noncovered services as defined under the Medicare program. We would then be able to routinely reimburse the hospital for all other claims filed in connection with the Minneapolis age and opportunity program. This procedure is, incidentally, in effect at another Minneapolis hospital which has a similar but unrelated senior citizens' program. Therefore, to insure that we are meeting our contractual obligations of not paying for noncovered services, we have to screen the outpatient claims submitted by this provider.

It was also at the April 11, 1974, meeting the minutes reflected an attitude of discrimination against Abbott-Northwestern Hospital. Unfortunately, Mr. Chairman, Blue Cross and Blue Shield of Minnesota did not receive a copy of those minutes until your good office included them with your letter to appear at this hearing. Had we had a copy of the minutes, I'm confident our corrections, deletions, or additions agreed to bilaterally would have carried a different concept of the meeting proceedings as opposed to the unilateral minutes provided to your office.

A better word selection than "discrimination" should have been used by our employee to convey our course of action. The broad issue is to examine Blue Cross and Blue Shield's course of action in view of our testimony.

INTERMEDIARY'S OBLIGATIONS

In conclusion, I feel a few comments regarding our perception of an intermediary's obligations and responsibilities might be helpful to the subcommittee. Our responsibilities include acting in an agent role for both the Federal Government and the providers of services, but most importantly, we also represent the interests of the Medicare beneficiary. This is, as you are aware, a very difficult task in that each of these groups has certain vested interests which, at times, may be in conflict with each other. In Minnesota, we have, to the best of our ability, attempted to represent each of these groups in a fair and impartial manner consistent with our contractual obligations.

The Blue Cross and Blue Shield system as a whole has performed well in this role. We know of no comparable existing system which has the ability, experience, and expertise to adequately represent all these groups in this unique intermediary-type role.

Let me also state Blue Cross and Blue Shield of Minnesota's corporate policy with respect to our administering the Medicare program. It is our policy in adjudicating Medicare claims to rule in favor of the beneficiary if there is any reasonable doubt as to whether medical care is covered under the Medicare program. We feel that this was and is the intent of Congress. However, it is our judgment that the regulations are quite clear with respect to noncoverage of screening examinations. To fulfill our contractual obligations with the Department of Health, Education, and Welfare, we therefore have to deny the initial screening examination unless there are symptoms present which warrant the services rendered.

This will conclude my testimony. Once again, we thank the subcommittee for inviting us to appear.

Senator MUSKIE. Senator Hansen was unavoidably delayed, and I think at this point we ought to yield to him so he may make a

statement.

STATEMENT BY SENATOR CLIFFORD P. HANSEN

Senator HANSEN. Mr. Chairman, thank you very much for your courtesy. I do regret another appointment I had was a little bit slow in being completed, and unfortunately delayed my getting over here.

Mr. Chairman, the testimony presented yesterday by the representatives of the Abbott-Northwestern Hospital offers all of us who are concerned with the situation of the aged person an opportunity once again to examine this issue with more clarity and perception.

Although in agreement that society should engage in efforts to help the aged procure essential medical care, I am somewhat disturbed at the recommendations to increase the scope of benefits of present Medicare law.

I see great difficulties that lie ahead if we increase the Federal role in providing medical care for our senior citizens beyond what it already is.

One of them is cost. In 1971, Medicare paid $7.5 billion in reimbursements. If this was actually only 40 percent of the medical costs of the elderly, then to have paid the full medical costs would have cost the Federal Government $18.75 billion. Such a figure staggers the imagination.

Taking into account inflation since 1971, the figure to provide needed medical care to our senior citizens at a Federal level now would be much higher. The fact is that the health needs of senior citizens are unlimited, and will never be able to be fully met by a Government handout program.

The task is one of herculean proportions, and may be beyond the capacity of our economy to sustain, without a renewed demonstration of personal and family commitment to help.

