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increased premiums or higher deductibles. But a big part of the cuts in this budget are on the providers.

In other words, that they're just not going to get the reimbursement rates, either the hospitals or the doctors or whatever, that they claim they should get and I'm really concerned about what that's going to mean. In other words, with this new budget and with less money going to providers, we're going to have to face a situation, again, where fewer people are probably going to accept assignment and fewer people will then be involved in the system.

And my understanding is that that situation has grown worse. I think one of you mentioned that only 25 percent of doctors accept assignment. That's a nationwide figure? Is that a State figure for New Jersey?

Mr. RIORDAN. It's a State figure.

Mr. PALLONE. I get the impression around Ocean County it's even less than that. And I'm just wondering what these budget cuts are going to mean in terms of that whole situation. I don't know if anybody even wants to comment on it but I know I'm very concerned about it.

Mr. RIORDAN. Doctors cannot walk away from treating Medicare patients. They're a very integral part of their practice and in some cases represent 35 or 40 percent of it. They just cannot refuse to treat Medicare. They cannot have a successful practice without treating Medicare patients.

Mr. PALLONE. And you have also have the problem with the hospitals. In other words, a number of hospitals in Monmouth and Ocean County are even operating in the red or close to it and again, with the kind of cuts that are in this budget, I'm fearful of what that's going to mean for hospital care as well.

Mr. RIORDAN. Well, the Hospital Association of New Jersey has endorsed the Governor's Commission's report. We really don't know what the effect is going to be on the Federal budget on the hospitals. There's things to be addressed-although New Jersey says they have the best bed occupancy in the country, or the second best I think, there are still empty beds in the State of New Jersey. Everybody has to be woke up.

You've got to look at prescription drugs, you've got to look at medical doctors, you also have to take a good look at hospitalsmaybe there's some fat there that could be eked out.

Mr. LARACY. I would like to make one comment on that. I haven't seen the tax bill that has just been signed into law and I know that Medicare is planning to cut back on payments to providers. But my concern, Mr. Congressman, is that when they cut back on the provider, the doctor is still going to say, “I want $30 for my house visit, even though I'm only going to get-instead of $20, I'm going to get $18 from Medicare.

We may have to pay a lot more for these services than we have ever paid. I think we're going to take the brunt of that whole problem.

I want to make a comment—this is maybe a little bit off the subject but I'm sure many of the elderly have this in mind because I talk to them every day of the week. And, again, I haven't seen the new tax bill, they tell me it's eight inches tall or maybe taller. We may never in our lifetime know what's in that law, but Wednesday, The New York Times printed 61 grants that were included in the bill, and those grants are like gifts to associations, to cities, to towns or States maybe that would never get it through regular legislation or from any other source. They're just plain gifts.

And we also read in yesterday's paper that included in the tax bill was the forgiving of a $6.7 billion debt which Egypt owes us. Now, there may be some reason for it but how can you tell these three people that sat up here in the very beginning "We're sorry we can't help you with your serious financial problems. You're going to have to sell your home and so forth if you want to continue getting care.

So I think, Mr. Congressman, this is a problem that is going to be met someday and you said earlier that some Congressmen and Senators in Washington area saying, “Gee, we've been treating these seniors with kid gloves. It's time that we stopped and considered others.'

I, for one, can not figure out what they've been giving us all these years that they can brag about. And, you know, it's regrettable, I may be out of order for saying this, but those who are saying this over television are millionaires who don't really know what it's like to be elderly and poor.

So I just hope someday they realize for themselves that it is a serious problem in this country. And I know you'll face up to them.

Mr. PALLONE. I think you're pointing out something which I was trying to get to before, which is in many ways when-initially, in the initial budget, something that was agreed to in early October, fully 60 percent, I think, of the cuts in domestic spending were going to be in the Medicare program. Out of all the domestic cuts that were proposed in the whole budget, 60 percent, I think it was the majority-was going to be in the Medicare program. And one of the ways that the new bill, the one that everyone voted for-I didn't vote for it but the majority voted for it and the President's going to sign it-was being packaged was to say, "Well, we're cutting back on the overall cuts.” I think it went from $60 billion to $40 billion, as an approximate amount. So that less money would be cut in the Medicare program.

But then they also said, “Wait a minute-not only are we going to do that, but most of the cuts are going to be for the providers and we're not going to make so many cuts or charge so much more to the seniors themselves.”

And what I think you're pointing out and what I was trying to get at is that that's not really legitimate because when you cut the money to the providers, how are you going to make up for it? Because you're ultimately going to pay for it, so it's really kind of a spurious argument to say we're cutting providers, we're not cutting the people. The consumer ultimately pays. And so it's not really a legitimate argument.

I just wanted to ask one thing—the other thing you brought out, I think it was Joe that brought it out, is that as much as we talk about Medicare cuts or at least the cost of Medicare in this budget, there are a lot of other things, particularly, for example, the gasoline tax which I know in Ocean County there's almost no public transit. So when we talk about an increased gas tax, we're talking about something that affects everybody in this room.

Again, fortunately I think the original budget had like a 10 or 12 cent gas tax increase and now it's down to 5 cents. But nonetheless, it's 5 more cents than you have to pay now. I

guess that's all I wanted to ask. I just wanted to thank all of you for coming. Again, I don't know if everybody realizes it in the room, but I personally—just from what I've seen-this was a really valuable panel not only because we had the State and Federal perspective but also because of our two advocates who really brought a lot to it as well.

So I want to thank all of you for being here today. I think we promised that we would end around this time. The reporter, Mr. George Kraft, thank you for being here, and also our two staff people.

Again, just so all of you know—and I keep saying this because you see when you have these hearings from time to time, you might say “Well, what is the value of it?”'

The value of it is not only for what each of you may have learned in the room or what I learned, but also from the fact that it is recorded and we do use it as part of our proceedings in terms of trying to decide what national policy should be about with regard to health care issues for seniors.

And obviously everyone here, I'm sure, is aware based on what we've heard the last the hour or two, that we do in some ways have a crisis and that we need to address a lot of these problems, not only in terms of where we go, but we how we pay for it. And that that's the increasing concern over the next few years, is how we're going to pay and are we going to expand these programs and what that's going to mean.

Thank you all again.
[Whereupon, at 12:45 p.m., the hearing was adjourned.]

APPENDIX

TESTIMONY OF THE NEW JERSEY PUBLIC ADVOCATE

BEFORE THE UNITED STATES HOUSE OF REPRESENTATIVES

COMMITTEE ON AGING

SUBCOMMITTEE ON HOUSING AND CONSUMER ISSUES

October 29, 1990
by: John V. Jacobi, Esq.

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