miliar surroundings. This is generally less expensive but not always possible because of the need for a resident caregiver. I strongly feel that the type of care needed, facilities and access should be handled through a complete system of case management involving a team consisting of a nurse and a social worker with oversight from the attending physician.

The cost of prescription drugs, based on information I have seen, has grown faster than any other health care costs. In recent days, I became aware of discounts that are accorded to some major users and not to others. The specific instance involved is supplying the Veterans Administration at one price and Medicaid at a price that was 75 percent higher. Merek recently agreed to supply drugs to Medicaid at a reduced cost.

Possibly the whole price structure in the pharmaceutical industry should be looked at. Approximately 30 percent of New Jersey seniors or disabled are on PAAD, which is the Pharmaceutical Assistance to Aged and Disabled. This group receives prescription drugs for a $2 copayment. However, others with serious chronic ailments have drug costs that run into hundreds of dollars. Attempts to encourage the use of generic drugs have been strongly opposed by the drug companies and the medical profession. Reforms in the pricing of drugs at all levels could be meaningful. It is one part of the health care system where up to now there has been no effort at cost containment.

In 1989, some concerned Members of Congress drafted legislation that would have phased out balance billing by January 1, 1994. It wound up in what to me is the most repulsive aspect of Federal legislation, Omnibus Budget Reconciliation. When it came out for an up or down vote on the floor, doctors were allowed to balance bills on a decreasing scale from 125 to 115 percent between 1991 and 1993 where it would remain. Your committee should persist in eliminating balance billing.

In New Jersey, balance billing, which is also called Medicare assignment, costs seniors and disabled $129 million in 1989, a statistical average of $125 per patient. Medicare assignment is fair. With the implementation of the relative value scale starting in 1992, there can be no complaints regarding established rates.

Because mandatory assignment is a recommendation of the Governor's Commission on Health Care, we are reasonably optimistic that it will be legislated in 1991.

Mandatory Medicare assignment, coupled with electronic claims processing, would minimize the problem of up-front payment which causes people to forego doctor visits. Early diagnosis often reduces

costs.

Wellness programs and payment for routine physical examinations would reduce the incidence of critical health situations with large out-of-pocket costs.

When we consider policy, we must go beyond the needs of older Americans. Long-term care must be intergenerational. We have infants born who will require long-term care as well as people of all ages with chronic debilitating ailments. These needs must be addressed. We should guarantee access to health care for all people. It must be delivered with dignity and assured quality.

In New Jersey, the Governor's Commission on Health Care Costs recently released its report. The group consisted of 18 members representing varying groups. Its first recommendation was:

"The United States Congress should enact legislation within the next year for a universal health care system to ensure that all Americans have access to quality health care."

We have a document which addresses many of the problems, the report of the Pepper Commission. I strongly suggest you support its recommendations and the legislation which will be developed from it. Let us put the issue on the front burner and make every Member of Congress go on record with their position.

Universal health care will come. The time for action is now.
Thank you.

[Supplemental material submitted by Mr. Riordan follows:]

Materials submitted by Joseph Riordan.

Please return to: The Long Term Care Campaign, PO Box 27394, Washington, DC 20038.

The $5 referred to in the pledge is based on estimates of the cost of a comprehensive, universal Long Term Care protection by a number of leading national experts, including former Social Security Commissi Robert M. Ball. Published by the Long Term Care Campaign, an educational, non-partisan coalition of 142 national organizations seekly passage of nailonal, comprehensive Long Term Care legislation.

EXECUTIVE SUMMARY

The crisis of health care costs is real, and is getting worse. Nationally and in New Jersey, the costs of hospital care, doctor's visits and health insurance are rising at an alarming rate. One million New Jersey residents have no public or private health insurance coverage. For those with coverage, huge increases in insurance premiums have become routine. Meanwhile, the uninsured have few options for care aside from hospital emergency rooms.

The Crisis

in a remarkably short period of time, the cost of health care for businesses and individuals has gone from a relatively inconsequential nuisance to a major budget item. Many New Jersey businesses are now forced to choose between health insurance premiums or jobs and wages. Many are passing along to workers, for the first time, substantial costs of insurance. Many others receive a 50 percent premium increase, and simply drop coverage.

Many individuals face similar choices. As astronomical rate increases arrive, New Jersey residents agonize over the choice of foregoing health care coverage or other essentials! The human cost of this inflationary phenomenon can be devastating.

The Commission believes that these cost increases have generated a cycle of cost escalation that must be broken. As health care costs rise, some businesses and individuals become unable or unwilling to pay for premiums, or unable to afford the ever-growing deductibles and co-payments. As people become uninsured, they are likely to obtain routine care in hospital emergency rooms through the Uncompensated Care system. The Uncompensated Care Trust Fund is funded through a little known tax on all hospital bills. As the amount of Uncompensated care goes up, the cost of health insurance rises, causing more people to become uninsured. The cycle causes more and more people to lose health coverage, and consequently places a larger burden of payment on the shrinking pool of people who are covered.

The people of New Jersey have long since determined that no one should be denied health care coverage on the basis of inability to pay. Fiscal strains on the Uncompensated Care and Medicaid system, however, threaten the ability of the medically indigent to gain access to appropriate care, causing unnecessary suffering and, perversely, forcing them into higher cost health care settings.

The cycle of higher costs and fewer insured can only lead to further crisis. The Commission determined that solutions to this crisis can only be achieved if long-standing assumptions and barriers in the system are challenged. This Report reflects that philosophy.

The road to cost containment need not result in reduced access to appropriate health care. Rather, there are many instances in which lower cost alternatives help improve access to health care. The Commission attempted to take apart the pieces of the health care system, and put them together in a more functional configuration. By moving from a fragmented, patchwork system toward a more comprehensive, unified system, both goals of cost containment and adequate access can be served.