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ministration's proposal, if enacted, would submarine legislation now in the books given the lesser requirements. Furthermore, there is nothing in this legislation, aside from this HMO, that would do anything about bringing services together, making them more readily available in one place for the elderly, and increasing the availability of physicians and other health care providers whom the elderly simply cannot find.

Senator MUSKIE. Do you believe that the Medicare program coverage needs improvement rather than constriction? What is your view on that?

THREE MAJOR ALTERATIONS NEEDED

Mr. GLASSER. Our union, Mr. Chairman, feels very strongly that the Medicare program needs three major alterations. The first is a substantial improvement in benefits with the removal of economic deterrants to early diagnosis and treatment. The medical profession has told us that for 50 years, but somehow it hasn't reached their legislative agents in the Congress.

Second, the program needs to be integrated with the total program of health care for all Americans. At present, it is disfunctional and costly to provide medical care for the elderly as though they are the only ones in America that have problems.

Finally, it is our firm belief that if these programs were integrated with a comprehensive program containing a single uniform system of financing, the elderly would be infinitely better off.

Senator MUSKIE. The administration's proposal as described includes a prospective reimbursement system for hospitals.

In your view, is that a valuable device for increasing cost control? Mr. GLASSER. Mr. Chairman, I have on many occasions testified in various places for a prospective reimbursement of hospitals. But I have also testified, and it has been our union's position, that it is not possible to control one piece of the system unless you look at the entire system as well.

Hospitals need to be on a budget. But so do extended care facilities and physicians. If one only controls a piece of the system, the costs in the remaining pieces are expanded. For example, if hospital costs are held down, nursing home costs escalate. This is not a theoretical discussion, Mr. Chairman; this has been our experience.

Last year, the Health Benefits Advisory Committee recommended to the Cost of Living Council, of which I am a member, that there be certain controls. The controls on physicians' charges were 2.5 percent. The controls on hospital charges were 6 percent last year. Everybody felt this was good fiscal policy as, in fact, both the hospitals and physicians stayed within their respective limits. Nevertheless, the total cost of health services went up 11.1. Well, it takes some strange kind of arithmetic to figure out how to average out 2.5 percent and 6 percent to come out with 11.1 percent.

What this illustrates at the national level is that any attempt to control a piece of what is in fact a total system simply means disproportionate increases elsewhere in the system. Consequently, I am for prospective budgeting of the total system. I think it is disfunctional to try to do it with one piece.

REFORM OF THE HEALTH DELIVERY SYSTEM

Senator MUSKIE. That makes sense. Could I ask what provision should be included in the national health insurance plan to stimulate reform of the health delivery system?

Mr. GLASSER. For those of us who have addressed the dilemma of health care delivery, it has become patently clear that such a system must provide access for not only the elderly but for all Americans.

It should have comprehensive benefits with no organizational or economic deterrants to early diagnosis, treatment and a full range of health care services. It should have controls on the cost for the budget for the whole system.

It should have effective controls on quality. Under the present delivery structure, the consumer is almost the last person to evaluate whether his services are any good. If he survives the medical care system, he obviously thinks he is in good shape. If he dies, he can't complain. The old marketplace caveat. "Let the buyer beware," has no place in health care. We need effective quality controls.

It should have financial and other incentives to restructure the system and thereby eliminate the fragmentation to which you refer. It should have uniform and equitable financing, as well as multiple and diverse delivery patterns within a single financing system. We need centralized regional and local administration. We need mechanisms to assure that benefits which have been promised in the program will be delivered-which is not mentioned in the Nixon bill. And we need something else the Nixon bill neglects: effective consumer participation at each important level of policymaking. They are the people who pay for the program. They are the people who will receive the program. They ought to have their say on how it develops.

Senator MUSKIE. One final question. You say that the administration proposal does not assure access to decent health services as a right for all Americans. Rather, you say, it continues to be a privilege.

I would like to emphasize that and ask you to comment on the costsharing parts of the administration proposal in the light of the goal of making good health a right.