In a period when inflation is our Nation's No. 1 problem, and is

SHARP INCREASE IN DEMAND

principally caused and aggravated by spiraling Government expenditures, I find it highly irresponsible to propose increasing to unthinkable proportions the expenditures of the Federal budget for health, when these costs could and should be met at State, local, and individual levels.

Another serious problem that we should consider in removing the financial barriers is the sharp increase in demand that would be experienced within the health system if it were suddenly opened up to increased requests for health care services. If the experience at AbbottNorthwestern Hospital were duplicated all over the country when medical care was offered for free, can you imagine the turmoil and confusion that would result?

I suggest that all of our health care facilities would be inundated with demands for health care, legitimate and imagined, far beyond our capacity to provide it. Such a situation would have no other re

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sult than to repeat the experience of 1965 when medical prices sharply increased as the demand heavily exceeded the supply of medical

facilities.

Many physicians noted that as the demands upon their time increased, as the patientload became greater, they were forced to spend less time with each patient. In order to assure that the patient had been diagnosed properly, the doctor often ordered varied laboratory and X-ray tests. These tests were not always necessary, but to "be safe," they were requested.

As the financial barriers are lowered, the doctor becomes further and further inundated with patients demanding care. Of course, he cannot continue to supply the same quality of care as before.

So you see, we have a very real practical problem with reducing financial barriers to medical care.

There is no doubt in my mind that, when medical services are offered at low cost or for free, most individuals-whether they are actually delaying going to the doctor because of limited resources, or whether they are just going some place where they will have to pay more-will opt for the cheaper of the two alternatives. I suspect that this is what happened in Minnesota.

Without demeaning or ignoring the crying need for providing medical care for our senior citizens, then, may I suggest that we turn from further Federal responsibility in this area and encourage private and local efforts?

PHILANTHROPIC CONTRIBUTIONS

It is of great interest to me to know the extent of such efforts as represented by private philanthropic contributions to health care. During 1973, $3.98 billion was contributed by private philanthropy for health and hospitals-about 4 percent of total health spending, and about 19 percent of private, nonprofit construction costs.

A statistical report prepared for the American Association of Fundraising Counsel, presenting figures on 84 fundraising campaigns, shows contributions totaling $183,500.849. Goal attainments ranged from 210.8 percent of a $250,000 goal to 58 percent of a $1.5 million goal. Corporations accounted for 37.9 percent of the total raised; other individuals accounted for 16.3 percent, and foundations for 15.1 per

cent.

Of particular note is that of 244,680 gifts, 242,000 were gifts of $5,000 or less. In 32 instances, the largest gift was made by a corporation or financial institution; in 11 instances, by an individual or family; in 10 instances, by a foundation; and in 6 instances, by a hospital auxiliary organization.

Of supreme importance to me is that in these fundraising campaigns, 33,513 volunteer workers were involved-this is great.

The figures are significant, for it shows that the principle of private and local responsibility for philanthropic contributions is not lost. I assert that this is what we ought to encourage. Surely if such efforts were expanded, we could deal much more effectively with the problems of our senior citizens.

A proposal which shows real understanding of the basic issues is that made by William Buckley and printed in the Congressional Record several months ago. Mr. Buckley, the noted columnist, proposed that:

The burden of the nonprofessional work done in behalf of the aged should be done by young men and women graduated from high school, during 1 year before matriculating at college. . . . The experience would remind young people at an impressionable age of the nature of genuine, humanitarian service, which is the disinterested personal act of kindness, administered by one individual directly to another individual. . . . The opportunity is great for initiative from the private sector.

Such a policy would return us to a realization of the responsibility of the individual and local association to provide help for the elderly. It would inculcate among our people a sincere interest of love, trust, and appreciation for the senior members of society. And that is the basis for sincere community efforts to help them procure needed medical care.

