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Mr. LANE. Yes, sir; I would just make several comments briefly. Probably one of its greatest areas of success of the Senate Special Committee on Aging has been in the area of extended care. And, in particular, one of the major accomplishments which this subcommittee cooperating with the subcommittee on Long-Term Care was able to get through the 92d Congress in the passage of Public Law 92-603 was to get some meat into the definitions within section 1861 of the present law.

One of the areas where we did get some substance was to require disclosure of ownership, and I must say that it is a very minor point when you look at this bill. However, when you come on third in a list of witnesses, you are looking for some new things to say.

One of the things that really bothered us, and I think it bothers others in this room-Val Halamandaris, I know, feels this way-is in the list of definitions on skilled nursing facilities they deleted the requirement that was imposed by Public Law 92-603 on disclosure of ownership.

In response to our question on home health care services, we received the answer from the Department of Health, Education, and Welfare "Oh, the fact that we dropped 100 days of home health care were just an oversight."

Senator, we can't believe that they dropped the disclosure requirement on skilled nursing care as an oversight because all they needed to do was to photostat that page of the statute, and it would have read in sequence.


You don't go from No. 9 to No. 11. As it relates to home health services, if I may just add another comment, we feel that the administration's bill falls way short. Our associations are very pleased with the leading effort that you have been giving in the area of home health care to improve services, to expand services, and to make that section of the Social Security law of the Medicare section have substance. I might add that in the piece of legislation which we have drafted, which Senator Ribicoff is introducing, we provided for unlimited home health services-in many ways copying what your committee has suggested was needed.

One other deletion in the administration's bill is in the definition of physician's services, the administration's bill drops even the limited provision for chiropractic service that was put in for us by Public Law 92-603.

I would suggest that the members of this committee might wish to very carefully review those definitions when you make your recommendations to the Senate Finance Committee.

Somehow in those definitions some of the things that have been done already seem to have disappeared.

We can't believe that all of them were by oversight.

Senator MUSKIE. Thank you very much. You have given us a great deal to digest, and I am sure it will all be very helpful.



May I say that on the question of finding something new to say, that repetition in this field is often as useful as something new, so we ought not be overly concerned. But I understand what you are saying.

I have just three or four questions that might be helpful for you to respond to.


On page 94 of your detailed statement, you mention a criticism of CHIP: The lack of standards for the promulgation of regulations by the Secretary regarding State reimbursement standards which, in your words, "seems to be an unwise abdication of responsibility."

Could you enlarge upon the possible consequences of this?

Mr. HACKING. Yes, Senator, as I said earlier, without describing in the bill procedure for reimbursement and the standards to be used, there is nothing there on which to base reimbursement. I think the end result is going to be an exacerbation of the problem we've been having throughout the Medicare period with rising costs-especially, rising hospital costs.

The administration's bill would apparently wipe away all the standards that are presently in the Medicare law.

The "reasonable costs"-the "reasonable charges"-standards and all that goes with it-it's just wiped away in the case of the Federal health care insurance programs in certified States.

In noncertified States, I would assume that the existing standards would continue to apply. They are going to have tremendous administrative problems where you may have different reimbursement procedures for different States-and, indeed, different reimbursement procedures functioning in the same State. The whole thing just couldn't possibly work without uniformity across the entire country.

I think that the administration has not considered this matter as well as it should. I certainly hope the Congress would before this particular bill begins to move along.

There are other problems that will arise because of this lack of uniformity. The fate of the disabled is a great concern of ours, and we make several points about it in our prepared statement.

We thought we were making some progress by extending Medicare coverage to some of the disabled. We also hoped that when some statistics were available as to what the cost of covering the disabled would be, we would be able to expand and extend that coverage.

But this particular bill would leave them under the assisted health care insurance programs in certified States provided that those certified States decided to establish such a program.

But there is nothing in that bill that requires as a condition for certification that a State establish such a program.

Since the disabled are not covered under the Federal Health Care Insurance program which would apply in certified States, but a certified State decides not to establish an assisted health care program because it doesn't think the Federal grant is adequate, then the disabled are without protection-even those disabled who are presently covered with Medicare.

Mr. LANE. Senator, I would add that I believe we have learned from Medicaid that sometimes this did not work, leaving it to the States.

The requirements written into the original Medicaid law have since been deleted the requirements of keeping care up, requirements of having a program in full.

Those requirements when it gets down to the cost analysis at one point or another get amended so they no longer have any merit. This has happened with Public Law 92-603.


Senator MUSKIE. You seem to have the same evaluation that Mr. Cruikshank has. What this does is create more than 50 systems that would probably insure inadequate protection and fragmentation of the program.

Mr. Ellenbogen, I just want to emphasize a point you raised. If a person pays payroll tax in the State of Michigan, then moved to a noncertified State, would he be entitled to nothing?

Mr. ELLENBOGEN. Under the new Medicare? That's exactly right, so long as he remains in that noncertified State, but he would be entitled to benefits under the old Medicare system that the bill would continue in such States. But the Hospital Insurance Trust Fund under the old program would not be replenished from earnings in Michigan if that's assumed to be a certified State.

First of all, the new section 1831 says: "The Secretary shall establish a Federal health care benefits program"-that's on page 27 of the bill-under which an individual residing in a State certified by the Secretary under section 1861 would enjoy entitlement to the new program.

Then the effective date provision, on page 104, says in effect:

Notwithstanding the general effective date provision, the provisions of title XVIII of the Social Security Act as in effect prior to the enactment of this act shall remain in effect on and after January 1, 1976 with respect to individuals entitled to hospital insurance benefits under section 226 of the Social Security Act as amended by this act.

