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(b) Over the last three years, one of the Department's major goals has been to gain control of the dramatically escalating costs of the Medicare and Medicaid pro grams. Since there is no clear evidence, even in the most recent report on the subject by the General Accounting Office, we are not proposing expansions in home health care. However, it is important to remember that many of the restrictions limiting the provision of home health care have been eased or eliminated over the last three years. For example, there is no longer a limit on the number of home health visits a Medicare beneficiary may receive, and he/she will not be required to pay a deductible or coinsurance for home care. States also now have the flexibility to establish programs of home and community-based services in order to keep Medicaid patients out of institutions.

Question 5. Medicare is focused on acute care, rather than preventive care, and some have suggested that such a policy is, in the long run, more expensive.

(a) Do you see any expanded role for preventive health care under Medicare or Medicaid?

(b) Would you support additional incentives for expanded preventive care?

(c) Would you support the creation of an optional Part C of Medicare, paid through general revenues and premiums for long-term care and health maintenance and monitoring?

Answer. (a) The Administration recognizes that expanded coverage of preventive health care under the Medicare and Medicaid program might contribute to the wellbeing of beneficiaries. However, Congress carefully considered coverage of these services and decided to maintain Medicare as essentially an acute care program. The current Medicare and Medicaid program limitations on these services do not reflect a judgment about their value to beneficiaries, but rather a decision about the best ways of using the funds available to these programs.

(b) Under current law, States have a great deal of discretion in determining the services to be covered under Medicaid, including preventive health care services. Eighteen States provide for preventive health services.

The Administration does not favor an expansion of Medicare coverage to include a full range of preventive health care services at this time. Expanding Medicare coverage to include a full range of preventive and routine health care services would involve significant additional program costs during a period of fiscal constraint. Nevertheless, we are continually reevaluating the Medicare program to determine what changes might be undertaken, within the limitations of available funds, to make the program more responsive to the health care needs of our beneficiaries.

(c) The Administration does not favor the creation of an optional Part C under the Medicare program long term care and health maintenance. Section 2176 of Public Law 97-35 provides authority under Medicaid that allows States to establish case management programs to coordinate long-term care services.

In addition, the results of HCFA's long term care demonstrations either recently completed or underway should provide more knowledge on how to best design a system for long term care and health maintenance.

Mr. RINALDO. Our first panel of witnesses includes representatives of national, State, and local senior citizens' organizations, who will comment on medicare reform from the perspective of beneficiaries.

I would like to call them to the witness table: Herbert Miller, the chairman of the New Jersey Coordinating Council of Organized Older Citizens, one of the largest senior citizen organizations in the State of New Jersey; David Keiserman, member of the New Jersey Council of Senior Citizens Executive Board, and a delegate to the 1981

White House Conference on Aging; Donald Bond, President of the Princeton Chapter of the American Association of Retired Persons, and a specialist in health care delivery in sparsely populated areas; and Esther Abrams, also a resident of Princeton, and a national executive board member of the Older Women's League.

So that everyone in the audience can adequately hear you, let me point out that we have only one microphone. That is the large

1 “The Elderly Should Benefit from Expanded Home Health Care, But Increasing These Seryices Will Not Insure Cost Reductions," GÃO IPE-83-1, December 7, 1982.

one. So it would be appreciated if you would pass it from person to person as you give your testimony.

If your written statement is longer than 5 minutes, it would be appreciated if you would summarize your testimony. However, the full statement will be included in the record. We will begin with Mr. Miller.



STATEMENT OF HERBERT MILLER Mr. MILLER. First let me thank you, Congressman Rinaldo, for calling this hearing and giving us the opportunity to present some of the views of the members of our particular organization. And I will try to go as fast as I can, but I have some sad notes on here that I think are appropriate.

We would like to have these suggestions and recommendations considered by Congress when they finalize their ideas of what can be done. We think that broader legislation should be enacted to contain the hospital costs. Most people cannot afford to pay the premiums and the deductibles now. Many stay away from the doctors and are self-medicating themselves because of the fact that the doctors' fees are so exorbitant.

