Page images
PDF
EPUB

Appendix 2

STATEMENT BY SENATOR ABRAHAM RIBICOFF, MARCH 12, 1974

COMPREHENSIVE MEDICARE REFOR ACT OF 1974

Today I am introducing the Comprehensive Medicare Reform Act of 1974. This legislation is the culmination of two decades of efforts to provide full health insurance protection for older Americans.

In 1961, following a Cecade of debate on health insurance for the aged, the new Kennedy Administration took an active leadership role in bringing the Medicare debate to legislative reality. As Secretary of Health, Education and Welfare, I headed a task force to draft a Medicar bill. While Congress rejected it in the early 1960s, Medicare became law in 1965. As a Senator and a member of the Senate Finance Committee which shapes such legislation I was proud to play a role in developing and supporting Medicare.

Medicare was a major breakthrough in assuring a measure of health protection for one segment of the population. Because it was a new concept, however, Congress limited its coverage. It was, in fact, a financial program to help meet some of the costs of short-term and acute medical care.

Since its enactment in 1965 we have found that the program should be improved and expanded. I have suggested expanding its coverage in a number of ways. Since 1965 we have expanded Hedicare to cover all disabled persons, those who have chronic kidney conditions and many more Its services have likewise been expanded to cover a wider range of non-hospital items.

At the same time we have found a need to curb costs and abuses under Medicare. Major oversight hearings which we held in 1969 led to improvements in the administration and cost control mechanisms of Medicare.

Since Medicare's inception in 1965, I have watched its progress and participated in its development at every step of the way.

It is time to change the Medicare from a limited financial program to the program which we originally envisioned--comprehensive national health insurance for all older Americans.

The Medicare program I envision is one which provides a range of care from preventative and diagnostic physician's services to the most acute hospital care. Nursing home, home health care, dental care, eye care, hearing care, prescription drug coverage are just a few of the areas which should be covered. In short, Medicare should be a balanced program which encourages the best kind of care with the greatest possible freedom of choice for the patient. And it should be a program that provides reasonably for all the providers in the system--hospitals, doctors and others and at the same time is efficiently administered at the smallest possible cost to the government.

The American Association of Retired Persons/National Retired Teachers Association has played a leading role in the development of this legislation. The legislation, which has been developed over the past two years, reflects their tireless efforts. The proposal also reflects the recommendations of the 1971 White House Conference on Aging and recommendations made in recent years by one of America's leaders on issues affecting older Americans, Nelson Cruikshank.

PRIORITY ON HEALTH CARE PROTECTION FOR AGED

In dealing with programs to provide comprehensive health coverage for all Americans at a cost which the taxpayers can afford, priorities must be established as to who should be covered.

The population over 65 is in most need of protection. For the most part their income is limited and the costs of illness for them is higher than for the population as a whole.

At the turn of the century there were only three million older persor. every 25th American. Since that time, the older population has grown faster than the rest of the population. Today there are over 20 million senior citizens--every 10th American. By the year 2000, every ninth American will be over the age 65. It is not a static population. Every day, 4,000 Americans reach age 65.

Unfortunately, however, the median income of older families and individuals is less than half that of their younger counterparts. While the Social Security benefit increases of recent years have had a dramatic impact in reducing poverty for older Americans, over 2 million older Americans were living below the poverty threshhold in 1973.

Thus,

Most older Americans depend on Social Security. But Social Securit benefit increases are too often negated by the tide of inflation. while the Department of Labor estimates that a minimum low budget for a retired couple is $3,442 a year, social security benefits are $118 a year under that bare bones minimum budget.

There are also an estimated additional 2 million aged persons who, while not classified as poor because they live in families with incomes above the poverty line, are in fact poor. In sum, while the aged make up 10% of the population, they make up 20% of the poor. If you are old, you are twice as likely to be poor.

As might be expected, older people, because they have half as much income as younger people, are forced to spend half as much. They must stretch their food, clothing, rent and medical dollars much farther than the non-poor. Proportionately, older consumers spend more of thei income on these items than do those under 65.

The problems of income are complicated by problems of health. Older Americans have less money but more health problems. Eighty-five percent of those who are over 65 and have at least one chronic condition Eighty percent have some degree of arthritis. Dental problems, hearing and eye problems and the need for prescription Crugs all increase with old age. Drug costs for older Americans, for example, run three times higher than for the younger population. Charges for prescriptions range up to 67 higher per prescription for older people, mainly because they often need expensive maintenance drugs.

