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their failure by throwing themselves on the mercy of the welfare people by taking advantage of Medicaid. It might be pointed out here, however, that only 29 of our 50 States have Medicaid programs in operation. Elderly poor in 21 States are out of luck insofar as meeting the deductibles and co-insurance features of Medicare are concerned even if they are prepared, in their desperation, to go the welfare route.

The truth is that the deductible and co-insurance features of the Medicare program merely discriminate against the elderly poor who need the most help. Any hospital administrator will tell you that deductibles and co-insurance are not necessary to control utilization and they certainly will not control abuses. People with plenty of money never have much difficulty getting into a hospital. Frankly, the National Council of Senior Citizens fought against the inclusion of deductibles in the original King-Anderson bill, and after one year of their operation in the Medicare program we are even more convinced that we were right.

Our Medicare program is a program of social insurance but the use of deductibles and co-insurance comes strictly from the practice and thinking in commercial casualty insurance. The basic concept of fire, auto, marine, etc. insurance is the pooling of risks to protect against loss from undesirable and often preventable accidents. The deductible is promoted as a guard against carelessness-or paying the consequences.

But in today's world everyone requires health services. Modern medicine embraces preventive care and health maintenance as essential elements. The casualty insurance concept simply does not fit in a Medicare program established as an element of our social insurance system.

Now, Mr. Chairman, to answer another of your questions-"Are rising medical costs causing special difficulties for the elderly?"

Those elderly Americans who are fortunate enough to be able to pay taxes will, of course, have to meet their appropriate share of the Nation's precipitously rising health costs.

But, under the co-insurance features of the Medicare law, 20 percent of all doctor bills must be met by the elderly themselves. But nearly all doctors have raised their fees to aged patients-some have doubled or tripled their fees. Some of our elderly suffering in the most extreme cases are beginning to feel they are not much better off under Part B of the program (voluntary supplementary insurance) than they were before. They pay $36 a year in premiums, have a $50 co-insurance feature-and some doctors have double or tripled their fees!

At his recent press conference in connection with the first anniversary of the introduction of Medicare, Social Security Commissioner Robert M. Ball spoke of the possibility, starting January 1, 1968, of a substantial increase perhaps 50 cents in the present $3 monthly premium for the optional doctor insurance under Medicare because of skyrocketing doctor fees.

It was clear, months before the start of Medicare, doctors began jacking up their fees so they would not be caught with their fees down when the program began.

Some doctors have excused their fee-grabbing by claiming they charged the impecunious elderly reduced fees before Medicare and feel an obligation to charge them more now that the Government pays a major part of their doctor bills.

If this Robin Hood system of taxing rich patients for the benefit of the elderly poor was ever in general use by doctors it would seem that doctors, in all fairness, have an obligation now to lower their fees to the rich. Even though doctors no longer have elderly charity patients, we have yet to hear of one doctor who has lowered his fees.

Medical Economics, the chief journal devoted to doctors' incomes and financial practices, revealed in a national sample of 3,195 family doctors (general practitioners and internists) that since Medicare began, the median fee of general practitioners has jumped 25 per cent for the key category of office visits (the patient's follow-up visits after the initial contact). The median fee of internists is up 40 per cent.

A very interesting finding is that pediatricians' charges for office visits remained unchanged (the median figure was $5) during this period. Yet our population expansion is just as heavy among the very young as it is among our aged population.


Under the fee-for-service system the accepted principle is that fees should be "commensurate with the services rendered and the patient's ability to pay".

Today, in millions of cases, the ability of the patient to pay has been reinforced, if not totally supplanted, by the resources of Federal and State treasuries or by Blue Cross-Blue Shield, or private insurance companies. This seems to have confused many of our doctors. They seem to want to charge what the Government can afford to pay, or what the insurance company can afford to pay.

The rising costs of health care are, of course, not merely limited to doctor fees. Walter J. McNerney, president of Blue Cross, has predicted the average cost of hospital care which he estimated at $54.05 nationally as of March, 1967, might go to $69.79 a day by 1970. At these rates few older people could remain in hospital one more day after their inpatient hospital benefits of 90 days run out.

