Senator MUSKIE. And I wonder if you would submit for the record a breakdown of that so we could identify it?

*

Secretary WEINBERGER. We will be glad to do that.

Senator MUSKIE. We will submit other specific questions if others develop in the course of the hearing.

I appreciate your patience and your testimony.

Secretary WEINBERGER. We welcome the opportunity.

Senator MUSKIE. Thank you very much. May I say to our witnesses, I will be back after this vote.

[A short recess was taken at this time]

AFTER RECESS

Senator MUSKIE. The committee will be in order.

I would like to welcome Nelson Cruikshank, president, National Council of Senior Citizens, and Bert Seidman, director of Social Security, AFL-CIO.

Gentlemen, I think we have at least a half hour before we are interrupted by a vote so I will turn the meeting over to you.

Mr. CRUIKSHANK. Mr. Chairman, since I had a good session with you yesterday, may I suggest that Mr. Seidman go first?

Senator MUSKIE. That will be fine. Mr. Seidman, it is a pleasure to welcome you.

STATEMENT OF BERT SEIDMAN, DIRECTOR OF SOCIAL SECURITY,

AFL-CIO

Mr. SEIDMAN. I am very glad to be here, Mr. Chairman.

The AFL-CIO has a very great interest in this hearing. The Secretary said this morning that this subject is of crucial significance for the 23 million Medicare and 42 million aged Medicaid beneficiaries.

I might say it is also of a very, very great significance for the workers and employers who, through their taxes, their Medicare, taxes are helping to finance this program or would help to finance the program that the Secretary is proposing, as well as to the taxpayers who will be paying for the part of it that would have to be paid out of general revenue.

Mr. Chairman, the Secretary said that the program that he was proposing was far superior to that which is presently available under Medicare and Medicaid. Well, I think that you and others, both witnesses and Senators, have shown that there is a very serious question as to whether the program is superior. It may be superior in certain aspects.

It is certainly clear that for most of the people who are now being covered by Medicare and Medicaid, it will be worse but I would like to say that in our judgment, this comparison should not be made simply between what we have and what is being proposed but also between those two things and what we could have. The AFL-CIO supports, as you know, the health security program and, therefore,

* See appendix 1, item 1, p. 937.

in a number of instances, I will be comparing what we have and more particularly, what is being proposed with the health security

program.

I was very glad that Senator Mondale introduced into the record the article in this morning's Washington Post.* I commend it to everybody to read because while it describes what can only be called genteel but abject poverty, it describes the condition of people who among the elderly are just probably average.

The article states that the two sisters, aged 82 and aged 79, have a Social Security income of $296.36, and the reporter goes on to say, a pinch-penny budget, that allows them, both of them-not each of them-both of them, $2 a day for food and then he goes on to say-describe what that food is. It is oatmeal, it is a can of beans, it is never any meat. They cannot remember when they last had any meat, and when the Secretary talks about whether people at that level of income and at much lower levels of income, can afford that 10 percent coinsurance, that deductible he says we have decided.

I do not know how many elderly people he has asked who are living at the level of income as to whether they can afford to make those payments.

Well, it just so happens that $296 a month, what these two elderly sisters have as income, is the average income for a couple, man and wife, two people, under Social Security today. So that if we think in terms of what any program, including the administration's program, means and the costs that are involved and whether or not there are barriers to health care, instead of thinking in terms of statistics and charts and so on, let's think about this elderly couple and whether they can afford this.

Mr. CRUIKSHANK. You forgot the Secretary said he was going to give them a credit card. They would have the privilege of going into debt and paying out on an installment basis.

Senator MUSKIE. Under the administration's proposal, what level would the two people come under if they had a joint income of $3.600?

Mr. SEIDMAN. Each one happens to have below average Social Security benefit but it just so happens that their combined Social Security benefits is about the average for a couple under Social Security today.

Senator MUSKIE. I still do not get the impact. As we have it here, the first income level is up to $1,749. There is no deductible and there is a 10 percent coinsurance at that level.

Mr. SEIDMAN. Ten percent coinsurance.

Senator MUSKIE. And the next bracket, there is $25 deductible for drugs. Now, would this couple come under, since their income is $3.600?

Mr. SEIDMAN. In the example-for example, in the Secretary's testimony-they would come in the program No. 2 income class, roughly.

Senator MUSKIE. So they would pay those higher deductibles?
Mr. SEIDMAN. They would pay higher deductibles and coinsurance.

See appendix 3, item 1, p. 984.

Mr. CRUIKSHANK. And we are not sure what they would mean to include by income. There is no indication whether food stamps would be included or there is no definition of what is income.

Senator MUSKIE. There is certainly none in the bill.

Mr. CRUIKSHANK. I could not find it.

Mr. SEIDMAN. The bill is a very, very hard bill to read, Senator. You cannot get some of these things that are in the testimony out of the bill unless you are a real expert and I am not that expert. So we have taken some of the things they have said more or less on faith.

ROUTINE MEDICAL SERVICES-NOT COVERED

Another point I would like to make is that the Secretary says, in his testimony, that the more routine medical services which can be budgeted should not be covered under a health insurance program which primarily seeks to provide financial protection.

He says that there has been a conscious decision to cover basically the same broad range of services under all three programs. Well, I do not know what he means by routine medical services which can be budgeted for but eyeglasses and hearing aids.

Senator MUSKIE. I was going to ask you that question. I never had the opportunity.

Mr. SEIDMAN. And hearing aids and dental care, things which really, in the case of many of the elderly people, can mean the difference between life and death and certainly between life and a living death, a decent life and a living death.