Medical practitioners must be made to realize that their fees should be more reasonable. Some of their fees are unconscionable.

Doctors should voluntarily accept the medicare assignments and if they are unwilling, then a law should be passed to order them to accept the assignments. In this regard, the Government should establish a schedule of reasonable fees by geographical location which should be agreed upon by the medical association.

What we are suggesting here is that you make the contract between the Government and the doctor, instead of the Government and the senior citizens.

Procedures should be established to detect abuses of the system by any member of the medical profession. Severe penalties should be imposed on those caught in fraudulent practices.

Just to give you an example, one of the patients came to the doctor with a pain in the leg, and the doctor said, Well, I cannot do anything about that until I first take some X-rays, et cetera, et cetera, et cetera. And to this day it has never been diagnosed, but he presented a bill of $400. And when the patient complained about it, he said, Well, in this case I might accept a medicare assignment. But he billed medicare $155 to get just $100 back. I think there is something wrong in the law that allows doctors to do that.

One of the greatest concerns we have is facing the possibility of being financially wiped out because of an extended illness. The Government, together with the insurance industry, should develop a catastrophic insurance plan that can be purchased by all people, not just the elderly. I think it is possible with the proper deductible.

I will give you an example here, the hospice case. This person has run out of all benefits. And they are letting her go from the hospital. The hospital does not want people there without some assurance of getting paid. I think that is possible to get a catastrophic insurance plan. It does not necessarily have to go under medicare. But I think if you work together with the insurance companies, you are going to have the opportunity to develop a proper catastrophic insurance plan.

We do not favor raising taxes or increasing beneficiary copayments or using general funds. In our opinion, the problems are not caused by insufficient funds, but by exorbitant fees of the doctors and the charges by the hospitals. These charges must be contained.

In this regard, a feasibility study should be made to determine the plausibility of regulating the hospitals and also requiring detailed reporting procedures for the medical profession.

The Government, in cooperation with industry, should develop affordable private insurance plans. Small companies should be encouraged to secure the health plan for their employees from an insurance company.

Home health care costs should be reimbursed by medicare to encourage more patients to receive medical attention at home instead of in the hospitals.

Some employers are now reimbursing retirees for the amount of the medicare premium. Tax laws require that such reimbursements be included as income. The law should be changed to exempt these reimbursements from taxation. Companies are purchasing additional insurance, and if they have a plan of their own, they are reducing their own costs of outgo. So that this is not a taxable item on the senior citizen because they are reimbursed.

Probably the most important of all things that concern us is the assurance of proper medical attention for all people at affordable cost. In this regard the laws relating to malpractice should be refined, in order to reduce the expenses of the doctors. There are far too many cases where people are instituting legal action to sue the doctors for malpractice, and far too many instances where the awards are excessive. Because of the high premiums paid by the doctors, they pass it on to the patients. Treatment of an illness by a doctor, in our opinion, is a matter of judgment.

There is a shortage of general practitioners throughout the Nation, particularly in populated areas. If more doctors made house calls, it probably would result in keeping more people out of the hospitals. Incentives should be provided by the government to encourage medical students to become general practitioners.

And, last, many dollars are paid out for doctor visitations to patients in the hospitals for which for the most part consist of “Howdy,” “How do you feel?” “Keep up the good work, and I will see you tomorrow.” And he charges the same fee as if you went to his office. There is something wrong with that. These costs must be contained. Doctors' fees for hospital visitation should be limited by Government regulation, and should also be limited as to total re

muneration for the number of patients they visit. If they have 10 patients in the hospital, they are charging each one the same amount of fees. I think if he can cover the whole thing within an hour, it should be put on an hourly basis.

I hope I am going to be popular with the medical profession after this, but those are our viewpoints.

Mr. SMITH. Thank you, Mr. Miller. We will get to questions at the conclusion of all four of your statements.

Mr. Keiserman.

STATEMENT OF DAVID KEISERMAN Mr. KEISERMAN. Thank you, Congressman Smith, for permitting me to present the views and fears of the over 250,000 members of the New Jersey Council of Senior Citizens.

