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Y 4.Ag 4/2:N42;/4
THE FUTURE OF MEDICARE: N.J.

HEARING

BEFORE THE

SUBCOMMITTEE ON HUMAN SERVICES

OF THE

SELECT COMMITTEE ON AGING
HOUSE OF REPRESENTATIVES

NINETY-EIGHTH CONGRESS

FIRST SESSION

MARCH 28, 1983, PRINCETON, N.J.

Printed for the use of the Select Committee on Aging

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U.S. GOVERNMENT PRINTING OFFICE

22-020 O

WASHINGTON : 1983

SELECT COMMITTEE ON AGING

EDWARD R. ROYBAL, California, Chairman CLAUDE PEPPER, Florida

MATTHEW J. RINALDO, New Jersey, MARIO BIAGGI, New York

Ranking Minority Member IKE ANDREWS, North Carolina

JOHN PAUL HAMMERSCHMIDT, Arkansas DON BONKER, Washington

RALPH REGULA, Ohio THOMAS J. DOWNEY, New York

NORMAN D. SHUMWAY, California JAMES J. FLORIO, New Jersey

OLYMPIA J. SNOWE, Maine HAROLD E. FORD, Tennessee

JAMES M. JEFFORDS, Vermont WILLIAM J. HUGHES, New Jersey

THOMAS J. TAUKE, Iowa MARILYN LLOYD, Tennessee

JUDD GREGG, New Hampshire STAN LUNDINE, New York

GEORGE C. WORTLEY, New York MARY ROSE OAKAR, Ohio

HAL DAUB, Nebraska THOMAS A. LUKEN, Ohio

LARRY E. CRAIG, Idaho
GERALDINE A. FERRARO, New York PAT ROBERTS, Kansas
BEVERLY B. BYRON, Maryland

COOPER EVANS, Iowa
WILLIAM R. RATCHFORD, Connecticut JAMES A. COURTER, New Jersey
DAN MICA, Florida

LYLE WILLIAMS, Ohio
HENRY A. WAXMAN, California

CLAUDINE SCHNEIDER, Rhode Island MIKE SYNAR, Oklahoma

THOMAS J. RIDGE, Pennsylvania BUTLER DERRICK, South Carolina

JOHN MCCAIN, Arizona BRUCE F. VENTO, Minnesota

MICHAEL BILIRAKIS, Florida BARNEY FRANK, Massachusetts

GEORGE W. GEKAS, Pennsylvania TOM LANTOS, California

MARK D. SILJANDER, Michigan RON WYDEN, Oregon

CHRISTOPHER H. SMITH, New Jersey
DONALD JOSEPH ALBOSTA, Michigan
GEO. W. CROCKETT, JR., Michigan
WILLIAM HILL BONER, Tennessee
IKE SKELTON, Missouri
DENNIS M. HERTEL, Michigan
ROBERT A. BORSKI, Pennsylvania
FREDERICK C. (RICK) BOUCHER, Virginia
BEN ERDREICH, Alabama
BUDDY MACKAY, Florida
HARRY M. REID, Nevada
NORMAN SISISKY, Virginia
TOM VANDERGRIFF, Texas
ROBERT E. WISE, West Virginia
BILL RICHARDSON, New Mexico

JORGE J. LAMBRINOS, Staff Director
PAUL SCHLEGEL, Minority Staff Director

SUBCOMMITTEE ON HUMAN SERVICES

MARIO BIAGGI, New York, Chairman WILLIAM J. HUGHES, New Jersey

OLYMPIA J. SNOWE, Maine, DONALD JOSEPH ALBOSTA, Michigan Ranking Minority Member TOM LANTOS, California

MATTHEW J. RINALDO, New Jersey BEN ERDREICH, Alabama

CLAUDINE SCHNEIDER, Rhode Island BUDDY MACKAY, Florida

MICHAEL BILIRAKIS, Florida BILL RICHARDSON, New Mexico

CHRISTOPHER H. SMITH, New Jersey
THOMAS J. DOWNEY, New York
JAMES J. FLORIO, New Jersey

ROBERT B. BLANCATO, Staff Director
JOHN E. VIHSTADT, Minority Staff Director

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CONTENTS

MEMBERS' OPENING STATEMENTS

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THE FUTURE OF MEDICARE: N.J.

MONDAY, MARCH 28, 1983

U.S. HOUSE OF REPRESENTATIVES,

SELECT COMMITTEE ON AGING,
SUBCOMMITTEE ON HUMAN SERVICES,

Princeton, N.J. The subcommittee met, pursuant to notice, at 9:30 a.m., in the council chambers of Princeton Borough Hall on Monument Drive, Princeton, N.J., Hon. Matthew J. Rinaldo (acting chairman of the subcommittee) presiding.

Members present: Representatives Rinaldo of New Jersey and Smith of New Jersey.

Staff present: Paul Schlegel, minority staff director, and Richard Bagger, minority professional staff.

OPENING STATEMENT OF CHAIRMAN MATTHEW J. RINALDO Mr. RINALDO. Good morning. This hearing of the House Select Committee on Aging will now come to order.

We are here this morning to hear testimony on the future of medicare. In July 1965, Congress added title XVIII to the Social Security Act to provide health insurance for the aged and disabled. The preamble of this historic piece of legislation declared that "access to quality health care is the right of all Americans regardless of age or ability to pay.

Today, medicare provides health coverage to 30 million Americans. It is projected to spend about $60 billion in the coming year. In fact, medicare in 1983 will spend more in any given month than it did in the entire first year of its operation, 1966.

But we are approaching a crisis.

Health care costs continue to skyrocket. They are the only segment of the economy still experiencing double-digit inflation. Over the past 5 years, medicare costs have averaged a staggering 19 percent. Over the program's history, cost increases have outpaced the consumer price index by better than 2 to 1.

That inflation is a ticking time bomb for the medicare trust fund.

Just last month, the Congressional Budget Office released a report showing that the medicare hospital insurance fund would be depleted in just 4 years, by 1987. CBO projections show that the system will have a cumulative deficit of almost $400 billion in 1995. The deficit will be $70 billion each year by the middle of the next decade.

The question we must face, and the question that hopefully we can get some answers to this morning, is: How do we protect health benefits for the elderly?

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