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ment now and in the decades to come, be dealt with as quickly and as thoroughly as possible.

Fortunately, the United States has already taken large strides toward such realistic plans.

Medicare, though certainly imperfect and hastily implemented, offers a good structure for improvements in our $50 billion health industry. Medicaid is passing through troubled times caused in part by haste in its genesis, but it is focussing attention on the need for quality control, the need to eliminate waste and abuse, other clear goals in national policy, and greater understanding of the formidable economic barriers to high-quality medical care for all.

Faced by a deepening retirement income crisis, this Nation can ill afford to add to the burdens of the elderly by neglecting unresolved problems related to their health care.

In the following pages, some indicators of the extent and nature of those problems are presented.

MAJOR FINDINGS AND CONCLUSIONS OF THE

ADVISORY COMMITTEE

• Medicare has provided invaluable protection and peace of mind to millions of older Americans.

But because it now covers only 45 percent* of all health costs of the elderly-the door is still open to catastrophic or steady, gnawing financial difficulties so serious as to be a source of great concern for all but the wealthy among the elder citizens of this Nation.

● This problem, though not limited to those elderly living in or near poverty, affects low-income individuals and couples most directly.

Deductibles and coinsurance required under Medicare, together with problems related to availability of services and refusal of a majority of physicians to "take assignment" under Part B of Medicare, intensify the cash problems encountered by the low-income elderly.

. Although Medicare and Medicaid have replaced a large segment of private spending for health care, 30 percent of the cost of personal health care for the aged remains as a private responsibility for the aged and their children.

In addition to the 45 percent covered by Medicare, 25 percent of the fiscal 1968 expenditures of the aged were met by Medicaid and other public programs. Nevertheless, the amount paid privately by the aged remains higher per capita ($176) than for the nonaged ($153).*

Private expenditure falls unevenly upon the aged population, causing desperate problems for many. Deductibles and coinsurance intensify such problems and in effect deny many elderly persons the care or services they need.

The refusal of nearly one out of two physicians (excluding those who are hospital-based)* to "take assignment" is accompanied by a rise in fees and a consequent inability on the part of many elderly to avail themselves of their Part B Medicare benefit, even when they have paid the premiums for Part B.

• Medicaid offers uncertain and uneven protection; and "meshing" with Medicare is far from adequate.

Cutbacks by the States in Medicaid benefits and beneficiaries will compound the problem.

• About half of the aged population has supplemented its Medicare coverage with some form of private protection, but premiums for adequate benefits are beyond the reach of many.

The complementary coverage is more often than not limited so that benefits are paid only when the Medicare patient is

*See note on page 4.

in the hospital; and those enrolled under Medicare Part B are already paying $96 per couple annually in premiums.

Inflationary tendencies in the health field have an intense impact upon care provided for the elderly.

While Medicare can and has generated powerful inflationary forces in the health-care market, more positively, it can also be a force against runaway costs.

There is some danger that the current investigations of fraud and near-fraud in Medicaid and Medicare may lead to a defeatist or negative attitude toward each program.

There is also a danger that such emphasis may well thwart efforts to deal with more fundamental deficiencies in each program. Reform is needed, but it should be thoroughgoing and it should be positive. This Nation has declared that high-quality medical care is the right of every American. We should be innovative and positive in making changes. We should be as insistent upon upgrading quality as we are insistent that wrongdoing be recognized and punished.

As consumers of health care and services now costing approximately 3 times* as much as for other age groups, the elderly have special needs.

They include long-term care in hospitals or nursing homes, and out-of-hospital drugs. Medicare coverage is deficient or nonexistent in these areas of special need.

• Deficiencies in the delivery system for health care services play a direct role in creating dollars-and-cents problems for the elderly. They, along with other age groups, suffer not only in terms of inconvenience, but also in terms of direct dollar outlays, because of irrational or outmoded delivery systems for medical care and services. A special cause for concern for the elderly is the lack of decent alternatives to expensive hospital care.

*NOTE: At the time the Advisory Committee was preparing this report, data were not available on the health care expenditures of the aged during fiscal year 1968. For the detailed analysis in its report, the Committee has therefore used data for the preceding year-the first year of Medicare.

The major findings summarized above have now been updated to reflect information released by the Social Security Administration in a Research and Statistics Note, dated July 16, 1969.

The conclusions remain unchanged.

FOR ADVISORY COMMITTEE RECOMMENDATIONS, SEE PART V

CHARACTERISTICS OF THE AGED POPULATION

Certain facts are needed as a frame of reference for consideration of the economic position of the aged, now and in the future.' Who are the people now 65 and older? How is the aged group changing? What are the population characteristics that help to explain low incomes in old age?

Every tenth American is 65 or older. Currently, there are about 20 million aged individuals. Fewer than 9 million are men and more than 11 million are women.

The rate of growth in the population 65 and older has slackened in recent years. In contrast to a 3.0 percent annual rate of increase for the decade 1950-60, the rate has averaged just under 2 percent during the Sixties.

Projections for the decade ahead indicate a growth rate for the aged population about the same as the rate for the total population. The ratio of the population aged 65 and over, consequently, is expected to remain nearly a constant proportion (about 18 percent) of the population in the "working ages" of 20-64 through

1985.

The population 65 and older is not a homogeneous group at any given date; the composition of the group is constantly shifting.

On the average day, roughly 3,900 people will celebrate their 65th birthday but about 3,080 already past 65 will die, a net increase of 820 a day. In the course of a year, this means a net increase of 300,000. In the course of 5 years, 35 percent of the population 65 and older are new additions to this age group. The aged population is getting older. Half of all people now 65 and older are about 73 years old or over. Of every 100 older persons today, 63 (almost two-thirds) are under 75; 31 (almost one-third) are between 75 and 85; and 6 are 85 or over.

In the years ahead, the growth in the aged population will be particularly great at the highest ages. The population 85 and older may nearly double over the years 1960 to 1985, in comparison to a 50 percent projected increase for the total population 65 and older. More of the aged in the future will be women, and most of these women will be widows, many living alone. Women 65 and older already outnumber men by a ratio of 134 to 100 and this disproportion is expected to rise to 150 to 100 by 1985.

Also, as our population grows older, more people outlive their children. Probably as many as one-fifth of all older people today never had children or had children who preceded them in death.

The facts used here have been drawn primarily from A Profile of the Older American, by Herman B. Brotman, Administration on Aging, U.S. Department of Health, Education, and Welfare. The Task Force is indebted to Mr. Brotman for his assistance in providing data more recent than those in his published analysis and for his helpful advice.

THE ROLE OF MEDICARE IN FINANCING HEALTH CARE EXPENDITURES FOR THE AGED DURING ITS FIRST YEAR (FY 1967)

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