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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.
PREPARED STATEMENT OF SENATOR HARRISON A. WILLIAMS
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
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.
CHIP-A FULLSCALE RETREAT
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.
Senator MUSKIE. Before we turn to our first witness, Mr. Glasser, I would like to give an opportunity to other subcommittee members to comment on the opening of these hearings.
Senator Pete Domenici has submitted a statement he would like placed in the record. He planned to be here, but had to go instead to a hearing by the Subcommittee on Transportation.
So, without objection, his prepared statement will be included in the record at this point.
PREPARED STATEMENT OF SENATOR PETE V. DOMENICI
I am happy to participate in these hearings concerning the elderly and the administration's national health insurance proposal. Adequate protection against the economic as well as physical consequences of sickness is important to all Americans. For older Americans, thoughwhose health often fails at a time when purchasing power has also been substantially reduced-comprehensive health insurance is an issue of special import.
We are reminded fairly often of the economic plight of the elderly, but the situation bears repeating. In 1971, more than 50 percent of all older couples had incomes below $5,000 annually and over 20 percent of all older persons were living in poverty. The statistics on the health problems of the elderly are also impressive. For example, about 85 percent of older persons not in institutions have one or more chronic health conditions. Older persons have a one-in-four chance of being hospitalized during a year-this is twice as great as for persons under age 65. Once in a hospital, older persons on the average stay 17.5 days, again twice as long as for younger persons. Older persons are also twice as likely to wear glasses and 13 times as likely to use a hearing aid as younger persons.
Looking at the average older person's health and economic situation. together, we see that maintaining one's health in retirement is going to cost more. Unfortunately, it also means that the elderly do not always get the health care they need because of the cost involved.
As if the economic and health problems facing older persons were not enough, in recent hearings before this committee we have heard emphasized other related concerns in the multiplicity of problems faced by older persons.
WEAKNESSES IN MEDICARE PROGRAM
Today we are specifically interested in health insurance proposals to better meet the needs of the elderly. Medicare was a major achievement. After 8 years, we are now, however, aware of some weaknesses in that program. For example, in spite of the statistics I mentioned. on chronic illnesses among the aged, Medicare does not cover the cost of dental care, out-of-hospital drugs, eyeglasses, or hearing aids. Medicare contributes only a small amount toward home health care-currently less than 1 percent of all Medicare reimbursements. Medicare also provides inadequate coverage of catastrophic health care needs. which causes great fear for many elderly. Neither does Medicare cover preventive health services.
Medicare costs, like other health costs, have been rising, and this is a concern to all of us. We, therefore, must investigate methods to encourage optimum utilization of health services-which is dependent to a great extent on the availability of sufficient and appropriate health service providers, including home-health services. We must also consider covering drugs prescribed by generic name only. As we have the responsibility for apportioning limited funds, we must make sure our programs are designed to achieve the best possible utilization of the Social Security tax dollars.
We also need to understand the economic burden of health care on the individual older person. Even with Medicare, private health care expenditures are still more for older persons than for others. The percapita figures for fiscal year 1972 were $337 for persons aged 65 and over as compared to $265 for persons aged 19 to 64. In addition, the cost of medicare itself to an older person has risen sharply since its inception in 1966. The premium for part B, supplementary medical insurance, has risen from $36 to $75 annually while the hospital deductible has risen from $40 to $84-both represent over a 100 percent increase. To help the elderly cope with these health and related financial problems, it is obvious that we need to look closely at the comprehensive health insurance proposals now before Congress, including the administration's national health insurance plan specifically being studied in these hearings.
The results of Congress' work on this issue will have a major impact on our older citizens. Our results must reflect our appreciation of the past and present contributions of today's senior citizens to this Nation, and our understanding of the special problems of this group.
Senator MUSKIE. Senator J. Glenn Beall, Jr., has also submitted a statement for the hearing record. Without objection, it will be inserted. in the record at this point.
PREPARED STATEMENT OF SENATOR J. GLENN BEALL, JR.
Mr. Chairman, I sincerely regret that the necessity to be on the Senate floor will make it impossible for me to be present for today's hearings. These hearings are of vital importance because they address themselves to one of the most pressing problems confronting our Nation's senior citizens. Access to health care is of crucial importance to older Americans and this 2-day series of hearings is designed to shed light on the various legislative proposals pending before the Congress that are aimed at paying the bills for senior citizen health care.
The health care issue can and should be approached from two different directions simultaneously. One is obviously the problem of paying the health care bills. Second, and of equal importance in my mind, is the quality, efficiency and effectiveness of our health care delivery system. The hearings today and tomorrow are primarily designed to focus attention on the first aspect of this problem.
Mr. Chairman, I would like to take a minute to discuss a legislative proposal I have undertaken which is designed to grapple with the issue of how our health care services are delivered. On March 13, 1972, I introduced S. 3329, the predecessor of S. 723, and the first bill introduced in the Congress aimed at making research and development in
health care delivery as effective and important a science as biomedical research. S. 3329, which establishes a National Institute of Health Care Delivery, was added to the HMO legislation which passed the Senate in 1972, but final action was not taken on this legislation in the 92d Congress. I then reintroduced the proposal as S. 723, along with Senators Dominick, Hathaway, Hollings, Javits, Pastore, Stevens, and Young. The bill passed the Senate on May 15, 1973, as separate legislation.
"BURIED IN BUREAUCRACY"
When I introduced S. 723 in the Senate, I said the following with respect to the existing research and development effort in health care delivery:
The Nation's effort in this area is at the National Center for Health Services Research and Development (now changed to the Bureau of Health Services Research). The Center is presently buried in the bureaucracy of HEW. In its present position, the Center lacks visibility and its clout is small. It lacks an effective organizational structure and the flexibility that characterizes many government research and development organizations. It is not funded adequately. Its research function has been shortchanged and over emphasized. It does not even have a legislative mandate. I doubt whether many in Congress other than those with a special interest in health or those who serve on the Health or Appropriations Committees, know the Center exists.
Of special interest to senior citizens, is that portion of the proposed Institute's mandate that would have it develop a policy "with respect to long-term care, particularly for mentally and physically handicapped individuals and senior citizens, with special emphasis on alternatives to institutionalization, including the use of home health aides." Many of the other functions of the Institute would also contribute directly to improving the quality of our health care delivery system and thus improve benefits to our Nation's senior citizens. Needless to say, I was especially pleased when the Senate, by a vote of 79 to 15, passed S. 723. Even though the Congress has not yet completed action on this legislation, I remain convinced that S. 723 best responds to existing deficiencies in our Government's efforts to improve the quality of health care delivery.
Mr. Chairman, I ask unanimous consent that the pertinent portions of Senate Report No. 93-131 be printed in the record of this hearing. [See app. 1, p. 747, for material referred to above.]
Senator MUSKIE. We have, I think, an excellent list of witnesses this morning. And I am happy to begin with Melvin A. Glasser, director of the Social Security Department of the United Auto Workers.
Mr. Glasser, it is a pleasure to welcome you this morning, and we look forward to your testimony.
STATEMENT OF MELVIN A. GLASSER, DIRECTOR, SOCIAL SECURITY DEPARTMENT, UNITED AUTOMOBILE WORKERS OF AMERICA
Mr. GLASSER. Mr. Chairman, my name is Melvin A. Glasser and I am director of the Social Security Department of the United Automobile Workers of America.