Note that this bill amends section 226 so as to limit entitlement to the old Medicare, which is based on section 226, to individuals residing in a noncertified State.

So, going on here: shall remain in effect on and after January 1, 1976 with respect to individuals entitled to hospital insurance benefits under section 226 of the Social Security Act as amended by this act, "and wages and self-employment income earned in States not certified by the Secretary under section 1861 of the Social Security Act, as amended by this act." The phrase I have quoted with respect to earnings in noncertified States would have the effect of continuing to earmark the taxes on those earnings for the present Hospital Insurance Fund, from which part A of the present Medicare program would continue to be financed. Whether such financing would then be adequate is, of course, speculative.

But individuals while residing in States other than those certified, could come in only under the preexisting Medicare program, no matter in which State the qualifying wages were earned.

So if they have moved from State to State, some States certified, some not, this might seriously adversely affect their rights.

It would create a rather confusing situation in addition to the inequities that would arise, and may raise constitutional questions. Senator MUSKIE. You certainly would need a lawyer. [Laughter.] Could I ask some questions about your plan? What role would insurance companies and fiscal intermediaries have in your plan?

Mr. BRICKFIELD. Do you mean the Senator Ribicoff bill?
Senator MUSKIE. Yes.

Mr. BRICKFIELD. There will always be need, we feel, for supplemental insurance coverage. While our bill goes a long way, even under it there will be need for supplemental insurance coverage because of its copayment features.

Of course, as you know, when Social Security was enacted in 1935 many thought that we wouldn't need pension systems. Well, we need more pension systems than ever.

When Medicare was enacted in 1965, they thought that this would do away with supplemental insurance provided by the insurance industry. It hasn't done that, Senator.

What it has done is bring about an awareness on the part of people for better and more medical care.

As long as that concept exists, we feel that there will be a need for supplemental insurance. And I will tell you that our associations would hope to provide, or make available, or recommend, highquality supplemental insurance in the health care field.

Mr. HACKING. Senator, could I supplement Mr. Brickfield's answer? Senator MUSKIE. Yes.

Mr. HACKING. Besides the risk-bearing function of private insurers to which Mr. Brickfield was addressing himself, our bill would in administering coverage and so forth, also use private insurers as fiscal intermediaries in much the same way as they are presently used for Medicare in the administration of the Medicare program.


Senator MUSKIE. With respect to your program again, I understand that you also impose a means test. Do you feel that bers would not oppose such a test?

your mem

Mr. BRICKFIELD. I will let Mr. Hacking answer that, Senator. We don't think it is semantics; we think it's an income test rather than a means test. But I would defer to Mr. Hacking.

Mr. HACKING. Senator, the bill that was introduced today is really the second version of our bill. In 1972, we had a health care bill that provided benefits very similar to those in our bill today; benefits constituting comprehensive protection for the elderly.

At that time, of course, the disabled were not covered under Medicare. So our bill was directed at older persons age 62 and over.

That bill was S. 4101. It was introduced by Senator Pell and did not contain any cost-sharing features. We felt that every older person should have a right to comprehensive health care without this combination of deductibles, coinsurance, and premiums that is presently in our Medicare law.

We found however, that as a political and legislative reality, we could not, without great difficulty, get anyone to sponsor that bill.

Many Senators and Congressmen we approached felt that, in return for comprehensive protection, the aged should pay something.

For others, the cost was simply too high. The added cost to the Federal Government under that first bill would have been something in the neighborhood of $19 billion.

The individuals that we approached, seeking sponsors, simply thought the cost was too much or thought that the cost should be shared.

We decided we would work on a second bill. We wanted to do that because we felt that in all the discussion about national health insurance legislation, the aged were being overlooked.

People were saying, "Well, they've got Medicare."

We felt a strong need to focus some attention on the aged and disabled. So we worked out a second bill.

We wanted to have it receive legislative consideration. We wanted it to be something that would generate some discussion of the health care needs of the aged by the committees of Congress with jurisdiction over that kind of legislation.

We felt it necessary therefore to introduce some sort of cost-sharing features. We looked at what others have done. We looked at H.R. 1, and we looked at the Kennedy bill, and we looked at some of the other bills that have come along like the Long-Ribicoff bill.

These bills contain catastrophic protection benefits. Most often, catastrophic benefits are defined in terms of income. In most of those bills a catastrophe is viewed as a relative thing and defined in terms of income.

So we put in a test for purposes of the catastrophic feature-you may want to call it a means test, if you like I prefer to call it an income test, and I prefer to call it that because it defines what a catastrophe is with respect to different categories. The "test" is used only for the purpose of the catastrophic feature. Our "test" has nothing to do with eligibility for coverage as is normally the case with

a means test.

I would also add this: our bill in its financing would use a number of different methods. It would use some payroll tax contributions, but it would also use a substantial amount of general revenues. We think this is the way we should be going.

And we think that to the extent you get away from the payroll tax manner of financing, and get away from insured status under Social Security for covered services, you can also get away from this rigid adherence to this principle that there should be no means test in a social insurance program. If our bill is social insurance, it is social insurance in a very diluted form.

We are going to use general revenue contributions to a substantial extent. We don't think it is too much to ask that the elderly and the disabled should be somewhat responsible for part of the cost by contributing something for the comprehensive care they receive.


We do, however, think that a low-income person should not have to pay anything. Consequently, our catastrophic protection benefit

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