The major chronic diseases among older persons-heart disease, cance: strokes, arthritis, diabetes are costly to older Americans not only in terms of invalidism and pain but also in financial terms.

At the same time that older Americans need more health care, real growth in health care utilization for the elderly has not kept pace with other age groups in recent years. The elderly in America are not utilizing the full range of health services they need because they can't afford to. They are economically forced to wait until they need acute inpatient hospital care. The economically disadvantaged aged population is further discouraged from obtaining health care because they are concentrated in urban centers and rural areas - often geographically distant from health service areas.

MEDICARE PERFORMANCE

Until 1965 older Americans had to depend almost exclusively on their own resources for health care. Since the enactment of Medicare, the federal government has assumed a portion of the medical costs of older Americans.

During fiscal year 1973, the Nation spent $94.1 billion for personal health care. Persons aged 65 and over accounted for 28% of this cost, although they make up only 10% of the population.

The average personal health care outlay for the total population was $441.00 in fiscal 1973. For the senior citizen it was $1,000.00.

Despite increases in government and other third party sources such as Medicare, average out of pocket payment by aged persons was $276 in fiscal 1972, three times the amount paid out of pocket by non-senior citizens. This $276 out of pocket cost is higher than the amount paid for health care by older Americans at the start of 1966 ($234) before Medicare was enacted. As costs have risen then, Medicare is picking up an ever smaller amount of the older Americans' health costs. In 1969,

Medicare paid 46% of their health bill. Today it pays 42%.

The decline in Medicare's share of the health bill of the aging is related not only to inflationary factors but to basic problems in the Medicare structure.

[ocr errors]

The time has come to re-shape the Medicare program building on its strengths and eliminating its weaknesses.

THE COMPREHENSIVE MEDICARE REFORM ACT OF 1974

PURPOSE

The legislation I am proposing today would re-structure the Medical program to provide health care benefits to all older Americans as a matter of entitlement. The bill would broaden the Medicare benefit package to meet the full range of medical services needed by older Americans and extend the duration of those benefits which are limited

under the present program. It would reduce the out of pocket personal health care expenditures of those eligible for ledicare coverage, establish a program of income-related catastrophic health insurance protection for senior citizens. And it would improve the administratio of Medicare while it attempts to control increases in health care costs

STRUCTURE

The bill establishes a single integrated program of comprehensive health insurance for the aged and disabled financed out of general revenues. Parts A and B of the Medicare program are combined into a single, expanded benefit structure with a single trust fund.

Requirements for premium payments and deductibled are eliminated. Minimal co-insurance provisions are designed so that while persons who can afford to pay will do so up to a predetermined maximum level, cost will not be a deterrent to quality health care.

The Act also provides coverage for all care and services for the aged presently covered by the ledicaid program.

that

[ocr errors]

The now dicare program is expanded to all persons 65 years of age or cl regardless of insured status under the Social Security or Railroad Retiverent cash benefit program. The only requirement is be a citizen or national of the United States or a legal rer siden. This means that for the first time all public employees, including teachers, policemen and firemen will be automat ically eligible for Medicare.

The Medicare program also provides eligibility to all those who are now eligible for Medicare because of special circumstances such as disability.

REIBURSEABLE SERVICES

The Medicare Reform Act provides a comprehensive range of benefits:

Unlimited inpatient hospital coverage:

-- includes pathology and radiology services;

-- includes 150 days of care during a benefit period
for a psychiatric inpatient undergoing active
diagnosis or treatment of an emotional or mental
disorder.

Unlimited outpatient hospital coverage.

Unlimited skilled nursing facility services with no
requirement for prior hospitalization.

Unlimited intermediate care facility services, effective
July 1, 1978.

Unlimited home health services with no requirements for
prior hospitalization.

Certain services offered by public or non-profit private
rehabilitation agencies or centers and public or non-profit
private health agencies.

Unlimited physicians' services, including major surgery by
a qualified specialist and certain psychiatric services.
Unlimited dental services.
Outpatient prescription drugs
as blood, immunizing agents, etc.
limitations to insure quality control.