Costs in extended care facilities are rising and our members report that the costs in the custodial care nursing homes outside the system seem to be rising right along with them.

To answer another one of your questions we would like to say we believe much has been done on a geographical basis to provide health care institutions under the program. However we are concerned that in many cases there has been a relaxation of the conditions of participation in some institutions. Introduction of the highly elastic concept of "substantial compliance" with conditions of participation gives cause for apprehension that the quality of care may be eroded in substandard and marginal facilities.

Before other Committees of Congress the National Council of Senior Citizens has highlighted what it believes are much needed improvements in the Medicare program so as to be able to deliver adequate health services to all older Americans. One of our major complaints is that while Medicare takes good care of the aged suffering from acute illness and requiring hospitalization, there is little help available for millions of older Americans suffering from chronic diseases. In this segment of our population the drug industry has bound a bonanza. Elderly people suffering from chronic ailments in a very real sense are captive to the drug industry because day in and day out they must take maintenance drugs for the treatment of chronic conditions which are an inevitable accompaniment to advancing age.

The high prices of prescription drugs constitute a problem of gigantic proportions. Frequently older people have to make a choice between needed drugs or food. But at the present time there is no other country in the world whose prescription drug prices are as high as those in the United States. Congress must find a way to provide the cost of prescription drugs—at least on a generic basis— under the Part B program dealing with supplemental insurance.

We believe, in fact, that Medicare will not adequately cover our older people until its provisions include wheel chairs, eye glasses, hearing aids, all surgical and orthopedic appliances, and all eye, dental, and drug needs as prescribed by a physician.


There are shortages of trained personnel in the medical and medical-related professions in all fields and particularly severe in fields that serve the elderly. Our population is showing marked increases at both ends-the very young and the very old. But after 50 years of struggle, baby care became a medical specialty and, in proportion, large numbers of each year's graduating crop of new doctors become pediatricians. At the beginning of this century there were only 3.1 million Americans age 65 or over. By 1980 we will have more than 25 million over 65. Not only is their number zooming but so is their proportion to the rest of the population. It is high time that geriatrics also became a specialty of the medical profession.

On of the greatest hardships under the current Medicare program arises from a doctor's refusal to accept an assignment of his medical bill. Social Security Commissioner Ball estimates 57 per cent of the doctors across the nation accept assignemnts at least part of the time. In some areas only one in three doctors do. It is often all a low-income senior can do to pay the entire amount of his doctor bill in cash so he can get a receipted itemized statement of services performed by the doctors. For the elderly, the majority living on shamefully inadequate incomes, it is a hardship to pay for major operations and treatment out of pocket, then wait weeks or months for Medicare reimbursement.

The National Council of Senior Citizens has asked Congress to simplify collection of Medicare claims.

Congressman Al Ullman of Oregon, a member of the House Ways and Means Committee, has come up with a plan whereby the doctor would give his Medicare

patient an unreceipted statement of fees for service that conform to fees that are customary and reasonable. The Medicare payment agency would be empowered to send a settlement to the patient for transmission to the doctor.

This would provide an alternative to the present billing options, namely, direct billing which allows the doctor to charge all the traffic will bear, and assignment which limits the doctor to customary and reasonable fees as determined by the payment agency.

A resolution adopted at the National Council's recent convention calls for a system under which doctors send their bills to Medicare payment agencies as they presently do with Blue Shield plans or, else, allow the patient to collect on unreceipted bill as Congressman Ullman proposes. National Council members feel this will obviate the painful necessity of many seniors having to borrow to pay their doctor bills then wait long weeks for reimbursement.

These are problems that can be corrected by a vote in Congress-they will certainly not require the expenditure of Treasury funds.

The real challenge is the need for a radical reorganization of health care in the USA and that will take time. If the cost of Medicare and Medicaid is to be kept within reasonable bounds, hospitals and doctors must cooperate for maximum utilization of medical facilities.

No longer is it feasible for two hospitals in the same town each to install costly cobalt radiation units, for example, when both could use a single radiation unit. More important, there must be an upgrading of medical procedures guaranteeing top health care for rich and poor alike.

