running a deficit of $150 billion. We are certainly aware, those of us in this body, at any rate, of just how difficult it has been to make even as much progress as we have made in the last couple of years on the deficit problem. Furthermore, we all know very well how much difficulty we are having just in meeting current obligations under the Medicare program. I remind all my colleagues, as well as I have to remind myself from time to time, that we still anticipate very serious difficulties in keeping the hospital insurance trust fund in a solvent state, although we have managed so far to keep pushing off the day when it runs out of money. That has been pushed off about 7 or 8 years just in the actions we have taken in the last 2 years. With respect to long-term care, according to a recent paper by the Congressional Budget Office, Federal expenditures are expected to almost triple by the year 2000 from $14 billion to $45 billion in constant 1985 dollars. The astonishing thing about the estimate is that it is based just on current law. It doesn't take into consideration the acute care catastrophic legislation presently in conference or any other long-term care proposals which have been introduced in the Congress. Note also that the estimate is only for the period up to the year 2000. We know that the baby boom doesn't begin to retire until the year 2009. This whole deficit problem is compounded by the great growth we are anticipating in the Social Security trust fund. Essentially, these surpluses make the current deficit seem smaller than it really is. In 1993, the Social Security surplus is anticipated to be around $100 million. This is the year, of course, when the budget deficit reductions under Gramm-Rudman are supposed to get us to a zero deficit. Unfortunately, the Social Security trust funds, as required under Gramm-Rudman, will no longer be counted in reckoning the deficit after that year. Hence, when we are done with Gramm-Rudman, we are going to find ourselves still facing a deficit which is enormous by historical standards. So, the whole matter of the Social Security trust funds, of course, is more complicated than simply counting it or not counting it, but that is not my purpose here. The main point that I am trying to make, Mr. Chairman, is that we need to be very careful before starting up any new long-term care problem, whether it be your proposal, Mr. Chairman, or more comprehensive long-term care programs as we are now being urged to do by so many voices, particularly by those people campaigning for President. The reason for this is that one day this country is going to have to deal with the retirement of the baby boom generation, and it is not clear just how we are going to provide them with the benefits we currently promise to provide older people to say nothing of providing them with yet new benefits like we are proposing here, and that doesn't detract from the fact that I know, Mr. Chairman, that when you have adult day care and keep people out of nursing homes, that is saving money in the long run. Mr. Chairman, thank you. [The prepared statement of Senator Grassley follows:] STATEMENT OF SENATOR CHARLES E. GRASSLEY FOR A HEARING OF THE SPECIAL COMMITTEE ON AGING ON ADULT DAY CARE, MONDAY, APRIL 18, 1988 THANK YOU, MR. CHAIRMAN. I THINK YOUR HEARING TODAY WILL PROVIDE USEFUL NEW TESTIMONY ON THE VALUE OF ADULT DAY CARE SERVICES. MANY OF US, OF COURSE, HAVE BEEN CONVINCED FOR SOME TIME OF THE IMPORTANCE OF ADULT DAY CARE. IT DOES SEEM TO ME THAT ADULT DAY CARE CAN HELP TO AVOID INSTITUTIONAL PLACEMENT OF INDIVIDUALS WHO MAY BE AT SOME RISK OF SUCH PLACEMENT. IT PROBABLY CAN ALSO HELP KEEP FAMILIES IN THE WORK OF TAKING CARE OF DEPENDENT OLDER RELATIVES, WHICH IS SURELY A VERY, VERY DESIREABLE GOAL. GOAL. WE NOW HAVE, AS IS SO OFTEN AND TRULY NOTED, AN INSTITUTIONAL BIAS IN OUR LONG TERM CARE "NON-SYSTEM", AN INSTITUTIONAL BIAS SUPPORTED AND HELD IN PLACE BY OUR FINANCING MECHANISMS FOR LONG TERM CARE. I THINK IT IS OBVIOUS WE NEED A BETTER BALANCE IN AVAILABLE SERVICES AS BETWEEN INSTITUTIONAL CARE AND CARE IN THE COMMUNITY SUCH AS ADULT DAY CARE AND HOME HEALTH CARE. THE ONLY NOTES OF RESERVATION I HAVE TO RAISE, MR. CHAIRMAN, WITH RESPECT TO PROPOSALS FOR NEW INITIATIVES IN LONG TERM CARE SUCH AS FOR A NEW ADULT DAY CARE PROGRAM UNDER MEDICARE ON WHICH YOU HAVE SHOWN SUCH