-

including biologicals such subject to certain

-

COST SHARING

Medically necessary devices, appliances, equipment and supplies, such as: eyeglasses, hearing aids, prosthetic devices, walking aids. Also included are any items covered under present law.

Services of optometrists, podiatrists and chiropractors. Diagnostic services of independent pathology laboratories and diagnostic and therapeutic radiology by independent radiology services.

Certain mental health day care services.

Ambulances and other emergency transportation services as well as non-emergency transportation services where essential because of difficulty of access.

Psychological services; physical, occupational or speech therapy; nutrition, health education and social

services; and other supportive services.

Under this proposal there are no periodic premium payments or deductibles.

There are, however, minimum initial co-insurance payments (based on the type of service) as follows:

[blocks in formation]

While the features of the bill already outlined are designed to deal with the basic health costs, older Americans are more likely than any other segment of the population to incur extraordinarily large costs. Therefore, this legislation also includes a catastrophic health insurance section for older Americans.

Senator Russell Long and I have already introduced legislation which establishes a catastrophic health insurance program for the non-aged. This provision is complementary in a sense to that proposal. At the same time it contains a novel feature which, while equitable, should be tried out on a smaller scale before being implemented on a full national health insurance program.

Essentially,

I refer to an income-related catastrophic ceiling. health costs which are catastrophic to one family may not be as burdensome to a more affluent family. For that reason, families should be able to bear differing burdens of cost for health care depending on their income. This income-related feature will present an administration challenge and should be tested. REIMBURSEMENT AND COST CONTAINMENT POLICIES

While Medicare reimbursement is continuing to grow, some of the new cost containment features in Medicare are holding down increased costs. My legislation incorporates all present Medicare cost control and utilization review provisions.

Payments will be made only to a "participating provider" (one whe has filed a participation agreement with the Secretary of HEW) except for emergency services. Providers will include not only institutions but independent practitioners and suppliers of drugs and medical appliances.

34-275 (Pt. 8) O 75-7

Reimbursement will be made to a participating institutional provider based upon a predetermined schedule of patient care charges. The schedule must be based on a system of accounting and cost analysis in conformity with prescribed standards. Periodic interim payments will be made to institutions during the accounting year on the basis of cost projections, with final adjustments based on the approved schedule of charges.

Reimbursement for services of physicians, dentists, optometrists, podiatrists, chiropractors and other non-institutional services of licensed professional practitioners will be made in accordance with annually predetermined fee schedules for their local areas. These schedules will be worked out in negotiation with the providers and it is intended that the fees will be reasonable and equitable for provider and patient alike.

In

One of the problems in the present Medicare program is that physicians are increasingly refusing to accept Medicare assignment because Medicare does not provide adequate compensation to them. fiscal year 1969, the net assignment rate was only 61%. In 1972, it declined so that only 56.4% of the claims were direct payments to doctors on an assignment basis. Doctors increasingly preferred to bill the patient and have Medicare bill the patient directly. In this way, the doctors could collect more from the patient above the Medicare payment.

While the payment mechanism in this bill requires participating doctors to accept assignment or not participate at all, it also establishes a fair way to set fees.

Fee schedules will be established through negotiation among representatives of government, providers and consumers. Final fee schedules will be established only after public hearing. And the Secretary of HEW is required to make public for each local area the established fee schedules and the names, professional fields, and business addresses of participating practitioners.

To make Medicare a full success it must not only provide adequate benefits to beneficiaries but it must adequately compensate those who provide the services under that program. I am hopeful that this legislation will make adequate provisions for all providers.

SUMMARY

The proposal I am making today must be considered together with other Congressional initiatives in the field of national health insurance. Senator Kennedy, a leader in the health field has proposed legislation which would cost some $80 billion. The President's package would cost $40 billion.

The American taxpayers cannot afford to pay these additional costs. Social Security taxes are already as high as they should go. I and Senator Long, joined by 23 other Senators of both parties have introduced health insurance legislation which recognizes both that certain priority health needs must be met--but at a cost which the taxpayer can afford. The Long-Ribicoff bill's cost is less than that of any other health insurance proposal. In part this is because our legislation builds on the existing Medicare program and would not create a new government bureaucracy. It is also less costly because it recognizes that there are certain health care needs which are of a priority nature and it provides coverage for those areas--catastrophic costs, for example, which can financially destroy the average family.

« PreviousContinue »