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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.



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

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


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).

$166 Medicare tax (.9 percent of $10,000) Medical deductible ($150 per person, maximum of $450 per family). Drug deductible ($50 per person, maximum of $150 per family)

Total family expenses before receiving benefits under Nixon pro

gram Plus Employer premium (65 percent of $475 a year)-

309 Plus Employer share of Medicare tax (.9 percent of $10,000).

90 Total expenditures before eligibility for benefits under Nixon proprogram

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.

90 450 150



34-275 (Pt. 8) 0 - 75 - 3

Even at that, not everything is covered. Specifically, services not under the Nixon plan for employees are physicians' charges in excess of fee schedules, physical examinations for adults, dental, and eye care for persons over 13, and extended care over 100 days. These costs alone would strap the budgets of many families.

The administration recognizes that the time is ripe for national health insurance, but it would merely attempt to patch up the present "nonsystem” in a half-hearted way. Primary reliance would continue to be placed on the private health insurance industry—the shakiest

— pillar in the whole health structure—thus inviting rising fees and increasing the profit bonanza for the insurance industry.

Nowhere has the President or his spokesmen indicated that this program would assure access to decent health care as a matter of right for all Americans.


Of more immediate concern to millions of elderly people in the country whose interests are the interests of the National Council of Senior Citizens which I represent is the effort reflected in the President's proposal to alter profoundly the basic purposes and concepts of Medicare.

That there are weaknesses and shortcomings in the Medicare program I would be the last to deny. And your charts, Mr. Chairman, have documented and illustrated this in an admirable way. But the President's proposals attack these shortcomings by compounding them rather than getting at their root causes and seeking a cure.

For example, surely one of the major shortcomings of Medicare is the fact that it leaves-as your chart demonstrates a significant part of the medical and hospital bill of the older patient to be paid out of his own income. The proportion of the total health care cost covered by the program has actually declined since its beginning due to increases in deductibles and coinsurance amounts, but more particularly as a smaller proportion of doctors have been willing to accept payment by the assignment method and have added more and more to their charges above the "reasonable charge” as determined by the law.

The Nixon proposal to meet this shortcoming is to add to the deductibles and coinsurance amounts resulting in even a smaller proportion of the total bill to be covered.

Again it is claimed the present program costs are excessive because hospital services are overutilized. The Nixon plan has a cure for that too: namely, to require the patient to pay 20 percent of each day's costs out of his own pocket above the $100 deductible subject only to the limitation on maximum liability. In short, make hospital care so costly to patients that they will plead with their doctors not to commit them to the hospital except in cases of urgent need. And when hospitalization is unavoidable patients would seek to be sent to the cheapest hospitals.

All this of course is further predicated on the notion that hospitalization is elective on the part of the patient. It undermines the concept that commitment to the hospital and the choice of the hospital should be primarily a medical determination that can properly be made only by the doctor.

The accompanying three tables illustrate the impact of these so-called "cost sharing" and "utilization control" devices for that portion of the Medicare covered population not eligible for incomerelated reductions.


Table I shows the out-of-pocket costs under the existing Medicare program for covered medical and hospital services by size of medical service bills and number of days in hospital at $110 per day.

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Table II shows the out-of-pocket costs for the same services under the Nixon proposal.

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Table III simply translates the data of tables I and II in terms of percentage increases (or decreases) in out-of-pocket payments under the Nixon Medicare proposal as compared to those under the present Medicare program.


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Under table I, take a person with 10 days in the hospital with a $400 medical bill, he would today pay out-of-pocket $212 under the present program.

Follow those same axis in table II, the Nixon proposal of $400 medical bill and 10 days in the hospital, he would pay not $212 but


And when translated into percentage that means it is a 79-percent increase in his out-of-pocket expenses.

A person with a 20-day hospital $200 medical bill would, under the present program, pays $172. Under the Nixon program, $560, or 225.6percent increase in out-of-pocket expenses.

These tables make it clear that only those persons experiencing catastrophic health costs would be better off under the President's proposals. Such cases represent a very small proportion of the total number of persons covered under the program, as according to your charts, Mr. Chairman, about 1 percent.

Insurance, whether private insurance or social insurance, should be designed to protect the great majority of the covered population against the most common risk, rather than just the exceptional cases.

I remember, gentlemen, sometime ago seeing in the New Yorker magazine an excellent illustration of just what I am talking about.

It was a cartoon of a man reading over his medical insurance policy. He said to his wife, “Look, honey, we get $50,000 if we are run over by a heard of elephants on Fifth Avenue." (Laughter.]

That is just about what the Nixon proposal does. If something happens to you that happens to less than 1 percent of the people, you get a little better protection.

Senator MUSKIE. Mr. Cruikshank, wouldn't it be accurate to say that depending on what is the definition of catastrophic, not all of those who suffer catastrophic expenses are covered by the Nixon administration's proposals?

Mr. CRUIKSHANK. That is exactly right. Mr. Glasser pointed out very effectively, I thought, that for low-income people even these $300– 400 costs can be catastrophic, and they would not be covered under the Nixon proposal.

You are quite right, sir. The President has described his program as one which "improves" Medicare, but its guiding principle seems to be to take a lot from a great many in order to give a few people very little.



It is obvious that many of the elderly presently under Medicare could not possibly pay the drastic increases in cost of care indicated in the accompanying tables. It was apparently obvious even to the administration that provision had to be made to help the low-income groups. This was done by making further changes in the program to provide sliding scale deductibles, coinsurance and premiums based on

The National Council of Senior Citizens has long led the fight for adequate protection against the medical costs that plague so many of our low-income elderly. But we want this protection through an expanded social insurance system that respects the dignity of the individual without subjecting him to an income test.

In contrast, the President's proposal undermines the basic purposes and principles of Medicare in three very significant ways.

First, the main reason for the enactment of Medicare was to give to the elderly, most of whom are retired, the same basic insurance protection against the costs of illness and the indignity of a means test that

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