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 FONG. 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. CRUIKSHANK. 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 34-275 (Pt. 8) O 75 - 4 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. ASSOCIATION-AMERICAN STATEMENT OF CYRIL F. BRICKFIELD, LEGISLATIVE COUNSEL, 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. 1 Mr. Chairman, Senator Abraham Ribicoff 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. In 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. 1 See statement, app. 2, p. 766. We include dental care, eyeglasses, hearing aids, many of the things which the Senator from Indiana just mentioned. We have in our bill expanded mental health care, neuropsychiatric care, whatever you want to call it. And we have in our bill catastrophic care. CATASTROPHIC CARE And as I believe Mr. Cruikshank and Senator Fong pointed out, catastrophic care can be a sometimes thing. One is covered by catastrophic care provided the services which one receives are covered in the law. For example, if intermediate nursing home care is not covered in the law-and the Nixon bill does not cover it-then catastrophic care does not come into play. You cannot incur $750 and continue to get intermediate nursing home care because it's not a covered service under the Nixon bill. So catastrophic care is a great thing but one must be careful to make certain as to what, in fact, it covers in the way of benefits. In the area of restraints, we provide in our bill-the Senator Ribicoff bill-for prior approval of hospital budgets, and also for negotiated fees for physicians. The thrust is to keep costs down. As you brought out this morning, Senator, and Mr. Glasser, too, our prior approval of budget cuts across the entire medical delivery system and it includes the hospitals, the nursing homes, the HMO's, and other facilities. Also, in the area of cost restraints, the Ribicoff bill provides for HMO's and seeks to emphasize preventive care, and out-of-hospital treatment. It also provides-and I think this is most important-home health services. If you would permit me to digress for a moment, I would like to describe the circumstances behind your organizations' 2-year effort in the development of our own health legislation. This bill, the Medicare Amendments of 1974, is scheduled to be introduced this morning by Senator Abraham Ribicoff of Connecticut. With the prospect for enactment of national health insurance legislation in the immediate future in serious doubt because of fundamental disagreements over the comprehensiveness of benefits, the means of financing and delivering those benefits, the degree of Federal involvement, the nature and extent of cost sharing, and the nature of catastrophic protection, our organizations, acting on the recommendation of the 1971 White House Conference on Aging for immediate legislative action to provide comprehensive health care protection for the aged, developed the Medicare Amendments of 1974. This is our contribution toward the ultimate national goal for quality health care for all Americans. Our bill is designed to reverse the present trend of declining Medicare protection and increasing out-of-pocket health care expenditures by reducing or eliminating the durational limitations on items and services already covered under present law, covering additionally needed items and services, and replacing existing cost-sharing devices with a single rational system of copayments subject to a catastrophic protection feature related to income. While providing comprehensive health care protection for this Nation's aged and disabled, it would also confront directly the problem of escalating health care costs by completely reversing existing reimbursement procedures. Under our bill, Medicare charges by an institutional provider (such as hospitals, et cetera) would be approved for a year in advance on the basis of prospectively approved budgets and schedules of charges derived from those budgets. In the case of most noninstitutional providers (such as doctors and other licensed practitioners) reimbursement would be made on the basis of negotiated rates. At this point, Mr. Chairman, I would like to bring to your attention the copy of our organizations' prepared statement. This document not only discusses our bill, but contains in parts 5 and 6 our analysis and criticisms of the Comprehensive Health Care Act from the point of view of the aged and disabled. [See app. 4, p. 780, for prepared statement.] In outlining what we have attempted to do in this prepared statement, I would ask you to turn to the table of contents. Part 2 of our statement is a statistical description of this Nation's health care needy-the aged and disabled. We have demonstrated statistically that, despite rising income from 1965 to date, a substantial percentage. of the aged (18 percent or almost 4 million) remain below the poverty level and that the aged still have far less disposable income for the purchase of heath care protection than do the nonaged whose income rose more rapidly over the same period.1 We also demonstrate that the aged, facing a higher incidence of illness and disability, are most in need of adequate health protection.2 DECLINING HEALTH CARE PROTECTION 3 In part 3 of this statement, we have undertaken to demonstrate the declining health care protection being provided by the Medicare system in the face of rapidly escalating health care costs and to suggest that part of that escalation has been stimulated by the very nature of the Medicare system. We have also undertaken to demonstrate the obvious consequence-substantial increases in out-of-pocket expenditures for health care on the part of the aged. Our conclusion is that health care legislation for this Nation's health care needy must, on the one hand, provide comprehensive health care protection, and on the other, deal directly with the problem of rising costs. That the Medicare Amendments of 1974 carry out these objectives far more effectively than present law is the thrust of part 4. In part 5, after presenting a description of the administration's Comprehensive Health Insurance Act of 1974, we demonstrate how this major legislation fails to meet the dimensions of the health care needs of the aged and disabled. As this subcommittee is well aware, Medicare's health care protection over the years has fallen to the point where, in fiscal 1973, only 1 Prepared statement, pt. 2, p. 5. In 1972, households headed by an aged person had median income of only 42 percent of the national family level. 2 On a percentage basis, the medical bill for an aged person in 1973 was $1,044; for the nonaged, $553. 3 Prepared statement, pt. 3, subpart B, cost experience under Medicare from the point of view of the provider, p. 12. |