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Mr. HARTLEY. The cost was over $100.

Senator RANDOLPH. I see it now. The 6- and 8-day figure-I wasn't clear.

In other words, $30, 5 years ago in Kansas City; $100 in Los Angeles County.

Mr. HARTLEY. $110, to be exact. Senator RANDOLPH. $110? Mr. HARTLEY. Approximately $110 on the first hospital visit$342.

On the second hospital visit—for 6 days—630-some dollars. Now, there is a variation there, but it still runs approximately $110 per day.

Senator WILLIAMS. Why did they take 8 days and reduce it to 6 days?

Mr. HARTLEY. They didn't. Due to the fact that I am covered by a prepaid plan, I could get a release from that hospital and they didn't have their bills made up, because I didn't have to pay it. My carrier would take care of that.

But the office girl related to me that for a 6-day period, there was a charge of 600-some-odd dollars.

Senator RANDOLPH. Mr. Chairman, I find no witness from the hospital profession as such; is that correct?

Mr. ORIOL. There is nothing today.
Senator WILLIAMS. I would say go ahead and do it. I will say, if

you have to return to the hospital, I wouldn't go to that hospital.

Mr. HARTLEY. That's beside the point. If those charges are proper in this area, then you are going to have to go to some hospital.

I will say this of this hospital: It is a very lovely hospital and the service is excellent. I am not griping, I might say, about what has to be paid here. Medicare and the prepaid plan pays it.

Senator WILLIAMs. You are doing a service, and I wanted to develop that you didn't pay it, because you were under medicare and also under your insurance program.

So it is a service for you to come here and talk to us.

Senator RANDOLPH. Don't misunderstand me on this point, and I don't want to lay a finger on anyone, but there is a tendency where you are not paying, or the chairman is not paying it-you are speaking about a nebulous group that pays something--and then you sock it to them, because you can't put your finger on you, or you, or you, and I think it is very important that this be developed.

Senator WILLIAMS. Well, I will say this: I know in the State where I live, the Blue Cross rates go up and up and up, and this is part of it, and you know who is in the forefront of the opposition—the AFLCIO.

Mr. HARTLEY. I have had very good service in this hospital, and I would object to anything like that—the prices of this.

The problem I am objecting to is the raises that cannot be met by the people in my age group, people who cannot afford

Senator WILLIAMS. That's right.
Mr. HARTLEY. Prepaid medical plans.

Senator RANDOLPH. Mr. Chairman, again I want to stop talking about this I want it broken down so as to be definitive--the hospital

charged this. There may have been some services that I want to know about, do you understand?

Mr. HARTLEY. I do.
Senator RANDOLPH. Not just bed and board.
Mr. HARTLEY. Bed, board, and food.
Senator WILLIAMS. Many X-rays, and other-

Mr. HARTLEY. Well, the equipment that they use—laboratory tests

Senator WILLIAMS. Oh, I mean in your case.
Mr. HARTLEY. Oh, in this case—no X-rays on this particular visit.
Senator WILLIAMS. What is your name, sir ?
Mr. DAVIDSON. Louis Davidson.

STATEMENT OF LOUIS DAVIDSON, FOR THE SENIOR CITIZENS

ACTIVITIES COMMITTEE, LOS ANGELES FEDERATION OF LABOR, AFL-CIO

Mr. DAVIDSON. I would like to make a preface.

Because we have complaints does not mean that the senior citizens and their unions underestimate the importance of medicare. I think there is nobody that more appreciates medicare and all its functions, even with its difficulties, as much as the senior citizens do.

However, I would like to make a couple of points which will serve to substantiate what the previous speaker spoke of—and many of the other complaints.

People living on a standard like mine—income, say, about $200 a month-because of the deductibles and because of the additional costs for doctors are, in a certain way, prevented from utilizing medicare benefits.

And I will substantiate by saying this: I have recently almost entirely lost my hearing. A certain very important and very good doctor, in his profession, was recommended to me.

He examined me in his clinic, and he helped me a great deal. He somewhat restored my hearing.

His charge was $25 for the examination, for which medicare does not pay, and $40 for the service, which also has to be paid by me because the first $50 of treatment is not paid by medicare, and has to be paid by me. That's $50 deductible.

The recommendation of the doctor was to operate. He thought-and he is a very good doctor—that he could put my hearing in good condition.

After I left his office I went to make an appointment for the recommended operation. The charge was to be $650 for the operation and $50 for his assistant—which came to $700.

Incidentally, a friend of mine was operated on by the same doctor in 1959, and was charged $250. If I had arranged for the operation, I would have been required to pay the 20 percent plus the $50 deductible. I would have had to pay $100 for admission to the hospital—which means several hundred dollars.

People in my income bracket couldn't afford that kind of money, and therefore I had to give it up.

DEDUCTIBLES BAR TREATMENT

I know of three more cases. People who are suffering with their sicknesses but they cannot go through with the operation because the deductibles and all of this are just more than they can manage.

Dr. Todd made a very good point when he said that there are a great number of participants in the medicare program—but there are also a number who don't participate, in Los Angeles particularly.

The people who provide the necessary services charge an awful lot, and some of the senior citizens don't have a pocketful of money.

Even in regard to those people who do participate, I have a couple of complaints particularly one woman that I know of—who goes to a certain doctor for many years, who has not overcharged.

He participates, but when she goes in for the next appointment, the nurse, who is the secretary of the doctor, makes her feel so bad that she, instead of taking the bill from the doctor and sending it to medicare, she just takes out the last dollar that she has to live on and pays the doctor.

