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some changes in the distribution of drug charges since these figures were collected, they indicate that under the administration plan many of the aged would still have to pay for all of their drug costs or a good portion of their drug costs.



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The drug benefit under the proposal would at least add something to Medicare coverage. But the proposed home health benefit would reduce the current home health benefit and impose coinsurance charges, and this is illustrated in chart 7.


The number of home health visits now authorized under Medicare is 100 under part A and 100 under part B, for a total of 200 per year. The administration plan would reduce this number and it would apply a new coinsurance charge of 20 percent to home health visits. Thus, a home health benefit-which is inadequate now-would be further reduced.

In his message transmitting his proposal to Congress, the President said that he did not "consider our current approach to longterm care desirable because it can lead to overemphasis on institutional as opposed to home care." I agree, and I have introduced legislation to increase the number of home health visits allowed under Medicare, and to make other liberalizations in the home health benefit. It seems contradictory for the administration to agree in principle with the need for home care, but to propose a cutback in home health benefits.

Many of the problems with the administration proposal, illustrated by these charts, can be traced back to the principle of costsharing meaning increased out-of-pocket costs. When we began our series of hearings a little over 1 year ago, I asked this question in my opening statement: "How can many of our elderly realistically expect to receive adequate medical care, in the face of these Medicare cutbacks?"

The cutbacks to which I referred would have resulted from administration proposals to raise the costs of Medicare to almost 21 million older Americans.

It came as no surprise, to me at least, when the administration could not find anyone in either House of Congress to make a serious effort to advance that cost-sharing legislation.

In fact, the Senate took a step later in the year which indicated its concern about the high cost of Medicare to participants in that program by voting in favor of my proposal to hold the line on the increase in the Medicare hospital deductible and coinsurance charges.

The Senate vote, I firmly believe, was a clear signal to the effect that the relentless rise in the costs of Medicare to the consumer must be stopped, before this essential program becomes too expensive to help the people it was meant to serve.

And yet, the administration has again come forward with a proposal which raises objections very similar to those expressed last year. The difference is that now the Medicare cost-sharing is tied to the plan described by President Nixon as his comprehensive health insurance program, meant to serve all age groups, not just older persons. Once again, these provisions are described as "improvements.' Once again, there is talk of cost-sharing.

Once again, we are told that less is more.

The President's comprehensive health insurance program deserves serious congressional scrutiny and debate. These 2 days of testimony before the Subcommittee on Health of the Elderly will begin that process.

Senator Frank Church, who is chairman of the full committee, has submitted a statement which I will be delighted to include in the record at this point.


Mr. Chairman and members of the Subcommittee on Health of the Elderly, I will take just a few moments to comment on the timeliness and importance of these hearings.

It seems to me that the subcommittee has acted promptly and wisely to provide a forum for discussion of the President's proposed comprehensive health insurance plan and its potential impact upon health care for the elderly.

The President's proposal, made on February 6, is significant for several reasons; for example, it offers some protection against catastrophic illness, and it clearly recognizes that there are major deficiencies in the present health care systems. These and other features of the administration plan-as they affect all age groups should receive careful congressional consideration and extensive debate.

To the Committee on Aging and in particular this Subcommittee on Health, however, it already is apparent that early attention should be given to those provisions of the President's program that have direct meaning for older Americans.

These hearings provide the opportunity for that kind of dialog.

One issue which, I hope, will receive particular attention is the administration's proposal, once again, to increase cost-sharing for older persons now covered by Medicare.

Today, Medicare beneficiaries pay an $84 deductible before hospital charges are paid by the program. There is no coinsurance charge until after 60 days of hospitalization.

The administration's proposal would require a $100 deductible and 20-percent coinsurance for all covered hospital services.


Nor is that all. The monthly premium now paid for supplementary medical insurance would increase by about 20 percent, from $6.30 to $7.50. Home health visits would be cut from the present authorized 200 visits to 100 visits per year with no liberalization of the present stringent requirements to qualify for home health benefits.

Drugs are supposed to be included, but we have no details as to whether the proposed coverage of drugs would equal the legislation. which I have sponsored and which has already passed the Senate. We do know that there would be a steep $50 deductible before any prescriptions are paid for.

Finally, it is certainly meritorious that the administration's plan would cover hospital stays without limit for those who require lengthy hospitalization. I have sponsored, and the Senate has passed, legisla

tion which would improve the Medicare program substantially in this regard by increasing the lifetime reserve and reducing coinsurance charges.