Mr. GLASSER. This is one of the reasons, sir, that we have such strong reservations about the health insurance industry.

The insurance industry approach, in essence, equates insuring for access to good health with insuring one's home against fire or automobile against collision. They use the same principle for all situations.

COST SHARING DETERS SERVICES

But we don't believe in the universality of this principle. We have been taught that early diagnosis and treatment are essential. Cost sharing a key ingredient of the insurance principle-deters these services. If the cost sharing is minor, it doesn't deter it, but then there are no economic savings. So one increases the cost sharing which drives people from the system. We believe that access to health care has to be direct and quick, and we believe that the present system is not providing that access and that Mr. Nixon's plan will provide even less access.

We believe that the whole notion of cost sharing is some kind of an Alice in Wonderland thing that somebody has dreamed up. I would ask, Mr. Chairman, as I alluded to in my testimony, that we ask somebody in the administration to pick up the telephone, call seven doctors listed as surgeons in the Washington telephone book and say, "Dr. Surgeon, I need an appendectomy; my GP told me so. Because I am in a cost-sharing plan, I need to know how much you charge so I can compare your price to seven other fellows. The guy with the lowest price gets my business."

Finally, assuming he gets answers, he picks Dr. X. Now he must call seven or eight hospitals in Washington, D.C., to get their prices. This may seem ludicrous but this is an essential part of the Nixon plan. Our conscientious consumer calls these hospitals and says, "Hospitals, what do you charge for a semiprivate room, use of the surgery, X-rays, posthospital care, and any ancillary services?" and he lists all of them. Gentlemen, I've tried it and found that won't get the information you need.

But the problem doesn't end here. Our consumer must call the surgeon of his choice and say, "Dr. Surgeon, I picked you because you were the surgeon with the lowest price. I have picked hospital X because it has the lowest prices. I am ready to have my surgery." What does he then say when the surgeon says, "That's fine, but I'm not even on the staff of that hospital."

End of comment.

Senator MUSKIE. Thank you.

Senator Chiles.

Senator CHILES. I don't have any questions. I am delighted to read your statement. Thank you, sir.

Senator MUSKIE. Thank you very much, Mr. Glasser.

The next witness is an old friend who has appeared several times, Nelson Cruikshank, president, National Council of Senior Citizens. Mr. Cruikshank, it is a pleasure to welcome you this morning to receive your testimony.

STATEMENT OF NELSON H. CRUIKSHANK, PRESIDENT, NATIONAL COUNCIL OF SENIOR CITIZENS

Mr. CRUIKSHANK. Thank you, Mr. Chairman, members of the subcommittee, it is always a pleasure to be before you, Mr. Chairman. My name is Nelson H. Cruikshank. I am president of the National Council of Senior Citizens. Our national headquarters office is at 1511 K Street NW., Washington, D.C.

This is a nonprofit, nonpartisan organization of older people's clubs, with members in all States. The members of our more than 3,000 affiliated groups were in the forefront of the long campaign, alongside organized labor and other humanitarian groups, for the enactment of Medicare. In fact, the late President Lyndon Baines Johnson in a White House announcement on June 28, 1968, said: "Without the National Council of Senior Citizens, there would have been no Medicare."

You can understand therefore that we are particularly grateful for the opportunity to present the views of the national council with.

respect to the administration's health insurance proposals particularly as they would affect the elderly and as they would cut back and weaken Medicare. The subcommittee is to be highly commended for its vigilance over the hard-won Medicare program and its perseverance in cutting through the formidable rhetoric to assess the claims of Medicare proposals.

The national council, having been born in the long legislative fight for Medicare, is greatly concerned with improving the Medicare program and safeguarding it from adverse proposals disguised as improvements.

CHIP-A MONSTROSITY OF MULTIPLE "SYSTEMS"

While I shall direct the major thrust of my testimony to the Medicare provisions of the President's proposal, I feel it essential first to assess the overall proposal labeled a Comprehensive Health Insurance Plan.

