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examinations for adults, dental and eye care for persons over 13. These costs alone would strap the budgets of many families.
By comparison, under the Health Security program, which we support, a worker would pay 1 percent of his income up to $15,000 a year as his share of the Health Security tax. The Medicare tax would be abolished; so, most workers would only pay a few dollars more for Health Security. The worker and family would then receive all their necessary health care services, including preventive care and dental care for children up to 15, without having to pay one dine more. Health Security would have no deductibles and no coinsurance.
The employer's share of the Health Security tax is 3.5 percent of payroll. According to Commerce Department statistics as yet unreleased by the Nixon administration, this would be less than employers would be mandated to pay in private insurance premiums for their employees under the Nixon plan. The administration bill would require employers initially to pay an average of 4.1 percent of payroll for health insurance premiums. This would rise to an average of 4.5 percent of payroll after 212 years.
While the President has been quick to criticize the cost of the Health Security program, he has been reticent about releasing the true cost of the administration proposal. The AFL-CIO staff, using available data, has estimated the cost of the administration bill if it were in force in fiscal 1974:
Thus, the Nixon program would increase the amount spent in the Nation for personal health care, largely due to added profits for private insurance companies. Only Health Security would get a handle on costs and hold future increases in medical costs to a minimum. Because the Nixon plan has no effective cost controls, it would touch off a new escalation in medical costs.
The Nixon plan would cover only about 40 percent of the Nation's health care expenditures. Health Security would cover about 70 percent.
In his health message, President Nixon said that the added government cost of his program would only be $6.9 billion. But to consider the true cost of the Nixon proposal, the mandated insurance premiums must be included as well as federal and state health care expenditures. Thus, the true Government or Government-mandated cost of the Nixon bill is closer to $71 billion. The high deductible and coinsurance required increases the cost of the Administration bill even further.
And because it lacks cost and quality controls, the Nixon program is certainly no bargain.
The Niron administration claims that rich and poor will be treated alike under this bill. The fact is CHIP would establish a double standard of care.
(1) The poor would receive minimum benefits. Insurance companies can offer, and the rich can afford, better health insurance policies which would pay the deductible and coinsurance charges and also cover the exclusions in the minimum benefit package.
(2) CHIP requires physicians to accept a State-negotiated fee schedule for services provided to beneficiaries of the government assisted plan and Medicare. The Nixon bill specifically permits physicians to charge higher fees to EHIP beneficiaries. Employee plan patients would inevitably receive more favorable consideration by physicians, because doctors would make more money.
The administration claims erery citizen would be able to purchase health insurance at a cost he can afford. The fact is that the Nixon biū falls far short of the universal coverage of the Griffiths-Kennedy hill. For example:
-Employers would not be required to offer EHIP to their employees until they had completed 90 days on the job. While employers would be required to
pay health insurance premiums for their former employees for 90 days after they lost their job, continuity of coverage would be interrupted unless the unemployed worker paid the full premium-or about $40 a month-or applied for the Government-assisted welfare plan. The unemployed worker would still have to pay the deductible and coinsurance.
--Self-employed families, if they are unable to buy private insurance, would have to pay 150 percent of the average group rate in their State of residence or about $900 a year. Poor health risks, the so-called uninsurables, could only obtain coverage under AHỊP.
-Migrant works with only temporary ties to one employer and only temporary residence in one state could not be readily insured under either EHIP or AHIP.
President Nixon claims his program would control costs and quality. The fact is that cost and quality controls are virtually non-existent.
The President says cost-sharing by the patient would control utilization of services and, therefore, cost. However, it is the doctor and not the patient who makes those decisions. To the extent that people are deterred from seeking early treatment, deductibles increase the total cost of medical care.
The President says that Professional Services Review Organizations (PSRO's) would reduce utilization and cost. But PSRO's are controlled by the medical profession, and physicians cannot be expected to act adversely to their own economic self-interest.
The administration's cost controls depend in part upon developing prepaid group practice plans throughout the country, but the benefit provisions of CHIP are incompatible with these plans because of the high deductibles and coinsurance. The Nixon program would, therefore, inhibit the growth of prepaid group practice plans and health maintenance organizations.
The Nixon plan would rely on the States to establish prospective budgets for hospitals and other health institutions. But the states have not demonstrated sufficient competence in this area and would have virtually no clout with recalcitrant institutions because the states would not control any funds. The insurance industry would have all the money for health services.