MRS. HUNTER MEETS CHALLENGE

I would like to refer to just one more example from my home State of Wyoming. This is the exciting story of Eileen Hunter of Jackson Hole, Wyo., who has played such an important role in the construction, operation, and expansion of the St. John's Hospital there. St. John's Hospital has just completed an expansion that adds six semiprivate rooms, a physical therapy department, and a nurses' station. The project was begun over a year ago and reflects the continuing commitment of Eileen Hunter and the public response her altruism stimulates.

Noting that the nursing home facility might be phased out due to a rapid increase of acute care patients during 1973, Mrs. Hunter raised the initial $50,000 of the total $150,000 for the expansion. She then spearheaded the drive to make up the full amount. When asked an approximate total of her hospital donations Eileen replies, with typical Eileen Hunter style, "if I can afford to give a lot and another can afford to give a dollar, then we're even."

While the contributions of Mrs. Hunter and John D. Rockefeller, Jr., were paradigms of philanthropy at its best, it must be noted that the working men and women of Jackson Hole, by pledging amounts of only a few dollars per month over a period of years persuaded the board of St. John's that it could build the new hospital facilities.

I submit that this is the type of thing we ought to consider. While the sustained dedication Mrs. Hunter exhibits is uncommon, I suspect that through some formal encouragement such efforts could become much more common and effective in carrying the burden of providing help to our senior citizens.

It is the principle of this issue that is most important-that individuals and private entities become active and involved in charitable. support and contributions. It is far better for individuals to recognize their responsibility to help their neighbor than to shirk the responsi

bility or abdicate it to the Government. Disinterested, third-party intermediary government roles will never match personal efforts based on sincere concern and motivated by love, trust, and respect.

I believe that demands for expansion of governmental programs of Medicare and Medicaid would be sharply reduced if private individuals, associations, and local governments, to the extent of their abilities, would take care of their families, kin, and the underprivileged. I realize the political advantages to be gained by supporting farreaching, comprehensive benefit programs for the aged. But in this instance, in all good faith and candor, I must defer the responsibility to your State and local governments, and private individuals and associations.

To do otherwise would be to hold out false promises that may never be met, and will surely result in further discontent and distrust of our public officials by all our people. Thank you very much.

Senator MUSKIE. I see Senator Domenici and Senator Brock are here. You have already heard Mr. Flavin's testimony, but if you have opening statements, I would be happy to yield for that purpose.

STATEMENT BY SENATOR PETE V. DOMENICI

Senator DOMENICI. Mr. Chairman, just a brief statement, I heard most of yesterday's testimony. Having actually conducted some hearings on barriers to health care, and having seen the diverse programs we have in existence, I was most struck yesterday by a summary that Dr. Farber made. After he went into some detail about his experience as a volunteer provider of medical services, working as part of a team of physicians that donated a substantial portion of their time to the effort that we heard yesterday, he went on to say that current funding of Medicare is grossly inadequate for patients dependent for their assistance on Social Security payments.

His conclusion, to me, was most emphatic and true, and if we could come to grips with it, I think we would be on the way to some success. He concluded, there is no doubt that early preventive medical care, with appropriate backup services, to this population of patients vastly reduces the overall cost to society of their medical care. I think this ties in with the national policy which seems to unnecessarily institutionalize our senior citizens.

This has been destroying other relationships which are good. I think if we could put the local package of costs together, we would find that a better preventive program and backup program for senior citizens over the long haul would be cheaper than what we are doing now, and certainly be the more honorable, more moral way to handle the problem.

It would increase relationships of parent to child, family relationships, and home care. I am extremely interested in this overall picture as we move in that direction.

I thank the chairman for permitting me to have a few comments today.

Senator MUSKIE. Thank you very much, Senator Domenici.

STATEMENT OF JAMES L. FLAVIN-Continued

Mr. Flavin, if I may get into your testimony of the issue that has been raised, first of all, with respect to the meeting of April 11, 1974, did your representatives keep minutes of that meeting?