Action to help long-term patients is to be welcomed, but too much emphasis is placed in the proposal on this catastrophic type of coverage while leaving uncovered such needs as routine medical checkups for older people and the provision of eyeglasses and hearing aids.

Mr. Chairman, last year when the administration offered an earlier version of the cost-sharing proposal, you and I and other Members of the Congress took vigorous exception. In addition you and I introduced a resolution calling upon the administration to submit legislative recommendations to improve Medicare coverage, rather than diminish it.

We also expressed opposition to the administration's proposals to increase out-of-pocket payments for the elderly and the disabled under Medicare.

It seems to me that the latest administration plan is subject to much the same objections-and perhaps to new objections-as was the case last year. I will, therefore, follow these proceedings closely, and work with you to assure that a national health insurance program-when it finally comes-results in better health care for the elderly, rather than in a setback for older Americans and all those who worked to enact Medicare 9 years ago.

Senator MUSKIE. Senator Harrison A. Williams, former chairman of this committee, has submitted a statement for the hearing record. Without objection, his statement will be inserted in the record.


Mr. Chairman, your decision to devote 2 days of testimony to the potential effects of the President's proposed comprehensive health insurance program is very welcome.

As chairman of the Senate Committee on Labor and Public Welfare, I am very much concerned about the overall impact that CHIP would have upon health care for all persons in the United States. I am glad to see that it has several provisions which are distinct improvements over earlier administration approaches.

But, as a former chairman of the Senate Committee on Aging and now as its ranking member, I have a special concern about those provisions of CHIP which would change the way in which the Medicare program serves older Americans.

I am the first to admit that Medicare-as it now stands-is in need of improvement. The latest official estimates show that Medicare covers only a little more than 40 percent of medical bills of the elderly. Medicare does not cover such essentials as out-of-hospital prescription drugs, eye care and eyeglasses, and hearing aids—yet the costs to Medicare participants keep going up.

For all of its inadequacies, however, Medicare guarantees most older Americans payment of the bulk of average hospital bills and a large share of doctors' bills.

Obviously, Medicare needs improvement. The subcommittee, for example, has clearly made the case for improved home health care

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benefits under Medicare and greater emphasis upon preventive health care services.

I'm all for making Medicare better than it now is, and it is with. that viewpoint that I examine the proposed CHIP program.


After careful evaluation, however, I am forced to conclude that CHIP would be more than a step backward for Medicare; it would be a full-scale retreat.

The most obvious drawback of CHIP is that it would dramatically increase the cost of Medicare for most beneficiaries.

As things stand now, a Medicare patient pays the first $84 of a hospital bill and there are no coinsurance charges until the 60th day. Most hospital stays under Medicare, however, come nowhere near 60 days.

The administration would change this picture considerably. It would raise the $84 to $100, and then it would charge 20-percent coinsurance for every day spent in the hospital, beginning with the first day.

An average hospital stay for a person 65 years or older now stands at about 12 days, according to the American Hospital Association. Under present Medicare, the hospital charge would be $84. Under the administration plan, the average hospital bill could be almost four times that figure.

The fact that CHIP would provide unlimited coverage of hospital and medical charges in catastrophic illnesses after maximum patient charges of $750 is a point in its favor, but this improvement would help only a very small proportion of Medicare beneficiaries.

One part of the proposal which would affect a large proportion of the beneficiaries is the addition of income tests to determine how much of the increased charges aged persons in certain income groups must pay. This, I believe, is a proposal that is extremely ill advised.

One of the key principles of Medicare, as enacted almost 9 years ago, was that benefits should be a matter of right, paid for by payroll taxes during the work lifetime. This principle has worked well and should not be lightly tossed aside in favor of onerous income testing which will complicate and downgrade the Medicare program.

In addition, the Medicaid program which now assists the lowincome aged would be gutted and left with only a residual long-term care program. This would reduce the health coverage available to the needy aged in many States.

And with regard to the coverage of out-of-hospital prescription drugs, the CHIP provision for Medicare coverage is welcome. But it requires a $50 per person deductible which still leaves uncovered a high proportion of drug costs for most Medicare beneficiaries.

All in all, the administration's proposal would provide only small additional coverage for a small proportion of beneficiaries. It fails to improve Medicare benefits substantially and increases rather than reduces charges.

Thank you, Mr. Chairman, for the opportunity to present this statement.

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