The President's budget message to Congress regarding medicare has caused great concern to our membership. If the President's recommendations are accepted as put forth, the impact upon both the senior citizen and the young workers would be catastrophic. The end result of the recommendations would shift more of the costs upon the senior and make the younger workers pay higher taxes and raise the cost of decent health care to unaffordable levels.

The concept upon which the changes are based is totally erroneous. The administration claims that placing a coinsurance charge on hospital stays from the second to the sixtieth day would reduce overutilization. Seniors today are already paying more than 60 percent of their health costs. Medicare covers less than 40 percent of the cost. Is not that enough coinsurance? Less than 2 percent of hospital stays exceed 60 days. This so-called catastrophic plan proposed will help very few of our elderly and will go a long way to increase the number of seniors who live near or at poverty levels or below poverty levels. The resulting premium rates for supplemental health care would also skyrocket.

The increase of the premium for part B of medicare to cover 35 percent of cost instead of the less than 25 percent paid today, is another unconscionable imposition upon the elderly. Along with this premium increase, the administration wants to freeze the amount medicare pays to doctors. Doctors' fees rose more than 18 percent in 1982 alone, while the cost in the consumer price index rose only 5 percent. This freeze would not preclude doctors from raising their fees still more and make medical care unaffordable. We have already been advised that the part B cost will rise to $13.50 a month from the current $12.20, an increase of 14 percent, while there will be a freeze on the cost-of-living increase on the checks for seniors.

The taxing as income of employee health benefits would adversely effect the low-income worker the most. It will reduce the emphasis on fringe benefits because they cannot afford to pay more taxes. This would add to the discrimination against older workers, since health group insurance rates are generally based on the average age of the persons covered. Younger workers will forgo health benefits to reduce their tax burdens only to find that when illness strikes them or their families, they cannot afford proper medical care.

Another contemplated change in the medicare program is the proposed regulation drafted by Health and Human Services, which will make auto insurance policies the primary source of medical coverage for injuries related to auto accidents. We in New Jersey, who still own cars, face a doubling of our personal injury protection premium, which will increase from $58 to $114 a year that we can expect here in New Jersey.

The New Jersey council recommends that Congress and the administration develop a comprehensive health cost containment plan that would control the present runaway costs for health services. Such a plan must include preventative health care, such as HMO's which have proven so successful, more qualified medical schools, and doctors trained in gerontological medicine so that se niors can be properly cared for, expansion of home health care, more trained nurses, therapists, and technicians who can furnish care in their specific fields at much lower cost than those demanded by doctors, controlled growth and spending by hospitals that will prevent constant rising hospital costs. And I am sure there are many more innovative ways by which costs can be contained.

I would like to point out yesterday's Star Ledger had a page 1 news item which reflected the premature hospital discharge of people. It is being blamed on the diagnosis related group or DRG. The hospital now encourages to discharge early so they can save money. And there is quite an article in yesterday's Newark Star Ledger regarding this.

I would ask that your committee please look into whether or not this is actually taking place here in New Jersey.

Let me express again the thanks of New Jersey Council of Senior Citizens for this opportunity to present its views and concerns and to emphatically point out that shifting more of the costs of medicare to the elderly is not solving the problem, but merely adding to the burden that so many of us can so ill afford.

Our medical program must be strengthened and made more efficient so that all Americans will have the best medical care in the world at affordable rates now and in the future. We as a nation cannot afford less. Thank you.

Mr. RINALDO. Thank you Mr. Keiserman.
Mr. Bond.

STATEMENT OF DONALD BOND Mr. BOND. Good morning, Mr. Chairman, Congressman Smith. My name is Donald S. Bond. I live in Princeton, N.J. I am president of the Princeton Chapter 459 of the American Association of Retired Persons.

I am a physicist and have specialized in electronics and telecommunications for 54 years. During the last 9 years I have been a telecommunications consultant with particular emphasis on applications to health care delivery and education for people who live in sparsely settled areas. This has included direct planning on satellite communications in cooperation with the Alaska Area Native Health Service, of the Public Health Service, in the Alaska bush and with the Royal Flying Doctor Service in the Outback of Australia. And I have made extensive travels in those areas.

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