APPENDIXES

Appendix 1

ITEM 1. LETTER AND ENCLOSURE FROM HON. CASPAR WEINBERGER, SECRETARY, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, IN RESPONSE TO QUESTIONS SUBMITTED BY SENATOR EDMUND MUSKIE IN A LETTER DATED APRIL 5, 1974

THE SECRETARY OF HEALTH, EDUCATION, AND WELFARE,

Washington, D.C., May 21, 1974.

Hon. EDMUND S. MUSKIE,
Chairman, Subcommittee on Health of the Elderly, Special Committee on Aging,
U.S. Senate, Washington, D.C.

DEAR SENATOR MUSKIE: In reply to your letter of April 5 requesting responses to questions relating to the administration's comprehensive health insurance proposal, we have prepared the enclosed material, which we hope you will find helpful.

Sincerely,

Enclosures.

CASPAR WEINBERGER,

Secretary.

Question 1. You have said in your statement that the total increase in Federal spending for the aged will be approximately $1.8 billion. Please submit a breakdown of (1) amounts which will be spent for each of the added benefits, such as catastrophic coverage, drugs, mental; (2) the total amount of savings (and extra charges to the elderly) of the cost-saving provisions; and (3) the interrelationships among these items.

Answer.

NEW FEDERAL EXPENDITURES FOR AGED (65 AND OVER) UNDER CHIP FEDERAL HEALTH CARE PLAN

3. Coverage of long-term hospital and psychiatric care....

0.3

4. Reduced cost sharing for classes I, II, and III___.

1.2

5. Net loss as a result of the elimination of the SMI premium___

0.6

Gross increase in Federal spending--.

3.9

Items resulting in reduced Federal expenditures:

1. Increased cost sharing for class IV beneficiaries_____

-0.6

2. New HI taxes on Government employees and reduced Federal spending in other programs (largely Medicaid) __

-1.5

Gross savings----

-2.1

Net increase in Federal expenditures for the aged--.

$1.8

Question 2. To help evaluate the impact of cost-sharing provisions for various income groups of the elderly, could you please submit (1) a breakdown of the elderly population by income level; (2) whatever information is available on present health care costs (total and out-of-pocket) and utilization by income level; and (3) comparative figures for the non-elderly population.

Answer.

ESTIMATED INCOME DISTRIBUTION OF PERSONS 65 AND OVER ANTICIPATED FOR FISCAL 1975

The following tables on present (fiscal year 1973) health care costs (total and out-of-pocket) and utilization of health care services for various age groups will appear, with analysis on age differences in medical care spending, in the May 1974 Social Security Bulletin.

Highlights for fiscal year 1973 reveal that:

-Of the $80 billion personal health care bill in fiscal year 1973, 15 percent was spent for the young, 57 percent for persons aged 19-64, and 28 percent for the aged.

-An aged person had an average medical bill of $1,052, compared with $384 for a person in the intermediate group, and $167 for a youth.

-The average hospital bill for an aged person was 10 times that of a youth and nearly triple that for a person in the intermediate age group; for physicians' services, his bill was three and one-half times that for a youth and double that for the remaining group.

-Public funds paid for nearly three-tenths of personal health care spending for the two younger groups and two-thirds for the aged. -Medicare met two-fifths (40 percent) of the aged's health bill-slightly lower than the 42 percent figure in 1972. The smaller proportion results in part from the increase in the SMI deductible, which rose from $50 to $60 as of January 1973. The overall proportion met by all public programs was slightly higher in 1973, however, due to an increase in Medicaid spending for the aged.

-All third parties-Government, private health insurance, philanthropy and industry-paid seven-tenths of the aged's health bill and more than threefifths of the bill for persons under age 65.