EXHIBIT IV MEDICARE IS EVERYWHERE IN THE UNITED STATES MEDICAID Is Now IN 49 STATES, THE DISTRICT OF COLUMBIA, GUAM, PUERTO RICO, AND THE VIRGIN ISLANDS PROVIDES SUPPLEMENTAL PROTECTION AGAINST COSTS EXHIBIT VI MEDICAID PAYS FOR AT LEAST THESE SERVICES: INPATIENT HOSPITAL CARE OUTPATIENT HOSPITAL SERVICES OTHER LABORATORY AND X-RAY SERVICES SKILLED NURSING HOME SERVICES PHYSICIANS' SERVICES SCREENING, DIAGNOSIS, AND TREATMENT OF CHILDREN HOME HEALTH CARE SERVICES IN MANY STATES MEDICAID PAYS FOR SUCH ADDITIONAL SERVICES AS DENTAL CARE, PRESCRIBED DRUGS, EYE GLASSES, CLINIC SERVICES, INTERMEDIATE CARE FACILITY SERVICES, AND OTHER DIAGNOSTIC, SCREENING, PREVENTIVE, AND REHABILITATIVE SERVICES Now, these are the basic ideas of the programs. Medicare provides these types of services. These exhibits will give you some general idea of what it provides. We will go into some of the specifics a little later, but this is generally the program. It has limitations, and a number of things that it does not pay for. (See exhibits III-VI, pp. 1037-1040.) It does not pay for intermediate care, which, if you will recall, was number three in that list of facilities. Medicaid, however, does. This gives you the two types of Medicare levels of service in institutions. Part A is something you are, I am sure, all familiar with, the hospital coverage and certain other services which relate to it. Part B is essentially physicians' care and other services, primarily related to people who are on foot, ambulatory, move around, come into the office, and so forth. This is where you pay every month for this particular coverage. Actually, the Federal Government also pays part of the premium as well. You do not pay the whole cost. You pay only part when you pay the monthly benefit, which I believe started at $4, and now it is $6.30. This is the program called medical insurance and it provides a whole host of activities for your care. Medicaid, for those who are eligible, provides all kinds of services, a very sweeping amount of services for the people of Utah. It also pays for things such as drugs on an out-patient basis, which of course Medicare does not, and these will give you an idea of what it does cover. Now, in Medicare, it pays part but not all of the hospital, and if you remembered my comment before lunch about deductibles, this is one of the problems that we have in administering this particular program, primarily because people do not understand the deductible problem. There is also another aspect called coinsurance, where you pay part on a daily basis. This is one of the things that people should understand, but generally do not. Again, the deductible, that initial amount is now $84. It becomes a major problem for some Medicare recipients. This will give you an idea. Now, the medical insurance part pays essentially 80 percent of the costs, you pay 20 percent. One of the ways that people who are on Medicare can help their situation is by buying supplemental insurance to pay the 20 percent or that other dollar out of the $5. Many do that. Medicaid for those people who can't afford to pay for the deductibles, the amount of money you have to pay before you get the service, and what we call the coinsurance which is that extra percentage, Medicaid, for those eligible individuals, can pay so that it does not cost the people out of their pocket. They get their Medicare benefits and the extras that they would normally pay for can be paid for by Medicaid, allowing them to get the services. [VOICE FROM THE AUDIENCE.] Medicaid pays the Medicare premium? Dr. WALTER. That is correct. Mr. Peterson reminded me of an important item, in this situation in the State of Utah, the Medicaid program for the eligible people pays the premium, plus the deductible, plus the 20 percent payment. Again, the $6.30 for part B is paid by the beneficiary. The Federal Government is a partner in this particular situation by paying another $6.30. I want to emphasize to you again the partnership arrangement of Medicaid so that you understand the arrangements of how things are paid. This, essentially, as you see, is a range where the Federal Government contributes from 50 percent of the dollars spent for Medicaid people to up to 83 percent. Utah is not considered one of the very poor States. I want to give you an idea of the general system that we have. Both Medicare and Medicaid came about through the Social Security Act, and they are called title XVIII for Medicare and title XIX for Medicaid. Those terms that you see and hear so many times, that is what they are, the same name for Medicare is title XVIII, the same name for Medicaid is title XIX. Now, that concludes my little presentation to describe these programs, how they work, and what they are. [Applause.] Mr. HALAMANDARIS. Thank you very much, Dr. Walter. Your prepared statement will be inserted into the record at this point. [The prepared statement follows:] PREPARED STATEMENT OF BRUCE A. WALTER, M.D., M.P.H., DEPUTY DIRECTOR OF HEALTH, UTAH STATE DIVISION OF HEALTH Thank you for this opportunity to share with you some of my viewpoints on health care as I see them in my position in the State of Utah. As a medical administrator I have a number of problems which prevail in the delivery of medical services. Some of these concerns are primarily problems of older persons who are the major users of medical care and, in particular, of hospital services. A number of the items I will discuss relate to administrative problems which, in some cases, reduce the effectiveness of the delivery of medical services or, by design, make these services more expensive. I. MEDICARE DEDUCTIBLE The first problem concerns the current Medicare deductible now required by the title XVIII program. It is my belief that the deductible has now reached a level which may well be restricting needed care. The present procedure also causes an expensive, disagreeable and administratively unworkable system. It is very difficult for a provider to find out how much of the deductible has been taken care of and utilized. This, in turn, causes disagreements, displeasure on the part of the patient, and an excess of administrative work to determine the present status for billing purposes. I believe this dilemma could be resolved by developing a standard coinsurance program without the use of a deductible. If there is concern about the early expenses and the desire to reduce the unneeded utilization of hospital services, I would suggest that the coinsurance amount be higher on the first, second, or third day, and then dropped to a standard rate. This process would be clearly understood by both the patient and the hospital business office alike. The patient would pay a preset share of his/her initial hospital stay costs; thereafter, the standard, coinsurance rate would become effective. It would also be possible to charge the same daily coinsurance rate for all days, depending on the desirability of the program. I am hopeful that coinsurance, or a standardized shared amount of money for hospital days, will be adopted and the deductible be eliminated. II. CATASTROPHIC ILLNESS It has been difficult to understand why the program is restrictive on the person who has a very major illness. It is generally understood that it is easier to find money early in the illness to provide deductibles and coinsurance, but it is extremely difficult after one has been ill for a long time; even the wealthy may need assistance after a very long illness. It is, therefore, my request that provisions be made for catastrophic illness, controlled by reviews, so that those recipients who have truly a major illness have their expenses covered so that they do not suffer more than others. III. CUSTODIAL CARE COVERAGE In America, it has been in the past the province of the family to take care of its own members. This, of course, posed only a relatively small hardship on the farm family of yesteryear; they could more easily take care of a loved one within the confines of the family unit which generally shared a reasonably cohesive life on the farm, producing much of their own food and creating fewer economic problems in caring for an aged or infirm member. In the present day, with the change of living patterns, custodial care becomes a major economic drain on the family. Even families with many working children find that long and continued care becomes incredibly burdensome and difficult, leading to concerns, guilt feelings and sometimes outright hate of the infirmed or aged family member. The other concern is that if a spouse in infirm, very frequently all savings and |