Under the Nixon plan, states would negotiate fee schedules with the medical profession. But physicians would only be required to accept the fee schedule for Government-assisted and Medicare beneficiaries. Physicians could require additional payments on covered benefits for those on the employee plan; but these payments could not be counted toward meeting the $1,500 ceiling on expenditures by the beneficiary.
By contrast, Health Security would control costs and quality through much more stringent provisions. For example, Health Security would establish minimum standards for physicians; the Nixon plan would not. Health Security would require that surgery only be performed by board-certified surgeons; the Nixon plan would not. Health Security would require consultation before surgery; the Nixon plan would not. Health Security would require physicians to accept the fee schedule as 100 percent payment for everyone; the Nixon plan would not.
The Nixon administration claims its program builds on the strengths, capabilities and experience of the health insurance industry ; that private enterprise can do the job better and with less red tape. The fact is that the escalation in medical costs was the result of the present outmoded system which relies on private insurance.
The worse features of private insurance would be continued by the Nixon program. Experience rating would be an integral part of the program. Poor health risks would have the option of paying 50 percent more for their insurance or buying into the welfare program. If insurance companies refused to cover high-risk individuals for 150 percent of the average rate, these people would be left with the option of no insurance or the welfare program.
CHIP would leave regulation of insurance companies to the states. State regulation of the insurance industry has been ineffective in the past, and there is no reason to believe state administration would be improved by passage of the program. In addition, the cost of administering an income-related program based on experience rating would build an immense insurance industry bureaucracy between the providers and the patients.
CHIP conforms to the insurance industry practice of "skimming.” That is, the insurance industry would sell insurance to low-risk and profitable employed
groups, leaving the poor, the unemployed and other unprofitable high-risk groups and individuals to the Government program.
The Nixon plan would require a complicated system of income-testing-a more polite name for "means" tests—to determine eligibility under AHIP. Additionally, insurance companies would have to keep records on the income changes of their subscribers in order to adjust the individual's deductible and coinsurance requirements.
Income testing is, per se, repugnant to American workers. It dilutes the principle of health care as a right of all Americans into a thinly disguised welfare program. As the States have found out in administering their welfare programs, income testing escalates administration costs, further reducing benefits. The paperwork that would be required for insurance companies to bill and collect deductibles and coinsurance would threaten to swamp the health care system in a flood of red tape.
As with welfare, when administrative costs exert pressure on limited budgets there is the temptation to reduce costs by cutting benefits. This happened under Medicaid, and must not happen under national health insurance.
President Niron claims consumers would have an important role in his program. The fact is that the only role for consumers is to pay high deductibles, coinsurance and premiums. A particularly distressing role for consumers in the administration proposal is the procedure whereby insurance companies could charge patients an unspecified amount of interest on their share of doctor and hospital bills. Credit cards and interest charges are no substitute for comprehensive benefits with no deductibles and no coinsurance. The Nixon program is for the doctors and the insurance companies, not the consumer.
Universal coverage as a matter of right.
Reform of the health care system. The Nixon program would not provide universal coverage as a matter of right. It would not provide a single standard of comprehensive benefits. It would be financed through the private insurance industry and not like a social insurance system. It would not encourage prepaid group practice plans. It would not effectively control costs and quality. It would not reform the health care system.
Only National Health Security--the Griffiths-Kennedy bill meets the goals of the AFL-CIO.
ITEM 2. STATEMENT BY THE AFL-CIO EXECUTIVE COUNCIL ON
NONINSTITUTIONAL SERVICES FOR THE ELDERLY
BAL HARBOUR, FLA., February 19, 1974. Many older people are confined in expensive nursing homes and other insti. tutions for relatively minor health conditions only because the range of community services that would enable them to remain at home are not available.
This problem is not insurmountable. All that is needed is a greater national and community commitment to development of these services.
Unfortunately, noninstitutional services for the elderly are given little or no priority in most communities. Even where such services are to some degree available, they are usually provided on a fragmented basis from a variety of agencies. These services should be brought together in a coordinated, general service program.
They would cost the community far less than it now pays for nursing home care and would provide the elderly greater satisfaction by enabling many of them to remain in their own homes. Successful programs will require a wide spectrum of services ranging from home health services and visiting nurses to homemakers and housing for the elderly.
