I would like to insert in the record a statement which we received from Andrew Biemiller, director, department of legislation, AFLCIO as to what the administration does in regard to Medicare:

[The statement follows:]

MEDICARE

The Administration would modify Medicare to make its benefits conform with the mandated program; however, only those Medicare beneficiaries unlucky enough to have a very serious illness would receive improved benefits. Most Medicare beneficiaries would be worse off:

At the present time, a Medicare beneficiary hospitalized for 12 days pays $84 out of his own pocket; under the Nixon proposal he would pay $342.

For a 30-day hospital stay, a Medicare beneficiary now pays $84; under the Nixon plan he would pay $750.

A Medicare beneficiary who does not need hospitalization now pays an annual deductible for physician services of $60 a year; under the Nixon plan it would be $100 a year.

The present premium for Part B is $6.30 a month; under the Nixon plan it would go to $7.50 a month.

The present Medicare tax-1.8 percent of income up to $13,200 a year shared equally by employee and employer-would remain. The Medicare program would continue to be administered by private insurance companies.

Additionally, there is a complicated means test formula to determine eligibility of Medicare beneficiaries for reduced premiums and cost sharing. Thus, Medicare would be transformed from a dignified social insurance program to a demeaning government welfare program for many of the elderly. And because the disabled would no longer be covered under Medicare in the Nixon bill they would all be forced into a welfare program.

MINIMUM BENEFIT A NATIONAL DISGRACE

Senator HARTKE. But the Hartke-Hansen bill does not deal with that. Let me say, as far as the elderly are concerned, I think I am willing to stack my record against most anyone there.

I am for eliminating the earnings limitation at the present time. In addition, a minimum benefit of $81 a month is a national disgrace. Some widows don't even get $81 a month.

Failure to cover prescription drugs is also an atrocity which should be eliminated. We ought to have hearing aids, eyeglasses, and false teeth covered under Medicare.

We need additional outpatient treatment and something to be done in relation to this requirement that they have to go to the hospital first before they can go to a nursing home-some new utilization in these fields.

I think we need to have full coverage of psychologists' services. I think aggressive taxation is absolutely going to destroy the Social Security system among the younger people who are absolutely going to rebel if they have to continue to pay more in a lot of cases on Social Security tax than they do on Federal income tax.

Now, having said all of these things, let me also make a point that in the Kennedy bill, the Hartke-Hansen bill, the Ribicoff-Long bill, the administration bill, the McIntyre bill, and you name it, not a one of these bills, in any form, really directs itself toward the problem which is called for.

And that is an improvement of the health delivery service. And I say that anyone who tells you that it does is absolutely misleading the American people. That is not true.

All these bills do is: mechanisms of insurance to pay the bills. That's all they do.

I say that the Kennedy-Griffiths bill just skims $1 billion off the top for a program which is completely undefined. They say they are going to improve the health delivery service with $1 billion, and that is not a way to go.

You first ought to devise a program under the terms of your philosophy and then go ahead and pay the money. You shouldn't go the other way around. It should not be "Let's put the money in and hope to God that somebody comes up with a program"-that will get you into all kinds of trouble.

I am not unbendable as you all know, but I think those people who say the Kennedy-Griffiths bill improves the health delivery service absolutely are misleading the American people.

Now would you care to comment?

Mr. CRUIKSHANK. Well, sir, I would have to disagree with you in respect to the Kennedy-Griffiths bill. We have participated in very farreaching studies on this. I don't suppose we could settle it here but I think there is a difference in kind in the Kennedy-Griffiths bill.

It is not an insurance bill. It is in fact, the very name of it- -a health security bill. It is not just a bill-paying mechanism. We are

amenable

Senator HARTKE. A regressive form of taxation?

Mr. CRUIKSHANK. In a very small way, only very minor, payroll taxes are involved and it would reduce the amount of the overall payroll tax.

THE CONTRIBUTION PRINCIPLE

And as far as that is concerned, I think that there is an important aspect to the contribution. We believe in support to the health system out of general revenues in a very substantial way. But we believe the beneficiary should also contribute to the system directly.