We of the National Council of Senior Citizens agree with Dr. Peter Rogatz, director of the Long Island Jewish Hospital, New Hyde Park, N.Y. Writing in Hospitals magazine recently, he declared:

"It has been said many times that in the great cities of America, both the rich and the poor have access to the finest medical care in the world. The argument runs something like this: American medicine is the best there is. The rich of course can purchase it at will and, although the middle income family is sometimes caught in between, at least the poor can go to the finest hospitals, without charge, and receive the finest medical care avaailable.

"Well, it just isn't true. Our basic system for providing health services for the poor is a failure. We try. Our intentions are good but the results aren't. In taking an honest look at some of our comfortable assumptions, I believe that we, in the fields of health and social welfare, have allowed ourselves to accept a fictional view of some of our accomplishments.

"There is no doubt our medical schools and research centers are the best in the world and that our medical technology has made incredible advances year after year. And yet, within a few blocks of so many of our magnificent medical centers, there are persons in poor health, attended by doctors of questionable ability who are practicing indifferent medicine. . . ."

What Dr. Rogatz has to say about the poor applies especially to the elderly poor.

Medicare and Medicaid have set off a revolution in health care-a revolution that promises early prospects that this nation might soon be able to eradicate second-class care and bring us closer to the day when top-quality care will be available for all citizens-not merely those with plenty of money.

We of the National Council of Senior Citizens believe a nation whose gross national product is more than $700 billion a year should be able to accomplish this goal. However, we are pragmatists at the National Council and we are patient, but the sands of time are running out for our nation's elderly.

We therefore plead with Congress to assign its highest priorities to improving health care of the aged. The National Council of Senior Citizens seeks solutions to the problems of the aged not as a special interest group but as an essential element of the welfare and prosperity of Americans young and old.


July 6, 1967.

Chairman, Subcommittee on Health of the Elderly, Special Committee on Aging,
U.S. Senate, Washington, D.C.

Dear SENATOR SMATHERS: Mr. Hutton's letter to Under Secretary Cohen was answered on June 26, 1967, to the effect that there seemed to be a misinterpreta

tion of my remarks. The letter in reference is enclosed for your information and use in the record if you so desire.

Sincerely yours,


Deputy Assistant Secretary for Health and Scientific Affairs.



Executive Director,

National Council of Senior Citizens, Inc., Washington, D.C.

June 26, 1967.

DEAR MR. HUTTON: Under Secretary Cohen gave me your letter and asked me to respond, inasmuch as I am the one who presented the testimony you take issue with. I am having it delivered by hand, in order to be sure you have it before the Conference on Medical Care Costs, as you requested.

First, let me say that there is nothing in my statement that is in conflict with your position or that of Dr. Ross. Part of the statement submitted for the record reads:

"Although the price of drugs has not risen significantly in recent years, there are a number of reasons for concern about the cost of drugs. Prior to Medicare, average per capita drug expenditures by the elderly were about twice as high as the average for all persons in the population. Thus, the cost of drugs imposes a major financial burden upon many elderly Americans. Further, a large proportion of the total drug expenditures by the elderly are incurred by aged persons who are high users of medical care. For example, in 1962, 10 percent of those persons over the age of 65 incurred 40 percent of the expenditures on drugs by all persons over the age of 65. But out-of-hospital drug costs are generally not covered by health insurance."

Furthermore, in "Medical Care Prices," submitted for the record as an appendix, and from which our statement was drawn, a number of remarks cover this ground, for example:

"Drugs contribute to the high cost of medical care, although they have not contributed significantly to recent price increases.

"The use of drugs is increasing, and many consumers are conscious of an increased burden of drug expenditures not generally covered by insurance.

"Drug prices are higher than they would be if there were more vigorous price competition at either the manufacturing or drug store level. Advertising costs are high and doctors often prescribe costly brand name drugs when cheaper equivalents are available."

"Drug prices have not been major contributors to rising medical prices. The drug component of the Consumer Price Index increased 13.3 percent over the period 1950 to 1965, or somewhat less than 1 percent per year on the average. There was no appreciable change in the drug component of the CPI during the 6-year period ending December 1966. The prices of prescription drug items in the CPI (as contrasted with over-the-counter drug items) actually declined by 11.7 percent between 1960 and 1966.