Why is it essential to look at the proposal as a whole? Because the goal of the National Council of Senior Citizens-and this was the goal enunciated by the 1971 White House Conference on Aging-is that health care for the aged be provided as an integral part of a coordinated system that provides comprehensive health services to the total population.

Under such a coordinated delivery system, everybody-rich and poor, old and young-would be assured of continuity of care for both short-term and long-term medical conditions. The system is concerned only with optimum care for the condition, not with the patient's age or finances.

And what does the President offer us instead? A monstrosity of multiple systems. "Systems," however, may be too kind a word since it implies organization. To administer the President's proposal would require a total of 154 systems in the continental United States alone.

Each of our 50 States and the District of Columbia would administer one bill-paying plan for the fully employed and another for those under 65 deemed to need assistance in paying their medical bills. These jurisdictions would still have to have a Medicaid program for certain benefits not otherwise covered, especially those essential to long-term care.

I am assuming in this count that all States would wish to cooperate in CHIP. But what if they didn't? Medicare would continue to be federally administered but the provisions relating to the low-income aged would, in effect, require that we then have two Medicare systems. And, of course, such a fragmented approach to the health needs of the Nation leaves outside the CHIP umbrella the separate health care systems of the Indian Health Service and the Veterans Administration.

Imagine the confusion as the individual goes from employed to unemployed status, moves up or down the income ladder, changes his State of residence, or celebrates his 65th birthday.

In short, the President has rejected the principal of a single universal system for all-old and young, rich and poor. Through an income test as well as the criterion of age, the White House proposes

various systems which would perpetuate invidious distinctions in health care and which, even in combination, would fall short of the goal of universal coverage.

CHIP FAILS TO PROTECT THE WORKING POPULATION

I have said that the National Council of Senior Citizens was born out of the fight for Medicare. I would stress that as an organization of older persons we would never have achieved Medicare were it not that the workers of America provided wholehearted support in the drive to push the program through the legislative process. Workersyounger and older alike-supported Medicare because they saw protection against medical costs in old age as an important right for their future retirement years as well as an immediate need for their aged parents.

Today, we of the National Council of Senior Citizens are equally concerned that the Nation embark on a national health insurance plan that will provide meaningful protection for workers and their families in their younger years as well as in their old age.

We find the President's proposal sadly lacking in this respect. This proposal does not protect against the medical costs that plague the average worker's family and too often serve as a barrier to timely care. As an example, according to an analysis recently issued by the executive council of the AFL-CIO, a family of four with an annual income of $10,000 would spend the following for health care in a year under the Nixon plan before receiving any benefits:

Premiums (35 percent of average premium of $475 a year)
Medicare tax (.9 percent of $10,000).

$166

90

Medical deductible ($150 per person, maximum of $450 per family).
Drug deductible ($50 per person, maximum of $150 per family) --

450

150

Total family expenses before receiving benefits under Nixon pro-
gram

-

Plus Employer premium (65 percent of $475 a year)_
Plus Employer share of Medicare tax (.9 percent of $10,000).

Total expenditures before eligibility for benefits under Nixon pro-
program

856

309

90

1,255

You will note then, total family expenditures of $856 plus employer premiums and employer's share of Medicare tax make a grand total of $1,255.

For the next $900 in medical expenses, the worker must pay $225. In other words, the Nixon plan would require an employee and employer to make a total expenditure for health-including premiums, taxes, deductibles and coinsurance, of $1,480 a year for $675 in benefits. Only after a family had spent $1.500 a year out of its own pocket for medical care-not including premiums or Medicare taxes-would 100 percent benefits be paid.

However, fewer than 2 percent of the people covered would have medical expenses in excess of $1,500 a year and, therefore, be eligible for full benefits. And the administration admits that 75 percent would not have medical expenses exceeding the deductibles and would not receive any benefits from the program in any given year.

34-275 (Pt. 8) O 75 - 3

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