We would agree with you on reducing the payroll tax on the cash benefit side of Social Security by supplementing it out of general reve

nue.

But we would not wish to see general revenues take over the whole cost because I think a part of the whole concept and the acceptability of the program is that the entitlement to benefits is bottomed on the beneficiary participation in meeting the costs.

Senator HARTKE. Let me ask you a philosophical question.

Why is it fair to go ahead and pay for war machinery on a basis of a graduated income tax and not pay for the care for the elderly in the same way? Is the war machinery more important than the elderly? Mr. CRUIKSHANK. No, sir, I don't think so at all. But there is, in our Social Security structure, there is-it's a social insurance program and people are insuring their income against the contingency of a loss due to retirement, disability, or death in the family of the breadwin

ner.

And the participation in that cost through the contributory system is the thing that saves it from the means test. I don't think Congress is yet prepared to give people an entitlement to liberal benefits as a

matter of right without proof of need when it is all met out of general

revenue.

I think it should be a three-way participatory system: partly general revenues, and partly employer, and partly employee.

Senator HARTKE. Let me come back to the question I asked a moment ago. Could you really define in the bill, the Kennedy-Griffiths bill-I admit that the other bills-not admit, I contend that they do not change delivery system. I contend the Kennedy bill does not. Will you tell me how it does? How does it improve the health delivery system?

NEED FOR WELL-DEFINED PROGRAM

I think if you are going to spend a billion dollars, that is a thousand million dollars of the people's money, that you ought to have a welldefined program of how it is going to improve the health delivery service.

Mr. CRUIKSHANK. Well, sir, just as briefly as I can, it starts out with the establishment of a health program in service areas with the available funds to be made available to the providers of service on a budgeted basis, not just insuring the payment under the existing program, but it sets up a health delivery system and then provides a method for paying for it.

Senator HARTKE. Which is then going to be in direct conflict with the present system.

Mr. CRUIKSHANK. No, sir.

Senator HARTKE. To supplement it?

Mr. CRUIKSHANK. There might be some residual outside of the system remaining, but not a whole

Senator HARTKE. Let me explain that to you. You mean you are going to have a system out here which is going to be paid for by the Government and it is not going to be in competition then with the other system?

Mr. CRUIKSHANK. It would be paid through a Government mechanism.

Senator HARTKE. The result is you have a direct conflict. And I will guarantee you that if you could get the same type medical treatment free that you would go and pay for then people are going to go where it is free. Why not take over the whole medical system?

Mr. CRUIKSHANK. I said it would take over a major part of it, but I think there might be some residual as there is in the British health service system. There are some people who still work outside.

Senator HARTKE. Let me say in closing that I admire you, Mr. Cruikshank, but I think that is a path in which you absolutely kill any chance of having any national health insurance-because what you are saying is: "I don't think the American people are prepared to have a duel system of medical delivery in this country."

Maybe you think they are, but I'm telling you I don't think they are ever going to buy that concept. And, in effect, if we pursue that policy, we will get nothing. I think it is high time that, as an industrialized Nation, we make that change.

Mr. CRUIKSHANK. Well, the last thing they want, sir, I agree the last thing we want is a dual medical system.

Senator HARTKE. All right, thank you.

Senator MUSKIE. Senator Fong.

Senator FONG. Mr. Cruikshank, I am sorry I was not here to listen to you all the way through your statement to give me an idea of what you were thinking about.

ELIMINATION OF INSURANCE COMPANIES

May I ask: I have heard that you indicted the Nixon plan-saying that it was just helping the private insurance companies. Do I take it to mean that you want a national insurance health program without the insurance companies?

Mr. CRUIKSHANK. Yes, sir, I think that the participation of commercial insurance has, for more than 65 years, been a negative aspect of our whole health system.

Senator FONG. So you would eliminate the insurance companies entirely and set up a national insurance system?

Mr. CRUIKSHANK. Yes, sir, I would. I would set up a national health delivery system, not on the insurance basis. In a sense, sir, I would eliminate both private and public health insurance.