Of course, elderly persons should not be denied care in a nursing home or other appropriate institution when such care is the best for their condition. The objective should be what is best for the health and well-being of elderly people,
The core of any noninstitutional service system should be an effective home health services programma complex of services which may be brought into the home to sustain individual health and independence. But there has been a glaring inconsistency between stated public policy and what has actually happened to home health services programs. In many areas, home health services are not available at all. Where such programs are operating, they are generally underfinanced, unable to adequately cover the target population, and deficient in essential elements which would make them an effective resource.
Both Medicare and Medicaid authorize home health services but with such tight restrictions that they have created roadblocks to the development of such services. Less than 1 percent of Medicare expenditures now go to home health care and even that small portion appears to be decreasing. Some health service agencies have shut down and many others still operating appear to be in financial jeopardy. A good first step toward more effective health service programs for the elderly would be greater emphasis on such services in the Medicare and Medicaid Programs.
But more than this is needed. What is needed is a program of noninstitutional services that is capable of being a major component in a comprehensive health care system such as the National Health Security Act would establish.
The AFL-CIO urges the development and passage by Congress of a comprehensive system of services for the elderly, and that such a program of services be included in any national health program that may be adopted.
Appendix 3 ITEM 1. NEWSPAPER ARTICLE SUBMITTED BY SENATOR WALTER
MONDALE, ENTITLED “AGING SISTERS IMPRISONED BY POVERTY,”
[From the Washington Post, Mar. 13, 1974 ]
(By John Saar) Imprisoned by poverty and hounded by inflation, two elderly sisters are closing out their lives in a Massachusetts Avenue apartment in a constant state of anxiety and depression. Mary Smith, aged 82, and her younger and sicker sister Elsie Sager, 79, survive, and not much more. Rising prices have stolen even the smallest of life's material pleasures from them.
The sisters' lives provide a frightening case study of life in inflationary times for many of this city's 103,000 people over 60 years of age.
Too old to work, with no close relatives, the sisters depend on a Social Security income of $296.30 and a pinchpenny budget that allows them $2 a day for food.
Penury has forced an almost total divorce from the outside world upon the sisters. Only the buzz of traffic and their own suppressed longings remind them, they say, of a normal life. They have one another and all the comfort an antiquated and flickering television can bring.
In the course of a long interview, the suspicion of tears misted Mrs. Smith's spectacles just once as she was saying, "Sometimes I see women in this building all dressed up for a swell lunch at Woody's or Garfinckels and I almost burst out crying."
They lack sheets for their beds, shoes for their feet. Rising prices lay constant siege to their diminished diet, making one sacrifice after another-fresh fruit, then milk, then meat ...
Stoic by nature, Mrs. Smith says their situation is "laughable.” But she does not laugh. In fact the once jolly person whose pleasant face bears imprinted smile lines rarely laughs these days.
For the two sisters, the closing out of their lives is proving a bleak ordeal replete with depression, indignity and suffering by deprivation.
Inflation continually threatens their precarious existence on an already inadequate fired income. And inflation, in a remorseless progression, has canceled the few pleasures from their lives. Mrs. Smith, for instance, “an avid reader" used to devour the morning paper cover to cover. She had to cancel it a while back.
The women worked a combined total of 39 years to earn their right to the monthly social security checks—Mrs. Sager as a beautician in Richmond, Mrs. Smith as timekeeper in a now defunct Washington laundry. They are single. Mrs. Smith was divorced in 1925 and her sister has been a widow for 44 years.
"Every night," says Mrs. Smith, "I thank God for what we have, but it's mighty little." Her dress was a gift from the manager of the building. The print flowers have been laundered to a pallor, so that the dress matches her indoor complexion-notepaper-white. Her shoes are a work of artistry—15 years old, the many slits and holes carefully welded shut with glue.
"In the past year or so," she says in her usual firm and unself-pitying manner, “it looks like I'm really getting crushed. I shouldn't and I'm trying to get out of it."
But her sister Elsie is depressed most of the time-"what we've been through is enough to tear the heart out of anyone,” Mrs. Smith explains.
Asked to comment on how the sisters' situation could be equated with that of thousands of other elderly people in the city, social workers with various