"Industry sources give a slightly different picture. The average retail price per prescription, reported in The American Druggist, increased at an annual rate of about 2.3 percent between 1955 and 1965, and at slightly less than 1 percent per year between 1960 and 1965.

"The 'average prescription price' reflects the use of new drug products, and changes in the quantities and prices of drugs prescribed. In contrast, the CPI reflects changes in the unit price of the same or similar drug items over periods of time. It is difficult to adjust the drug component of the CPI for the rapid changes in the character of the drugs prescribed. By the time a prescription item is incorporated into the index, its price may have fallen to a lower level than in previous years. In the interim, newer drugs are being prescribed at a higher price level, and the drugs included in the CPI may not reflect such price movements. Most of the difference between the increase in the 'average prescription price' and the change in the drug component of the CPI can be attributed to the use of new and improved drug products and changes in the quantities prescribed."

In essence, we cannot quarrel with your argument that drug costs are a heavy burden to our older citizens. There was no intention on my part to minimize

this factor. When I said, "Drug prices have not been a major factor in rising medical prices," this referred to drug prices relative to other medical prices. Sincerely yours,

GEORGE A. SILVER, M.D., Deputy Assistant Secretary for Health and Scientific Affairs.


(Rodney M. Coe, Eugene A. Friedmann, Warren A. Peterson, Jack Sigler, Harold Saunders, Douglas Marshall, and Henry P. Brehm,2 Midwest Council for Social Research in Aging, Institute for Community Studies)

The enactment of Public Law 89-97-the Medicare Act-in July, 1966, represents a dramatic innovation in the philosophy, scope and procedures for delivery of health care services to the aged population in the United States. As such, it affords a unique opportunity for social scientists to study the processes of social change that simultaneously permits the testing of hypotheses derived from sociological theory and provides information with an immediate importance for application to practical problems. This paper focusses on the development of testable hypotheses concerning the utilization of community health resources by older people and the provision of these resources by the community.


Initially, our attention was drawn to the potential importance of this legislation by the early predictions-much publicized in the mass media-that local health facilities, especially hospitals, would quickly become swamped with requests for services. This prediction, of course, was based on a kind of "economic man" hypothesis that an increased ability to pay for health and medical care services (provided by Medicare) would lead to (cause) an increased utilization of the facilities and services by people eligible for Medicare benefits. This assumes that for the most part, utilization rates are determined by ability to pay. At a superficial level, some data would suggest that the hypothesis was valid. For example, utilization rates in terms of number of office visits, frequency of hospitalization, etc., do vary directly with amount of family income, i.e., the higher the income level, the greater the utilization (1,2).

To suggest that this is the whole story, however, is to grossly over-simplify the problem. A considerable fund of research data points to other, more important factors related to utilization. Among them are the perception of illness and subsequent definition of symptoms as illness in need of professional services (3-6). These studies have consistently shown that the perception and meaning of experienced symptoms vary by such factors as age, sex, social class position, educational level, ethnicity, involvement in kinship ties, urban or rural residence, etc. Further, these studies suggest that the appearance of symptoms is not always defined as illness, or if it is defined as illness, it is not always seen as necessary or appropriate to seek out professional care. For example, some older persons may interpret persistent aches in joints and muscles, sore feet, generalized feelings of weakness as "a part of the process of growing old" and not as illness at all. If these symptoms are viewed as indicating an illness, they more than likely would be treated with home remedies or patent medicines of various sorts. If the individual's condition becomes incapacitating or otherwise prevents the person from engaging in important activities, then perhaps professional medical attention will be sought.

This brief characterization of illness behavior (7-8) and its relationship to utilization of health services suggests at least two opportunities provided by Medicare to answer questions relevant to sociological theory. The first has to do

*See statement, p. 65.

1 Revision of a presentation made at the meetings of the Midwest Sociological Society, Des Moines, Iowa. April, 1967. This paper was supported by USPHS Grant Number CD 00244.

3 Washington University, Kansas State University. Institute for Community Studies, Institute for Community Studies, University of Iowa, University of Wisconsin, U.S. Public Health Service.

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