One more point I would like to make, and that is in connection with Medi-Cal, which Speaker Unruh spoke for: It is true that California is one of the States that participates in medicaid. The top income of one single person has to be $167 a month. I come originally from—I am a neighbor of yours, Senator, from New York—where it is quite different.

And something else: I have a complaint that a certain person-particularly—who has recently gone in to apply for Medi-Cal—her income is $107 a month. She was unfortunate in that her husband left her an insurance policy of $1,500.

After an hour and a half of interrogation by the clerk, they found that she was not entitled to Medi-Cal-even though she only gets an income of $107–because she has $1,500 in cash.

Furthermore, according to the law, there is supposed to be an allotment, first of all, of some of the money that is in the bank for livingsupplementing this $107, and also she is entitled to $700 funeral service. That has not been taken into consideration.

It may not always be handled in the same way. Not all interrogators may be the same. But I say that those things happen that discourage dignified people from—even if they cannot get along-to apply for this service.

Thank you very much. Senator WILLIAMS. That comes from your personal experience? Mr. DAVIDSON. That's right. Senator WILLIAMS. That is why we are here—to try to find out what is happening. Our mission is to try to improve situations that should be improved.

Mr. DAVIDSON. That is why I am very happy to come here, because I know that you are very much interested in solving this problem.

Senator WILLIAMS. Thank you very much, gentlemen. You have been most helpful.

It is now 1:26 p.m. We will have one more witness before we recess, and Mr. Robert Thomas is available right now.

STATEMENT OF ROBERT THOMAS, VICE PRESIDENT, BLUE CROSS

OF SOUTHERN CALIFORNIA

Mr. THOMAS. Mr. Chairman, and Senator Randolph, and gentlemen, I am Robert J. Thomas, vice president of Blue Cross of Southern California, with the responsibility for professional and governmental relationships.

It is my pleasure this morning to make, really, a short report on our performance as intermediaries under title is, which is, as you know, known as Medi-Cal in this State.

In the interest of time and your recess, my remarks here this morning will just be informal.

California's Assembly bill No. 5, which was the enabling legislation to permit implementation of title 19 in this State, was enacted in the fall of 1965 in a manner which permitted the State to take advantage of the existing resources of private enterprise in the administration of health care benefits under this program.

By resources I mean our facilities, our equipment, our staff, our systems, and particularly our experience and experitse in this field.

For example, the organization which I represent has been in the business of health prepayment for more than 30 years. I have a history of having been a hospital administrator for more than 18 years.

In any event, I am pleased to report that in response to requests from State officials, from the medical profession, and from the health field in general, Blue Cross of Northern California, Blue Cross of Southern California, and California Blue Shield, joined together and submitted what turned out to be a successful bid for us to serve as intermediaries under this program on a no-profit, no-loss basis.

Senator WILLIAMS. Is there an advantage there, do you think, instead of the State handling the whole thing itself?

Mr. THOMAS. I think there is, Senator, particularly because of our long experience in the field of health and administration of health benefits.

Because of our close association with institutional providers of care, in my case, and in California Blue Shield's relationship with physicians, we are known to them-we know the ins and outs of the business.

We know the good and bad operators, as it were, and I think in most instances, certainly from the providers' standpoint, they want a buffer between the government and their own activity.

We provide that, and we are, I think, regarded as a part of the health team.

So I think we do provide a service that could not be provided normally through the existing government channels.

Senator WILLIAMS. And has this matter substantially increased costs in Blue Cross—whatever you want to call it-premiums?

Mr. THOMAS. Rates.
Senator WILLIAMS. Has it made a substantial increase!

Mr. THOMAS. Our rate increases have gone hand in hand with the overall increases in the cost of care which we have heard referred to here this morning.

Obviously our rates are set on an actuarial basis, and as costs go up, our rates must go up to cover them.

Senator WILLIAMS. And those rates have to be approved by a department of State government?

Mr. THOMAS. Yes. Although we are a nonprofit corporation, we are still subject to the regulations of the State insurance commissionerand those rates are approved by him.

Senator WILLIAMS. As a conclusion on that point, you are in favor of the intermediary, rather than pure government handling the whole program?

Mr. THOMAS. Well, not only am I in favor of it, because we are administering the program, but I know I speak for the professions and the different provider organizations with whom we deal and whom we represent.

Senator WILLIAMS. How did you become intermediary? Did you have to compete on a fitting basis with insurance companies, for example?

Mr. THOMAS. Yes, In this State the intermediary role was let on the basis of bid, and evaluation of bids.

Senator WILLIAMS. Check. Right.

Mr. THOMAS. And even though we joined with California Blue Shield in this bid, I think Dr. Malcolm Todd has spoken quite succinctly about their role.

RELATIONSHIPS WITH PROVIDERS OF SERVICES

And so again in the interest of time, I will limit my remarks just to Blue Cross and its relation with the institutional providers of service, the hospitals, the nursing homes, health agencies, rehabilitation centers, free clinics, and so on.

Now, in the 30 months that this program has been under way in this State, 4,800,000 institutional claims have been paid in behalf of eligible Medi-Cal recipients.

And this amounts to a total expenditure of in excess of $730 million to date.

I am sure that before this fiscal year is out, this will surpass the $1 billion mark.

These payments have been made to more than 1,900 institutional providers in this State. About 560 hospitals, 1,200 nursing homes, 120 home health agencies and free clinics, so I think you can see that Medi-Cal, which sort of sounds like a drink for weight losers, is certainly not a slim program in this State. It is a very large and a very complicated program.

I would like to say right here, if I may, that I feel that our success as an intermediary has been due in no small measure to the rapport and certainly the very capable cooperation that we have had from the State department of health care services.

Each of us has a very important role to play in this program and I think we present an excellent example of private enterprise and government working together in concept.

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