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before the passage of Medicare. Medicare is simply filling the same gap that was filled by private insurance for those who had back in 1965. With medical inflation, however,

it,

older

Americans are paying a larger portion of their income for health care. In 1980, seniors paid 13 percent of their income on health care; in 1988, they paid 18 percent. American industrial giants in the auto, steel, and communications industry are waking up to the impact of rising health care costs on their bottom line. Yet, for all our awareness of the growing dimension of the problem, our solutions have been so limited in scope they do little more than put "band-aids" over hemorrhaging wounds.

The evidence is unassailable--piecemeal reform does not work. Our health care system is like a balloon, squeeze in one place and it will expand some place else. We pass a hospital prospective

reimbursement

program and physician costs go through the roof. Congress is considering Medicare limits on physicians' costs--something which we strongly support since Medicare costs

Now

alone have risen more than 14 percent annually in eight out of the last nine years--but, no doubt, doctors will figure a way around it. Witness the response of physicians to the recent Medicare reimbursement reductions--they simply increased the numbers of visits and tests to maintain their income levels. Every day laboratories perform 40 million tests. That's enough tests to provide every American with one test every six days. Doctors can "game" the system with the best of them.

Even more disturbing is our high rate of infant mortality. In any study, the United States consistently falls beneath all other industrialized nations. This decay is even more prevalent for non-whites. A black baby born in Detroit has a smaller chance of

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surviving its first year than a baby born in Costa Rica. Americans should be ashamed and angry about this, and they are. In Canada, 98 percent of women receive prenatal care. Only 75 percent of American women ever do. This also drives up our medical inflation. Premature and sick babies cost thousands of dollars a day. Yet many of these babies' problems could have been prevented with adequate prenatal care.

All while 300,000 hospitals beds a day go unfilled. Fortunately, expanded Medicaid coverage for pregnant women and infants was one of the apparent survivors in the Catastrophic crash.

Other industrialized nations have higher life expectancies and

lower

infant mortality rates, even as they spend less money on a per-capita basis. Americans spend about $2,000 a year medical Per Capita Health Expenditures - 1984

costs, while Europeans spend only about $1,000 to $1,200 a year. This is especially true since other countries are able to contain costs and aren't suffering the 15 to 20 percent medical inflation a year like the United States. Also, in the U.S, 23 percent of our health costs go to administration, in Canada, 13 percent. Chairman, if all we did was to lower our administrative costs to 13 percent, we would save, as a nation, about $50 billion a year; enough money to provide health insurance for every American

Mr.

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currently without it.

Plus,

hospital

administrators are

increasing four times faster than physicians. States is paying more, and getting less.

Clearly, the United

The National Council of Senior Citizens and its members are convinced that fundamental, systemic reform of the way we provide health care in the U.S. is essential and that we must begin the process now. We must burst the health care balloon and put in its place a more equitable, more efficient and more affordable national health care program. As you have no doubt heard many times, we along with South Africa are the only two nations of the western industrialized world that have not adopted some form of national health program. Yet, such a program can ensure that all Americans have access to decent quality, affordable health care.

Polls show that 61 percent of Americans favor the Canadian

model for a National

Health Care System.

This model, while not

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perfect, is extremely popular among Canadian citizens--only three

system needs fundamental change or complete rebuilding.

The cost of health care in Canada is much lower than in the U.S., with Canadians paying only 8.6 percent of G.N.P., while the U.S. pays 11 percent.

Many critics of a proposed American national

system raise the specter of "rationing."

health care

in the U.S.

Yet, we
Theirs is a rationing

system based on need, ours is one based on wealth.

Even for those

lucky enough to be covered by one of the nation's 1,500 health

insurance

programs,

health

is care

rationed,

with large, profit-minded companies deciding what care is to be provided and what care people can do without. Even if coverage is provided, many companies still require patients to pay a great deal of costs

out of their own pocket.

In Canada, everyone is given health care regardless of his or

can spend.

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Standards are kept high by the Federal Ministry of

Health and local governments which oversee day-to-day operations. Plus, patients are still free to choose their physicians and doctors are privately employed. And Canadian physicians are still well-paid, earning five times what an industrial worker makes.

One argument often levelled against the Canadian system is that it limits access to exotic medicine and non-emergency surgery. Let's face it: high-tech medicine is expensive. Yet,

in the U.S., hospitals and clinics routinely buy CT scanners, MRIS and other extremely expensive medical equipment. Such equipment is either under utilized or used unnecessarily (i.e., using an MRI scan for a broken bone). These unnecessary costs then continue to fuel the fires of medical inflation.

The Swedes have solved the exotic technology problem without undue hardship by establishing six high-tech regional centers (one center for about every million and a quarter people). Problems that cannot be handled at a local level are referred to these centers. Indeed, this is how some planning problems are handled in the U.S. with some facilities concentrating on burn victims, others on heart attacks, cancer, or stroke for example. Clearly, we should examine all of our options before choosing what is right for us. But I do not, and cannot, believe that we cannot solve }

this problem.

Unfortunately, efforts to move toward a national health care system continue to be blocked by most medical groups, particularly by the powerful American Medical Association which gave over $3 Imillion to political candidates in the last election. The AMA, which opposed the passage of Medicare, and now pays for full-page ads in major newspapers claiming their support, says that any