believe should be maintained and incorporated into federal health policy,

Many challenges face us as we go through 1990 ranging from the typically expected budgetary and quality considerations to significant policy changes in the areas of Social Security, long-term health care, and the

medically indigent.

For example, in order to meet this year's Gramm-Rudman deficit target of

$60 billion approximately $37 billion must be reduced from current

spending policies. Under the President's budget proposal, nearly $13 billion comes from domestic spending. More specifically payments to

health providers, such as hospitals and physicians, will be reduced by $5.5 billion next year and $46.2 billion over the next five years. The question is whether these areas require further belt-tightening or should

we begin to look elsewhere for the necessary reductions.

Also, there is the Social Security system. Several bills have been

introduced which would eliminate the large and growing Social Security

(OASDI) surpluses. Most of these proposals would repeal the 1990 increase

in the payroll tax immediately and return the OASDI system to "pay-as-you

go" financing in 1991.

Under current law, the Social Security Trust Funds are increasing over $110 million per day and rising. In fact, by the year

2000 the surplus will grow to $1.4 trillion.

Should we mess with these

monies or leave current law intact. Just last week our committee heard

testimony on this complex issue and there are no easy answers.

I look forward to the comments of the distinguished Secretary Sullivan on

these important issues. However, let me mention one more concern that I

feel very strongly about in our federal health system.

National health policy has been driven by the engine of cost-effectiveness

over the past decade. We have also instituted significant, and necessary,

quality control mechanisms but these actions have not accomplished the

dramatic gains in cost reductions that we would like to believe. Instead,

a large portion of these expenses have merely been shifted to other third

party payers, particularly in the private sector.

Rather than focus

merely on reimbursement strategies future federal policy must encourage

the better practice of medicine and the most efficient delivery of that


Then we will see real changes in cost-effectiveness with better

access and quality of care.

Possible examples include Medicare coverage of certain preventive health

care services, greater reliance upon home care rather than

institutionalized long-term care, and better case-management systems

across the spectrum of care.

Again, I am confident the Secretary's testimony will provide an insight

into these important matters.

The CHAIRMAN. Thank you. Before introducing our witness today, I would like to announce that I am releasing a study of health and long-term care costs, which is 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. It shows that unless the Federal Government steps in, an average elderly person will see over onefifth 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 or State government, but all Americans. The study clearly shows that only this action will protect poor and middle income Americans of all ages.

[See Appendix, p. 59 for study.]

The CHAIRMAN. At this time, I would like to submit the prepared statements of several Members for the hearing record. Hearing no objections, so ordered.

(The prepared statements of Representatives Thomas J. Downey, James H. Bilbray, Jerry F. Costello, Ben Blaz, and Constance A. Morella follow:]

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