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also would be required to pay a higher deductible-$150—prior to Part A coverage instead of the present $100. Personally, I found this plan to be completely unacceptable and I joined with 253 of my House colleagues in defeating this budget package on October 3 when it was originally proposed.

On October 7, the House passed an alternative budget, a plan which I had also opposed. And this budget, like the one rejected a few days before, unfairly targeted senior citizens to pay the burden of deficit reduction. Under this plan, which is expected to be signed by the President, senior citizens would pay $350 million in higher Medicare deductibles in 1991, an increase of $2.6 billion over the next 5 years. Although the Medicare Part B premium will continue to be based upon 25 percent of the program cost, projections indicate that this premium will increase by $20 to $30 a year well into the 21st Century.

Basically, the purpose of this hearing is to assess the impact of rising out-of-pocket costs on the seniors. As many senior citizens know, the increasing costs of medical care is a major contributor to the impoverishment of our Nation's elderly, and I believe this hearing will be both informative and thought provoking. As Congress continues to seek means of providing low-cost, high-quality care for our Nation's citizens, understanding the impact of higher out-ofpocket costs will become especially important.

And I just wanted to stress, that this is not only an issue of higher costs for the elderly, but this is also a matter of less money going back to the providers, less money going back to either the hospitals or the doctors or other health care professionals because of the cuts. There's also a question about the viability of the Medicare program itself.

In other words, what we're facing is higher costs to the elderly and at the same time cuts in the program so that it makes it more difficult, if you will, for providers-be they hospitals or doctors—to provide the services. And one really questions where the program goes at this point.

Now, I've been to Holiday City before and other retirement communities in Ocean County where we had hearings and we talked about the need to expand Medicare for home health care, for custodial care, for long-term care. Well, obviously in this current climate, we're not talking about expansion, we're-if anything-talking about restrictions.

And those of us like myself who consider ourselves senior advocates who would like to see Medicare expanded to include longterm health care, for example, find this an increasingly serious situation where we're not talking about expansion, we're talking about restrictions and higher costs. And that just kind of raises the whole fundamental issue of where we're going with senior health care and with the whole Medicare program itself.

[The prepared statement of Representative Pallone follows:)

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STATEMENT OF FRANK PALLONE, JR.

SELECT COMMITTER ON AOINO
SUBCOMMITTEE ON HOUSING AND CONSUMER INTERESTS

OCTOBER 29, 1990

Dur lng the recent debate over the budget, Modioare was targeted as o primary source of deficit reduction. As you may recall, the original budget deficit reduction package negotiated by congressional leaders und rresident Bush relied heavily on cuts in the Medicaro program, some $60 billion over half of all entitlement cuto. Under this plan, Medicare recipients would be required to pay 30% of the cost of the Medicare Part Bprogram (the present premium is based on 25% of the programe cost) and would be required to pay a higher deductible ($150 prior to Part A coverage instead of the present $100). I found this plon to be completely unacceptable. I joined with 253 of my House collegue's in defeating this budget package on October 3, 1990.

On October 7, 1990, the House passed an alternative budget plan, which I also opposed. This budget, 11ke the one rejeoted a few days before, unfairly targets senior citizens to pay the burden of deficit reduction. Under this plan which 18 expected to be signed by the Presiderit, senior citizens would pay $350 million in higher Medicare deductibles in 1991 an increase of $2.6 billion over the next 5 years, Although the Medicare Part B premium will continue to be based upon 254 of the programs coutu, projections indicate that this premium will increase by $20 to $30 a year well into the 21st Century.

The purpose of this hearing 18 to assess the impact of rising out of pocket costs on the elderly. As many senior citizens know, the increasing costs of medical care 18 a major contributor to the impoverishment of our our nation's elderly, I beleivo this hearing will be both informative and thought provoking. As Congress continue to seeks means of providing low cost, high quality card to our nation's senior citizens, understanding the impaot of higher out of pocket cost will become especially important.

FIGURE 1.

ELDERLY OUT-OF-POCKET HEALTH CARE COSTS

COSTS PER CAPITA FOR 1977-1906

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$2.800

$2.600

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$2,400

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$1.400
$1.2006 ETE

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1977

1980

1987

1988

YEAR

SOURCES: House Select Committee on Aging, February 1989; Health Care Financing Administration, July 1984 and October 1988; Census Bureau, 1988.

TABLE 3. PER CAPITA HEALTH CARE EXPENDITURES FOR PEOPLE AGED 65 AND OLDER IN 1977, 1980, 1987 AND 1988

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SOURCES: House Select Committee on Aging, October 1988; Health Care Financing Administration, July 1984 and October. 1988; Census Bureau, 1988.

FIGURE 2.

ELDERLY OUT-OF-POCKET HEALTH CARE COSTS

PERCENT OF INCOME 1977-1988

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26

24

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20

18

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1977

1980

1987

1988

YEAR

SOURCES: House Select Committee on Aging, February 1989; Health Care Financing Administration, July 1984 and October 1988; Census Bureau, 1988.

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