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if-applicants submit to a means test. But what of the elderly in the 21 States that do not have medicaid?

Even in the States with medicaid, I am sure there are many elderly who proudly undergo great privation rather than submit to a means test. These are men and women who were most of them self-supporting until excluded from the labor force on account of age.

Upon leaving, gainful employment, they were forced to join that other America, described by Michael Harrington, an America of poverty, deprivation, and disease.

A year's experience with medicare and medicaid shows that medicare and medicaid have bypassed a great many men and women they were designed to help.

What can be done?

DEDUCTIBLES, DRUGS CAUSE PROBLEMS

We of the National Council of Senior Citizens urge with all emphasis at our command a phasing out of the medicare deductibles. The way is now, with deductibles and other restrictive medicare features, we offer the elderly modern health care with one hand and snatch it away with the other.

Even with the increase in social security now being considered, the medicare deductibles will remain a barrier to adequate health care for large numbers of older Americans.

Proper health care takes in vision, hearing and dentistry. Yet, medicare excludes eyeglasses, hearing aids and dental care. These items must be covered if we are really going to bring modern health care to the elderly poor.

The exorbitant prices often charged for drugs are another obstacle in the way of modern health care for the elderly. Drugs the elderly must buy-four out of five elderly have chronic ailments—should be brought under the medicare umbrella.

Who will pay for these improvements?

We of the National Council of Senior Citizens insist our prosperous land can and should pay for them out of general taxation, generally income taxes.

I am glad to note that the Health, Education, and Welfare Department has called a conference for June 26 and 27 in Washington to discuss these critical matters.

My colleague, Bill Hutton, executive director of the National Council of Senior Citizens, is close to the problems of rising health care costs. Daily, he and I see desperate letters from our members telling of their medicare problems. I would very much like to have him present his observations to the subcommittee. I thank you for the privílege of appearing before you.

Senator SMATHERS. Thank you, Mr. Edelman, for that splendid statement. We are happy that you are back feeling well and could make it. That is a fine statement.

Mr. Hutton, you may proceed.

STATEMENT BY MR. WILLIAM R. HUTTON

Mr. HUTION. Senator Smathers, members of the National Council of Senior Citizens do not spare themselves in recognizing that medicare and medicaid are doing more to break down the barriers to ade quate medical care for older people than any other steps that have been taken in the history of American medicine and in the history of our social legislation.

But it is precisely because we believe that the organization and delivery of medical services to every American citizen may be changed dramatically by the impact of these programs that we are glad to submit the following observations.

Through its enactment of the Social Security Amendments of 1965 which included these important health programs, the U.S. Congress clearly recognized that the problems of medical care for the aged are more severe than for other age groups.

Though we are intensely grateful to Congress for the enactment of these programs, we have had plenty of opportunity during a full year of their operation to realize where they fall far short of the minimum that is needed to make good health a reality for many aged citizens.

Nevertheless, we want to emphasize that in our goal to seek a better life for all older Americans the National Council of Senior Citizens is extremely conscious of the national interest. This concept of seeking improvements for the elderly within the framework of the national interest is one, Mr. Chairman, which has brought recognition of our organization by the Members of this Congress as a responsible voice of the elderly people of America.

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"RUNAWAY Costs" OF SERVICES We are desperately concerned about the health care needs of the elderly. We are just as desperately concerned with unnecessary, unrealistic, “runaway costs” which are forcing up the price of health care, not only to elderly people themselves, but for their sons and daughters and for their grandchildren.

Ever since the spring of 1965—when it became clear that medicare was going to be enacted—the National Council of Senior Citizens has been warning Congress that soaring hospital costs and spiraling doctor fees pose a dangerous threat to the program.

We believe quite sincerely that this is currently an economic threat and not a political one. Something must be done to halt the rate of health cost increases. We must work to control costs and improve efficiency without sacrificing the quality of care. While to some degree this calls for the understanding and cooperation of the people who will use the care, it calls more seriously we believe, for restraint and judgment by those doctors who are willfully and flagrantly raising their fees on the theory that "Uncle Sam can afford it” or who are inflating their fees because a patient happens to be privately insured.

It is understandable that some hospitals which are belatedly meeting staff demands for needed increased wages are having to meet higher costs. It is also clear that there are wasteful and extravagant practices in many of our health institutions. Inside and outside of Government there is a great need for built-in incentives to control costs.

