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cut in half, from 200 under the present program to 100 under this program.
It is very interesting that the Secretary used the catastrophic argument as the reason why they wanted to set the limit, the upper limit for it, all other aspects of the program, but apparently for home health services, he used just the reverse argument. I do not know why he did that but apparently, that was tailored to the program they had, rather than any consistency or logic in the program.
Well, thank you very much, Mr. Chairman.
STATEMENT OF NELSON CRUIKSHANK, PRESIDENT, NATIONAL COUNCIL OF SENIOR CITIZENS
Mr. CRUIKSHANK, I will be very brief, Mr. Chairman. There are many things that I could say but your committee was very generous with respect to time with me yesterday. Just very briefly, I would point a couple of basic inconsistencies, I think, in the Secretary's statement this morning. One, Bert has already referred to.
In the approach to hospital insurance, he said it was not important to cover the most frequently recurring item because this was budgetable. The administration bill he said provided a tradeoff, namely no protection for the so-called budgetable costs in return protection against the catastrophic, down at the end of the very, very long stay in the hospital.
Senator MUSKIE. He used the word "routine." Can you distinguish between routine and chronic?
Mr. CRUIKSHANK. That is a distinction completely new to me. I do not know what he means by routine. He used the reverse argument on home health by saying we are covering the most frequently recurring costs and argued this is what a program should do.
Another one was brought very sharply into focus by the question and reply of Senator Mondale, where the Secretary was trying to convince the committee that the physician would find such advantage accepting assignments, that he would not charge beyond the reasonable charge amounts because he would be relieved of other burdens, and so forth, but in the earlier part of his statement, the Secretary relied heavily, as an argument for his program, that the assignment method was gradually being cut down under the present Medicare. Under the present Medicare program, the physician has all of the advantages resulting from accepting assignment that he has under the proposal and if it is true that if it is in few-fewer cases accepting assignment, there must be something to Senator Mondale's argument, that there is an economic interest.
Now, if that economic interest exists, generally among the poorer segment of the population, how much more would it exist as applied to the employed sections of the population. We also know with respect to that assignment question that the incidence falls with very, very widely different degrees.
The Health Insurance Benefit Advisory Council made a study of this and it shows that the doctor accepts assignments much more
generally in the case of the large bill. The small office visit, and so forth, where he feels more free and a greater chance of collecting the bill, that is where the heavy incidence of the direct billing method takes place. He takes the risk there in collecting and the costs of collecting, and so forth, but what I would like to point out is the inconsistency here that the Secretary sees no such incentive; in fact, he tells us there is an incentive the other way in his proposal, but in describing the present Medicare proposal, he describes a move away from assignment to the economic motives and results in the cutback.
Now, yesterday, Mr. Chairman, I spoke at some length about the very basic differences in the philosophy of the approach of these two programs and it seems to me that is apparent, without underscoring it, to the members of this committee, but there was, in last Sunday's Post an article of such discernment and perceptiveness, preceding these hearings, I do not know that the author even knew that these hearings were scheduled but he could very well have been preparing this paper for these hearings because it runs just to these points. It is by Prof. Rashi Fein, who is a medical economist. He is the professor of economics at Harvard Medical School and a faculty member of the Kennedy School.
This runs so much to the point of the issue now before this committee that I would like to ask, sir, it be made a part of the record. Senator MUSKIE. Without objection, it will be made a part of the record.*
Mr. CRUIKSHANK. Thank you. If you have no further questions, I am finished at this point.
Senator MUSKIE. Well, I think we have touched on the significant points here in this morning's hearing. I find that this bouncing back and forth of hypothetical examples can be very confusing and, of course, the Secretary wanted to steer away from any implication that the program represented any reduction for any significant number of people and anything we would get in the record to illuminate that point is instructive. I think your willingness to respond to his testimony has been very helpful.
I would like to suggest if, upon further reflection, there are other points you would like to make, we would, of course, welcome them for the record.
Mr. CRUIKSHANK. Thank you, sir.
Mr. SEIDMAN. Thank you.
Senator MUSKIE. Thank you very much. We stand adjourned. [Whereupon, the subcommittee adjourned at 1:15 p.m.]
*See appendix 3, item 2, p. 987.
ITEM 1. LETTER AND ENCLOSURE FROM HON. CASPAR WEINBERGER,
THE SECRETARY OF HEALTH, EDUCATION, AND WELFARE,
Hon. EDMUND S. MUSKIE,
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.
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.
NEW FEDERAL EXPENDITURES FOR AGED (65 and Over) UNDER CHIP FEDERAL HEALTH CARE PLAN
Items resulting in increased Federal expenditures:
1. Newly eligible aged persons-
2. Coverage of outpatient prescription drugs..
3. Coverage of long-term hospital and psychiatric care_.
4. Reduced cost sharing for classes I, II, and III___
5. Net loss as a result of the elimination of the SMI premium__
Gross increase in Federal spending---.
Items resulting in reduced Federal expenditures:
1. Increased cost sharing for class IV beneficiaries__‒‒‒
2. New HI taxes on Government employees and reduced Federal spending in other programs (largely Medicaid).
Net increase in Federal expenditures for the aged.
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.
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.