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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.

I welcome this opportunity to testify before your committee on the potential impact on the aged of the administration's proposed comprehensive health insurance program. This is a matter of direct concern to our union. We have over 400,000 retirees and dependents who are covered by Medicare. Our active worker membership of over 1,400,000 also have a deep interest in the Medicare program. Their taxes are paying for Medicare; they have close identification with their fellow workers no longer in the work force; most of them have parents and relatives covered by the program. Finally, they recognize that at some future date they too will be Medicare recipients.

Prior to the passage of Medicare the UAW was active in legislative efforts to translate the proposal into law. Since 1966, our union has studied the administration of Medicare, followed various proposals to strengthen and to weaken it and appeared before this committee and other committees of the Congress to share our experience and our views.

It was just a year ago that I had the privilege of appearing before this committee to protest an administration proposal to weaken Medicare through transferring insured costs to out-of-pocket payments by the elderly. Fortunately for our senior citizens, that proposal failed.

As I hope to delineate in this testimony, we have before us another administration proposal, in a different guise, and with the same objective. My comments are directed to S. 2970.

IMPROVED HEALTH INSURANCE PROPOSAL

At the outset may I indicate that the Nixon administration's current proposals (identified with its acronym CHIP), represent an improvement over their national health insurance proposal of 2 years ago. More comprehensive benefits are stipulated. There are more mandatory coverage provisions and substantial improvement in benefit coverages. Unfortunately these improvements contain a good deal more form than substance as I hope to be able to illustrate this morning.

All of us interested in health care are nonetheless grateful to the administration for introducing its proposal. It brings back to first priority for consideration the need for the Congress to act expeditiously on what all parties, regardless of their points of view, have come to recognize as a constantly aggravating health care crisis in this country.

Mr. Chairman, your committee is, by definition, concerned primarily with those public and private health insurance arrangements which affect the health of persons age 65 and over. I have labeled this group the "elderly aged." I would like to suggest, however, that we need also to concern ourselves with an emerging group of persons whom I would define as the "early aged."

The early aged are under 65. Their number is rising. Voluntary early retirement programs, many pioneered by the UAW, are becoming industrywide phenomenons. Chronologically speaking, many of the early aged are in their fifty's. We know that many are in their early sixty's for the majority of those who now take old age retire

ments under Social Security leave the work force before the age of 65 and are thus ineligible for Medicare for some years.

Another category of the early aged, increasing rapidly in recent weeks as a result of the energy crisis, consists of those who have been involuntarily retired. Last week the Detroit press reported that in the automobile industry, hundreds and perhaps thousands of high seniority nonunion salaried workers had been asked to retire early. These management requests carry a high degree of compulsion since these white collar workers lack the protection of a union contract.

But whether the retirements are voluntary or involuntary, the early aged are in many ways worse off than those who retire at 65 and are immediately eligible for Medicare. The early aged are prime candidates for America's greatest killers and cripplers. Cancer claims 34 percent of its victims among persons between the ages of 45 and 64; 21 percent of arteriosclerosis and hypertension deaths each year occur among persons in this age group.

It is well known that chronic illness and disability do not wait until age 65 to take their toll. For example, 20 percent of the population between the ages of 45 and 64 have some sort of limitation or are unable to carry out their normal activities due to chronic health conditions, compared to only 8 percent of persons between the ages of 17 and 44.

EFFECT ON EARLY AGED

I suggest, therefore, that in addition to the impact of the Nixon administration proposals on Medicare recipients, this committee would wish to look carefully at the effect of the proposals on the early aged retired who, unless they are totally disabled, are not eligible for Medicare, do not usually have the continuation of their employer-paid insurance, are frequently labeled high medical risks which insurance company secret data banks label as inappropriate for continuing health insurance, and even when they are eligible are forced to pay premiums frequently beyond their financial means.

As for the elderly aged, the excellent work carried out on a continuing basis by this committee over the years has amply demonstrated that while the Medicare program has been of inestimable value to the elderly, its benefits have been slowly winnowed away so that costs have become more and coverages less. In fiscal 1972, the average person past 65 paid out of pocket $42 more for his medical care than in the year before Medicare began.

The cost to the Federal Government of Medicare in the first full year of operation was $4.7 billion. The administration's projected costs for the fiscal year 1975 are $13.4 billion.

Problems of access to physicians and other providers of health care, fragmentation of services, limited and often nonexistent quality controls, escalation of costs, disorganization of services, and the interrelatedness of these factors continue to plague the program and those it is designed to benefit.

The problems we face in Medicare today are well known to this committee. They are relevant to this morning's discussion because they are a reflection of the core causes of the health care crisis in this country. In Medicare, the problems are made more complex by in

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