I don't think that insurance is the proper way to meet our health problems. Now I supported Medicare. That is an insurance system. But I believe that we have moved beyond that. I would like to see a system that analyzes the health needs of the people and then devises a program for meeting that health need rather than just a system which provides money to pay for the present sytsem.

Mr. FONG. I see. So you would have to set up what the services would be.

In your estimation, what should be the minimum service that should be given to the individual?

Mr. CRUIKSHANK. Well, I think you have to have a complete and comprehensive service, I think, starting with preventive care.

You have the models that are now existing in prepaid group practice plans, such as the Kaiser plan, such as Group Health Association.

I believe such operations could be done under the aegis of Government, but using the present privately owned and privately operated medical care services. We wouldn't have to take those over. We wouldn't have to have a Government system.

The Government program could use the existing health facilities. and health personnel.

Senator FONG. In other words, you would just take money and pay over to the present deliverers of

Mr. CRUIKSHANK. I would pay for services rather than reimbursing for the cost of services on an insurance system.

Senator FONG. You would fund this by a three-way funding, that is, by the employer, the employee, and the Government?

Mr. CRUIKSHANK. Yes, sir.

Senator FONG. Under those circumstances, how would you divide the cost?

TOKEN COST FOR EMPLOYEES

Mr. CRUIKSHANK. Well, I think there should be a lesser cost for the employee, more or less a token cost, a larger cost for the employer as he now pays under private plans that are negotiated-a larger share.

Most health plans that are now negotiated are what are called noncontributory with the employee paying nothing directly.

Now whether he pays indirectly or not-as this is a part of a total wage cost is very difficult to decide. But he would pay a token part of a payroll cost, and the employer pay a larger percentage of payroll costs, and the Government pay a larger proportion-roughly, a third. Senator FONG. A third each?

Mr. CRUIKSHANK. Yes, sir.

Senator FONG. Could you estimate the amount that would be paid by the Government?

Mr. CRUIKSHANK. In dollar amounts, I wouldn't be prepared to now. We have the figures and-but while we are dealing with these costs, sir, I would like to point out, if I may, that there is a fallacy that runs through many of these things.

The administration, for example, I think said that their plan would cost something like $6 to $7 billion a year, and they contrasted the Kennedy plan and said I think it would cost $70 billion a year.

Well, this is on the assumption that the only cost to the American public is what is paid through Government. It costs the American people for health services, whether they pay it in terms of contribution to a public system or they pay it out of pocket.

Both plans, I believe, would, in the initial years, cost roughly the same. I think, down through the years, a plan of health security such as the Kennedy plan would cost less because it would have an emphasis on preventive services and preventive care that the Nixon plan does not have.

It is very difficult to make those exact estimates but I want to emphasize very strongly the point which should be very obvious, I believe, that it cost the American people for medical service every cent they pay out to a private health insurance concern, or that they pay out of pocket to the nurse as they leave the doctor's office-or as they pay out a hospital bill-that is a cost to the American public, whether it goes through a Government channel, or whether it doesn't.

So when you compare the two programs and say one costs $6 billion and the other costs $70 billion, you are not making the same comparison at all, on the same basis.

Senator FONG. What you are saying then is that the total cost runs the same regardless of who pays it?

sir.

Mr. CRUIKSHANK. I think those estimates are roughly the same, yes,

Senator FONG. But the administration proposal says that the Government should only pay $6 billion of it, and you have railed against that program as not sufficient-a $6-billion contribution by the Government to this program is really not sufficient?

Mr. CRUIKSHANK. Yes, because there is a lot of waste in it. A lot of those billions of dollars would go to insurance company profits, and go to the costs of advertising, competition, agents' fees, retentions, all of the other things that are packed into an insurance policy.

Senator FONG. Yes; now, if $6 billion is not sufficient to run the proposal presented by the President, and you say that that proposal would not deliver enough services, then how much more would you say that Government should contribute over the $6 billion to get a national health program going?