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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. Foxg. 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

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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?

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

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?

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Mr. CRUIKSHANK. Well, you see, I don't support a health insurance program at all. I support a health security program, a program that plans for the health needs, and then plans to meet them.

And that would be very costly. It is costly now to the American people to pay their health bills, and I don't think it would be any more costly to provide a totally comprehensive complete health cost that is now being paid. In fact, somewhat less, and the total American health bill now is in the magnitude of $90 billion. I think we could do it for something less.

WHAT AMOUNT SHOULD GOVERNMENT PAY? Senator Foxg. The Government is not paying anything now for many, many of us as far as health insurance is concerned. We are paying it ourselves. Now, the Government is going to pick up a portion of this if it has this program. So, therefore, Government would have to get that money from somewhere. Government can only provide a certain amount, and this is what I am trying to get at: What amount should the Government pay for this program?

You know, we can write all kinds of insurance and we can provide all kinds of benefits depending on how much you are willing to pay.

Mr. CRUIKSHANK. Well, I think it's a little difficult to make this distinction, Senator, when you say Government should pay.

You see, Government would be in one sense, and one accounting method, be paying what flows from the employer and the employee tax.

If I understand your question properly, and please don't think I am trying to restate your question, it is: What proportion should come out of general revenues as opposed to what proportions should come out of a special marked tax?

Senator Fong. Yes; I'm trying to arrive at the amount of money. You stated that one-third of that should come out of general revenues. The $6 billion which is being proposed could take care of the needy, but is not sufficient for the kind of coverage that you want.

So on the kind of coverage that you are talking about, I was trying to see whether it projects into $12 billion or

Mr. CRUIKSHANK. It would be more than that, sir.
Senator Fong. $20 billion ?
Mr. CRUIKSILANK. It would be more than that.

I don't have estimates right before me. And if I might, could I supply those ?

(See p. 722.) Senator Fong. Yes.

Mr. CRUIKSHANK. I'd be happy to do it. I would be a little nervous about just picking out a figure right here, but I don't want to avoid your question. It is an important question. We all have to face up to it as part of the public policy which will have to be determined.

Senator Fong. Wouldn't it be better to start with something small and see where we go from there?

Mr. CruiKSHANK, I think we did that 8 years ago with Medicare.

Senator Fong. Well, that was for the elderly, but now we are talking about the country as a whole.

Mr. CRUIKSHANK. Well, the Congress may decide to start with a part of the program, but we would hope they would start in the right direction and not freeze us into something which would be very difficult to correct.

Senator Fong. You would eliminate insurance companies?

Mr. CRUIKSHANK. Yes, I think if you get frozen into that, you are in a bad way.

Senator Fong. Thank you.

Senator Muskie. Thank you very much, Mr. Cruikshank, for your excellent testimony.

Mr. CRUIKSHANK. Thank you, sir, and gentlemen.

(Subsequent to the hearing the following information was supplied :)

According to our projected revenue requirements of National Health Security, the program would cost $61.9 billion in calendar year 1975 and $65.6 billion in 1976.

Under National Health Security these funds would be derived from a one-half contribution from federal general revenues and one-half from a payroll tax on employees and employers.

As a result, the federal general revenues would be $31 billion in calendar year 1975 and $32.8 billion in 1976. However, it must be remembered that this figure does not represent net governmental outlays. The Federal, State and local governments are already paying billions of dollars for such programs as Medicare, Medicaid, Neighborhood Health Centers, and Comprehensive Health Planning, all of which would be very substantially reduced by our proposal.

Let me emphasize for the record a fact that I am sure is well known by the members of this Committee but has received practically no recognition in the public discussion of the various programs. That fact is that it is the American people who are going to pay out of their own pockets the costs of medical care and service which now run to about ten percent of our gross national product. To claim therefore, as the Administration claims, that the "cost" of their program is only in the neighborhood of nine or ten billion dollars and to contrast this figure with seventy or eighty billion dollars which, according to their estimates, would be the cost of Health Security, is utter nonsense. In the unhappy event that the Administration bill were ever to become law, who would pay the remaining ninety billion dollars of the health bill—who indeed but the American people?

The issue is not how many dollars are to be added to the consolidated budget by the inauguration of a comprehensive health program. The issue is how best to collect and channel the dollars necessary to provide a good health program. In fact it is not only conceivable but very likely that a seventy billion dollar Health Security program would actually cost the American people less than a ten billion dollar bargain basement program designed to pay only a fraction of the total of all the charges for health care leaving the balance to be paid by high deductibles and co-insurance carriers whose premiums would of course include the cost of advertising, sales commissions, profits, “retentions", and all the other gimmicks known to the insurance industry.

Senator MUSKIE. Our next witness of the morning is Cyril Brickfield, legislative counsel to the American Association of Retired Persons and National Retired Teachers' Association.

Mr. BRICKFIELD. Thank you, Senator Muskie. In order to save time, I have several documents that I would like to submit for the record. Rather than read them, I shall summarize them if that is agreeable.

Senator MUSKIE. That would be fine.

Mr. BRICKFIELD. The first thick document is our prepared statement. A lot of work has gone into its preparation, and we think it will be very helpful to the subcommittee.

Senator MUSKIE. We will include it in the record. 1

1 See appendix 4, p. 780.

Mr. BRICKFIELD. This second statement I was going to read, but if it is all right, I will summarize it.

Senator MUSKIE. All right.

Mr. BRICKFIELD. I will also ask my colleagues to address themselves to one or two important items we think the subcommittee should hear about.

Senator MUSKIE. Fine.

STATEMENT OF CYRIL F. BRICKFIELD, LEGISLATIVE COUNSEL,

NATIONAL RETIRED TEACHERS ASSOCIATION-AMERICAN ASSOCIATION OF RETIRED PERSONS

Mr. BRICKFIELD. Mr. Chairman, I would like to introduce those who are with me at the witness table this morning.

On my left is Theodore Ellenbogen, who was, for many years, Assistant General Counsel for Legislation to the Department of Health, Education, and Welfare.

On my right is James Hacking, and on his right, Laurence Lane, both of whom are associates of mine.

Mr. Chairman, Senator Abraham Ribicoff 1 of Connecticut, today, is introducing a bill which our associations have spent 2 years preparing

COMPREHENSIVE MEDICARE REFORM ACT He is calling it the Comprehensive Medicare Reform Act of 1974. We undertook this matter, Senator, in order to carry out many of the health recommendations of the White House Conference on the Aged. The recommendations, among other things, called for immediate legislation looking toward comprehensive health care for the aged. Because of that, and other reasons, we have developed this bill that Senator Ribicoff has introduced this morning.

my formal statement, I go over many of the statistics which you gentlemen have already heard. An important one is that Medicare is only covering 40 percent of the health care costs of the aged.

If you go back just 5 years, Senator, to 1969, it paid almost 46 percent. Its protection is decreasing. Each year it is covering less and less

. Something has to be done. Not only is Medicare paying for less of the costs of the elderly--but the elderly themselves have relatively less and less money. The average head of the family over 65 has less than half of the income of what the average family has today. So it cuts two ways, and both ways are cutting into them.

Out-of-pocket health care costs are rising and income-fixed retirement income-- is less for the elderly than what the average family has.

Our bill does two things. It makes the benefits for the elderly more comprehensive. At the same time, it tries to bring in, in a very responsible way, cost restraints,

In the area of benefits, we would introduce intermediate nursing care which is not in Medicare today. We don't require prior hospitalization which Senator Hartke just referred to.

In

1 See statement, app. 2, p. 766.

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