CONTENTS G. Health Care Expenditures Per Aged Person, by Source of Funds: Fiscal years 1966 and 1967 (before and after Medicare)- Part 1: What the elderly pay for health care.. The national scene: public and private spending- What costs mean in personal terms Can private health insurance help?. Part 2: How medical cost inflation intensifies the problem__ The question of controls under Medicare or Medicaid.. The question of "cheating" under Medicare and Medicaid. Part 3: Special needs of the elderly and their effect upon medical costs_ Page FOREWORD -Older Americans are victims of a retirement income crisis which is deepening rather than improving. -Millions of the elderly in the United States are living today in poverty, and most did not become poor until they became old. -Dismaying as the present situation is, all indicators point to a widening of the gap between income of retirees and income of those still in the labor force. The purchasing power of the retirees will continue to shrink unless we move promptly. What is needed are major new policy decisions and actions to assure economic security for those now old and for those now in middle-age or younger. Such were the major conclusions earlier this year of a Senate Special Committee on Aging Task Force in a Working Paper called "Economics of Aging: Toward a Full Share in Abundance." That document offered a powerful summary of the forces that have caused the present crisis, and it also gave suggestions for additional inquiry. The Task Force called in particular for close attention to health needs of the elderly and the effects of rising medical costs upon. their economic security. Accepting the Task Force recommendation, the Subcommittee on Health of the Elderly of the Senate Committee on Aging will conduct a hearing on "Health Aspects of the Economics of Aging" on July 1718, 1969. To prepare adequately, an Advisory Committee was invited to issue a report summarizing basic issues and problems in this area. The Advisory Committee has done its work and presents its conclusions in the pages that follow. Those findings and conclusions may differ from those finally adopted by the subcommittee and the full Committee on Aging, but there can be no doubt that the Advisory Committee has performed a timely and helpful service by providing an incisive summation of medical cost pressures that afflict aged Americans today despite the invaluable help of Medicare and other public medical care programs. Those pressures are especially destructive and unsettling for the elderly because of the heavy inroads they make on fixed retirement income, and because they fall so unevenly. A middle-income elderly couple, for example, may find itself in financial jeopardy because either the husband or wife needs nursing home care. They may be disqualified from Medicaid or welfare because they have a savings nest-egg or because of a private pension. Or perhaps a man who has been healthy all his life may, in his mid-70's, become disabled by an illness in which he requires constant attention and medication, but little or no hospitalization. Since, essentially, Medicare coverage begins with hospitalization, it is of little help to him. The fact is that Medicare pays for only 45 percent of all health care expenditures for the elderly today. Other programs provide 32-346 O-70-15 some help, but the threat of costly, catastrophic, disabling illness remains all too real among our aged population. That threat, intensified by today's rapid rise in medical costs, cannot be disregarded in any evaluation of the economics of aging in the United States today. If we in this Nation ever hope to establish an adequate retirement income maintenance program, we will have to resolve medical cost problems that otherwise will remain an intolerable drain upon the limited resources of the elderly and forestall every alternative in providing adequately for the economic security of the aged. The Advisory Committee, working under formidable time pressures, has our gratitude for their generosity in sharing their knowledge and convictions with us. We are especially pleased to acknowledge the leadership of Mrs. Agnes W. Brewster in this effort. Mrs. Brewster, a medical economist with a long history of service in governmental agencies behind her, served on the original Task Force and has now made a major contribution to the report which follows. HARRISON A. WILLIAMS, Jr., Chairman, Senate Special EDMUND S. MUSKIE, Chairman, Subcommittee on Health of the Elderly. HEALTH ASPECTS OF THE ECONOMICS OF AGING ADVISORY COMMITTEE REPORT INTRODUCTION Americans of age 65 and over-though drawing substantial, essential economic assistance from Medicare, and to a much lesser extent, from Medicaid nevertheless continue to be the major victims of unresolved problems related to the costs, quality, and availability of medical care in the United States today. Inflationary cost pressures of recent years in the health field intensify the uneven burden of expense, disability, and pain among our elders, creating acute financial problems for many and-for most of the others the ever-present fear that similar problems will strike their households. There is reason to believe that millions of old people in our Nation today postpone treatment until the crisis stage simply because (1) they expect old age to bring physical infirmity and misery, and (2) gaps in Medicare and Medicaid coverage make it difficult for them to receive high-quality health services and supplies except during and immediately after hospitalization. Thus, the over-reliance on hospital care, the most expensive level of care available, is perpetuated and accentuated. This brief working paper is not meant to be a definitive study of the dollars-and-cents realities faced by elderly Americans who need medical care. Rather, it is meant to comply with a recommendation of a Task Force which in March declared as part of its report on "Economics of Aging: Toward a Full Share in Abundance" that special attention should be given to rising medical costs, costs which compound the general problem of low income among the aged. The Task Force report, made to the U.S. Senate Special Committee on Aging, was a profoundly disturbing document. It declared that, for present and future generations of older Americans, their retirement income situation is deteriorating. It declared that only major changes in social policy can deal adequately with the overall problem and its many components. Implicit in every major finding of that Task Force was the realization that any needless or avoidable drain upon the limited incomes on which the great majority of the elderly must rely would endanger any public retirement income maintenance plan that might be developed. Health care expenditures represent a major element in the ability of the elderly to maintain themselves financially. Many of the elderly, even with Medicare, are driven from a status of economic independence into dependency and must turn to Medicaid. Improvement of the plight of the elderly calls for major improvement in income maintenance programs combined with augmented health benefits. What is discussed in this report are, therefore, matters that must, as a prerequisite for any realistic plans for economic security in retire |