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 fellowworkers 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

surance-industry-oriented statutory specifications which do not permit organizational change in health services and encourage extravagance and further distortions and fragmentation of medical care delivery. Further, the practices under this program have enlarged and intensified administrative, delivery, and cost problems not only for the elderly but throughout the entire private health sector.

About half of the elderly aged and an unknown though substantial portion of the early aged lack private health insurance protection. For the elderly aged, close to a majority do not have supplemental coverage to Medicare. A substantial portion do not have the income resources required to cover their share of the medical bills, let alone the expansion of those bills under the Nixon administration proposal. In 1972, 19 percent of all persons age 65 and over had incomes below the then established poverty line, and 37 percent of the aged persons living alone had incomes under the poverty level. These persons were at the mercy of State Medicaid programs. Their position will not be improved. Rather, it is likely to be worsened under the administration proposals.

Now, sir, I should like to talk about the CHIP proposal and the elderly aged.

THE CHIP PROPOSAL AND THE ELDERLY AGED

The administration proposes that Medicare be retained for the elderly aged with modification of benefits to conform with the CHIP programs for the employed and the needy. This basic proviso may for the first time create a situation in which Medicare benefits would be different in different States, for the new plan cannot be operative unless the States pass enabling legislation for the employee health insurance plan and for the assisted health insurance plan (which is designed to replace Medicaid) and for the new Medicare. Arizona today has no Medicaid program. It is therefore possible and likely that they would not pass an AHIP legislation or the enabling legislation for Medicare.

Several other States which have Medicaid programs have high Federal subsidies so that the State's share is quite low. Should they adopt the administration's AHIP plan, their share of the costs would substantially increase. The administration estimates that in the first. year, the increased cost to States would be $1,100 million. These States, hard pressed as they are for adequate funds with which to support State programs, would have an incentive to continue Medicaid unchanged, and not pass S. 2970 enabling legislation. In such event, as I read the administration's proposal, Medicare could not become operative in these States. The elderly would simply keep their present Medicare program. This in many significant ways is different from the CHIP Medicare program which would be operative in the majority of the States.

The administration proposal anticipates this in that it provides for preservation of the present title XVIII trust fund to pay for Medicare benefits in States which have not implemented the new programs.

I believe this is a retrogressive step and is a part of one of the basic objections we have to CHIP; namely, that nowhere does the

legislation assure that access to decent health services is a right for all Americans. Rather, it continues to be a privilege for those who can meet the requirements of out-of-pocket funds, State legislation, and Federal strictures.

Disability beneficiaries who only recently have become eligible for Medicare coverage, would lose this eligibility and, under S. 2970 would presumably be eligible for AHIP. In those States which elect not to have AHIP, they would stay with Medicare. In those States which adopt AHIP, they would lose their entitlement as a right, and presumably be subject to the means test provisions of AHIP. This, too, I believe is retrogressive.

LIBERAL BENEFITS UNDER MEDICARE?

The administration proposal provides what is claimed to be liberalized benefits under Medicare and you refer to this, Mr. Chairman-which would conform with the other two CHIP programs. These are in four categories:

(1) Improved mental health benefits. There is some question as to whether the administration's proposed benefit of 30 days of full hospitalization and 60 days of partial hospitalization is better than the Medicare proviso of a lifetime limit of 190 days. In program design, I believe the CHIP benefit is a better one. For the elderly who experience substantially longer periods of hospitalization for mental illness than younger persons, the 30-day limit may in fact affect some of them adversely.

The provision for 15 covered visits for out-of-hospital mental health services from solo practitioners or 30 from organized mental health programs is a good one. It would be if the olderly used these benefits. The UAW has had even more liberal out-of-hospital mental health benefits for its retirees since 1966. This program provides no copayment by the beneficiary for the first five visits and lesser copayments than in the Nixon proposal. Based on careful study of the operation of the UAW program, we have found that for a number of reasons which there is not time to discuss this morning, retirees make exceedingly little use of this out-of-hospital mental health benefit. While the Nixon proposal for mental health benefits is an improvement, it is not likely to involve significant costs because utilization among the elderly can be expected to be exceedingly low.

(2) Prescription drugs. This is an urgently needed benefit which our union has been suggesting for several years and should be added to Medicare. We applaud its inclusion in the Nixon program but are constrained to point out that the requirement that the beneficiary pay the first $50 of such expenses each year makes of this considerably less than appears on the surface. In 1972 the elderly aged spent $90 per capita on drugs and drug sundries. In that year the CHIP benefit would have covered only 44 percent of the average beneficiary's drug expenses.

(3) S. 2970 provides no limit on hospital days, after the deductible and coinsurance sums are paid. Medicare provides for 90 days per year of coverage plus a one time additional 60 days. I shall deal with the cost effect of this new proposal a little later. You have already

referred to the fact that only about 1 percent of the elderly use the benefit for 60 days or more. So, in essence, 99 percent are being asked to pay more so that 1 percent might benefit.

(4) Catastrophic coverage. Beneficiaries would pay 20 percent coinsurance up to a maximum liability of $750 a year. This is designed to assure the elderly aged that they would not be bankrupt by excessive medical payments. However, it is estimated that in July of 1974 the average Social Security benefit will be $181 per month for a single person and $310 for a couple. If indeed an elderly person had to pay $62 a month from the meager income I have cited, his would be a catastrophic situation in the first month, not after he reaches the $750 maximum. In addition to this maximum, the beneficiary would have to pay the monthly Medicare part B premium, and he would also pay for other medical expenses for benefits not covered by the program.

"COSMETIC" ILLNESS PROTECTION

It would appear that this so-called catastrophic illness protection for the elderly aged is largely cosmetic.

Almost everyone concerned with the adequacy of health services recognizes the need to include preventive services. The CHIP plan recognizes this need and discriminates against the elderly in its benefiit structure. Eye examinations, developmental vision care, eyeglasses, ear examinations and hearing aids are covered for children up to age 13. But, as this committee well recognizes, the major problems in vision care and hearing and the major need for eyeglasses and hearing aids is not among children. It is among the elderly. They are not eligible for these benefits.

The elderly under the CHIP plan would be eligible for post hospital extended care of 100 days per year. They would be better off without CHIP. Under Medicare they are eligible for 100 days of post hospital extended care per benefit period. Since there is a 90-day corridor in Medicare, it is not infrequent that an elderly person would receive more than 100 days per calendar year under the present program. These "extra" days now possible under Medicare will be lost under the administration's program.

Mr. Chairman, you cited the figures of how much greater the charges would be for hospital care to the elderly under the President's proposal than under Medicare. I shall not repeat these figures. But the situation is even worse than it appears.

Under the CHIP program, physicians are required to accept reimbursement in accordance with State fee schedules as payment in full for all patients under Medicare, and under AHIP. Under the employee plan-that's for the workers-they would receive the same payments, but be permitted to bill additional sums to the patient. This would appear to be a seemingly invidious means of reimbursing providers. Older people already have great difficulty in finding physicians who are willing to provide care for them. Now the administration is proposing in essence to set up a two-class system: those who could pay the doctor more, and those for whom the doctor cannot charge more. We have had very considerable experience to demonstrate that this will