I wonder whether these two elderly sisters can afford to pay for eyeglasses that they may need or a hearing aid they may need; I doubt it very much. But if they were covered by Medicaid, in most States-it is true that Medicare does not and should cover those items-but in most States, Medicaid does cover those items so the poorest of the elderly, those who are now receiving, let's say Supplementary Security Income, SSI, would have available to them, at no cost, eyeglasses, hearing aids, dental care, and even preventive care. That would all be taken away by this program and the Secretary says that somehow or other, the States would pay for this. But if you look at the fine print, the cost for the States, under this program, is already greater for the covered items than they are now paying for Medicaid, and I wonder in how many States they are going to cover eyeglasses and hearing aids and dental care in addition for the people who are now getting them.

It is at least a very serious question as to whether many of them will not. So that this program is taking away from the elderly particularly, things which they desperately need, which ought to be available under Medicare and at least are available under Medicaid and would not be available under the so-called assisted programs.

There are so many points in the Secretary's testimony and I really cannot cover all of them but he says that cost-sharing instills cost consciousness. Again, I turn to these two elderly sisters and I wonder whether they have to have cost consciousness instilled in them by cost-sharing; whether they have to make 10 percent or 20 percent payments in order to go to a doctor and that means one less can of

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beans; whether they need that kind of cost consciousness. I doubt it very, very strongly.

IMPACT OF COST SHARING ON THE POOR AND ELDERLY

The fact of the matter as we get to a more technical level, that there is no technical evidence whatsoever in terms of the impact of cost-sharing on the poor or the elderly, except that is does not take very much intelligence to realize that those who are elderly and therefore living on very restricted incomes and particularly the poorest among them do not have the money to meet the cost-sharing amounts and, therefore, will not avail themselves of the health care that they need, no matter how much they need it.

The Secretary says, well, but on balance the benefit package for the aged will be raised from $565 to $620. Now, what we are talking about here is approximately a 10 percent difference and I frankly wonder how closely the Department can estimate a 10 percent difference on a program which has not even begun yet. At most, we are talking about the possibility that because of this catastrophic feature, and for no other reason, there might be some slight increase in the total benefits to the total group but I think we should be very skeptical about that.

Senator MUSKIE. We have figures indicating that, of the $1.8 billion he spoke of as the increase in Federal spending for the aged, $1.6 billion is attributable to the drug program alone so that the remaining difference of $200 million is pretty small.

Mr. SEIDMAN. That is certainly correct, but he does make a great deal of this catastrophic element, and I would just like to point out that, as he states, in 33 States, we have in effect a catastrophic program for the elderly because in the so-called spend-down provisions for the medically needy, they can be taken care of.

This elderly couple, living entirely on Social Security, had this hospital bill for 2 weeks. One of them had to go to the hospital for a heart attack and she had her bill paid for by Medicaid, undoubtedly on this spend-down provision, as it works in the District of Columbia, where they happen to live, so this is not giving the elderly very much that they do not have now.

Mr. CRUIKSHANK. Bert, could I interrupt on this catastrophic?

I think it is awfully important to note, while the Secretary made a great deal out of the catastrophic protection that was under his bill, as opposed to Medicare, he left out the fact that that only applies to part A. He was talking about these limitations all the time. There is no limitation under Medicare under part B.

A doctor's bill can run up to $10,000, $15,000, and it is covered presently under Medicare. Nowhere does the catastrophic thing come in under their proposal. It comes in down at the 60-, 70-, 80-, 90-plus days and when does that happen? Only after peer-review has failed, only after utilization review has failed, only after every precaution presently in the program has failed. This tiny, small fraction of 1 percent is to get this so-called great additional protection. It already exists under part B, no limit under Medicare, so it is really

just talking about the very, very long-term hospital stay. That is where the catastrophic protection comes in.

Mr. SEIDMAN. Senator, we think people should have that catastrophic protection but we ought not prevent them from getting the needed care by so-called cost-sharing, which, in effect, for people at that level of income means they do not get the care at all unless they are so desperately sick, they have to go to the hospital. The health security program does contain a catastrophic feature for the elderly as well as for the rest of the population.

The Secretary says that the program would be even more responsive to the health needs of the aged than Medicare because it removes the financial barriers that prevent the elderly from obtaining these necessary medical services of high quality.

NEW ADDITIONAL BARRIERS

Frankly, I do not understand this statement. It seems to me the reverse is true. It builds in new additional barriers to necessary medical services and it is less responsive to the health needs of the aged, particularly if you combine the Medicaid and Medicare and particularly, the kinds of features that I indicated before, the eyeglasses, the hearing aids, the dental care, and so on.

Senator MUSKIE. Do all States provide that?

Mr. SEIDMAN. Almost all States provide eyeglasses, hearing aids, dental care, and preventive care. I am told that 75 to 80 percent of the people now covered by Medicaid would be robbed of some of those services and this applies, of course, with these items, particularly to the elderly.

And while it is true that Medicare ought to and does not cover drugs, there are only four States under Medicaid that do not cover drugs so that drugs are available without cost-sharing under the Medicaid program to many of the elderly.

Senator MUSKIE. What are the income levels in the Medicaid program?

Mr. SEIDMAN. In Medicaid, of course, they are set at different levels in different States.

Senator MUSKIE. What is the range? Is it designed to be the poverty level, by and large?

Mr. SEIDMAN. Now it is the SSI program, all of the people on SSI are generally covered, plus in some States, those that are receiving supplemental SSI, so that those minimum figures are now, for a couple, $210 a month, I believe, under SSI, and they will be going up July 1.

The Secretary says that aged persons with incomes below $1,500 will pay no premium or deductible charges and would pay only a 10 percent coinsurance rate up to a maximum annual liability of 6 percent of their income or $105. He read this very quickly, with no emotion whatever. We are talking about people living at $1,500 in America in 1975, being expected to pay $105 out of their $1,500 for obviously the most desperately needed medical services. How many of them are going to be able to do this?