Mr. Chairman, in your Senate statement on June 7 announcing these hearings, you asked a number of questions to stimulate discussion con

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cerning the organization of our medical services as they affect the elderly. I would like to group several of our observations under the topics prescribed by these questions.

Do many of our elderly face insuperable obstacles in obtaining needed health services !

I know that the committees of Congress appreciate the tremendous difficulties we experience in gathering accurate data on the invisible poor. As President Johnson pointed out in his message to Congress on social security, there are 5.3 million older Americans living in the squalor of poverty and obviously it is difficult, if not impossible, for many of them to meet the deductibles and coinsurance features of the medical law. The leaders of our over 2,000 affiliated clubs have told us they believe there are many older Americans in their communities who will not go to a doctor because of their lack of money.

Many aged sick would rather suffer in silence than admit they cannot produce the $40 for the first day of hospitalization, the initial $50 for doctor bills, or subsequent one-fifth of all doctor costs as coinsurance for medical insurance.

ONLY 29 STATES HAVE MEDICAID

The people I am talking about, Mr. Chairman, include many proud Americans whose sweat and toil helped to make this country great. They don't wish to admit their failure by throwing themselves on the mercy of the welfare people and taking advantage of medicaid. It might be pointed out here, however, as it has been by Mr. Edelman, that only 29 or our 50 States have medicaid programs in operation. Elderly poor in 21 States are out of luck insofar as meeting the deductibles and coinsurance 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 coinsurance 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 coinsurance 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 1 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 coinsurance comes strictly from the practice and thinking in commercial casualty insurance. ''he basic concept of fire, auto, marine, et cetera, 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 through the payment of these taxes.

But, under the coinsurance features of the medicare law, 20 percent of all doctor bills must be met by the elderly themselves. 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 medicare. They pay $36 a year in premiums, have a $50 coinsurance feature--and some doctors have doubled or tripled their fees.

Senator SMATHERS. Let me ask you a question right there. If, as you say, doctors' fees have gone up, do you think Congress is wise in eliminating the provision which allows taxpayers 65 years old and older to deduct all of their medical expenses irrespective of whether it exceeded the 3-percent limitation? Do you know what I am talking about?

Mr. HUTTON. Yes, I do, sir.

Frankly in our studies we believe that Congress probably made a wise decision. The number of elderly people who do have to pay taxes is much fewer than the mass of people who don't, and for the most good we feel that this is probably right.

Senator SMATHERS. I agree that most of the elderly-
Mr. HUTTON. Do not pay taxes.

Senator SMATHERS. They are in an income bracket where they are not too concerned with it. If physicians' costs continue to go higher, if hospital costs continue to go higher, if insurance finally gets to the limits of what it can cover, then should it not be as it once was, that people who are 65 years old or older should be able to deduct all their medical expenses?

Mr. HUTTON. I believe, Mr. Chairman, that hospital costs would have to go a great deal higher than they have even gone now to affect the majority of the elderly. It is only a very small percentage of the elderly who are affected by having to pay income taxes.

Senator SMATHERS. I tell you one reason I ask the question. I have personal knowledge of a situation of a lady who is 93 years old and has a fairly substantial income, $20,000 a year. She is an invalid. Every bit of that income is utilized in the payment of her nurse which she has to have with her full time, of doctors' bills and so on.

Now, when the Congress eliminated that total deduction, she now has to pay an additional $319 or $320 a year. With an income of that size there are certain things she cannot avail herself of, with the result that this woman is having to borrow the $300 to pay her tax.

Mr. HUTTON. Yes, sir, there are some sad cases.

Senator SMATHERS. I agree, generally speaking, that does not apply to the person that you are generally representing and that we are talking about, but I think the Congress made a mistake in doing that. I think if you are 65 years old and older you ought to be permitted to deduct totally your medical expense because when you get to be that age even though you have some steady income, with the cost of things going as they are, even these people now in some respects have insufficient funds—although not to the extent of the great masses of the 19,300,000 elderly.

INCREASE IN PREMIUMS?

Mr. HUTTON. Sir, there is one other aspect I would like to mention where these rising medical costs are threatening to cause additional cost for medicare. 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.

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, sir, to hear of one doctor who has lowered his fees to the rich, and we have surveyed our 2,000 clubs to find one.

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 percent for the key category of office visits-the patient's followup visits after the initial contact. The median fee of internists is up 40 percent.

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 the hospital 1 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.

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