GREAT LEADERSHIP HAVE NOTHING WHATSOEVER TO DO WITH THE BENEFIT OF ADULT DAY CARE SERVICES IN RELATION TO OUTSTANDING NEEDS OR IN RELATION TO OTHER SERVICES CURRENTLY MORE READILY AVAILABLE, SUCH AS NURSING HOME CARE. THEY HAVE TO DO WITH HOW WE ARE GOING TO PAY FOR ANY NEW BILL WHICH WILL BE VOTED ON IN THE HOUSE EARLY NEXT MONTH, BEST WAY TO PROCEED ON THIS LONG TERM CARE PROBLEM. OFFERS THE AS YOU KNOW, I HAVE BEEN A SUPPORTER OVER THE YEARS OF PROGRAMS FOR OLDER AMERICANS. AND I THINK I AM AS AWARE AS ANYONE OF THE TRULY VICIOUS NATURE OF OUR LONG TERM CARE "NONSYSTEM". AND YET, AS THE DEBATE HEATS UP ON THIS ISSUE AND THE PRESSURE ON THE CONGRESS GROWS FROM THE COMMUNITIES OF PEOPLE INTERESTED IN GETTING, AT LONG LAST, SOME KIND OF MAJOR START ON SOLVING THIS PROBLEM, WE CAN'T AFFORD TO LOSE SIGHT OF THE FIRST QUESTION I RAISED NAMELY, HOW ARE WE GOING TO PAY FOR IT? PRESENTLY, WE ARE RUNNING A DEFICIT OF AROUND 150 BILLION DOLLARS. AND WE ARE CERTAINLY AWARE, THOSE OF US IN THIS BODY, AT ANY RATE, JUST HOW DIFFICULT IT HAS BEEN TO MAKE EVEN AS MUCH PROGRESS AS WE HAVE MADE IN THE LAST COUPLE OF YEARS ON THE DEFICIT PROBLEM. FURTHERMORE, WE ALL KNOW VERY WELL HOW MUCH DIFFICULTY WE ARE HAVING JUST IN MEETING CURRENT OBLIGATIONS UNDER THE MEDICARE PROGRAM. I REMIND YOU THAT WE STILL ANTICIPATE VERY SERIOUS DIFFICULTY IN KEEPING THE HOSPITAL INSURANCE TRUST FUND IN A SOLVENT STATE, ALTHOUGH WE HAVE MANAGED SO FAR TO KEEP PUSHING OFF THE DAY WHEN IT RUNS OUT OF MONEY. WITH RESPECT TO LONG TERM CARE, ACCORDING TO A RECENT PAPER BY THE CONGRESSIONAL BUDGET OFFICE, FEDERAL EXPENDITURES ARE EXPECTED TO ALMOST TRIPLE BY THE YEAR 2000 FROM 14 BILLION DOLLARS TO 45 BILLION DOLLARS IN CONSTANT 1985 DOLLARS. AND THE ASTONISHING THING ABOUT THAT ESTIMATE IS THAT IT IS BASED JUST ON CURRENT LAW. IT DOESN'T TAKE INTO CONSIDERATION THE ACUTE CARE CATASTROPHIC LEGISLATION PRESENTLY IN CONFERENCE OR ANY OTHER LONG TERM CARE PROPOSALS WHICH HAVE BEEN INTRODUCED IN THE CONGRESS. NOTE ALSO THAT THE ESTIMATE IS ONLY FOR THE PERIOD UP TO THE YEAR 2000. AND WE KNOW THAT THE BABY BOOM DOESN'T BEGIN TO RETIRE UNTIL THE YEAR 2009. THIS THIS WHOLE DEFICIT PROBLEM IS COMPOUNDED BY THE GREAT GROWTH WE ARE ANTICIPATING IN THE SOCIAL SECURITY TRUST FUNDS. ESSENTIALLY, THESE SURPLUSES MAKE THE CURRENT DEFICIT SEEM SMALLER THAN IT REALLY IS. IN 1993, THE SOCIAL SECURITY SURPLUS IS ANTICIPATED TO BE AROUND 100 BILLION DOLLARS. IS THE YEAR, OF COURSE, WHEN BUDGET DEFICIT REDUCTIONS UNDER GRAMM-RUDMAN ARE SUPPOSED TO GET US TO A ZERO DEFICIT. UNFORTUNATELY, THE SOCIAL SECURITY TRUST FUNDS, AS REQUIRED ALSO UNDER GRAMM-RUDMAN, WILL NO LONGER BE COUNTED IN RECKONING THE DEFICIT AFTER THAT YEAR. HENCE, WHEN WE'RE DONE WITH GRAMM-RUDMAN, WE ARE GOING TO FIND OUTSELVES STILL FACING A DEFICIT WHICH IS ENORMOUS BY HISTORICAL STANDARDS. THE WHOLE MATTER OF THE SOCIAL SECURITY TRUST FUNDS, OF COURSE, IS MORE COMPLICATED THAN SIMPLY COUNTING IT OR NOT COUNTING IT. BUT IT IS NOT MY PURPOSE TO GET INTO THAT HERE. THE MAIN POINT I AM MAKING IS THAT WE NEED TO BE VERY CAREFUL BEFORE STARTING UP ANY NEW LONG TERM CARE PROGRAM, WHETHER IT BE THE CHAIRMAN'S ADULT DAY CARE PROGRAM, OR A MORE COMPREHENSIVE LONG TERM CARE PROGRAM AS WE ARE NOW BEING URGED TO DO BY MANY VOICES. THE REASON FOR THIS IS THAT ONE DAY THIS COUNTRY IS GOING TO HAVE TO DEAL WITH THE RETIREMENT OF THE BABY BOOM GENERATION, AND IT IS NOT CLEAR JUST HOW WE ARE GOING TO PROVIDE THEM WITH THE BENEFITS WE CURRENTLY PROMISE TO PROVIDE TO OLDER PEOPLE, TO SAY NOTHING OF PROVIDING THEM WITH YET NEW BENEFITS. The CHAIRMAN. Thank you, Senator Grassley. I think the point really is if the national average for adult day care centers is $31 in cost, how do we relate that obvious saving with somebody who is not in a nursing home or doesn't have to go to the hospital because they get the necessary health care and rehabilitation in an adult day care center? How do we relate that to savings and how do we project those savings? I think we are having a difficult time really doing that at this point. I hope we can get some figures on that, because, obviously, the gross difference between $31 or an extra day or two or going back to a hospital just because that is the only place to go or into a nursing home-how do we project that if the adult day care centers become more widespread and are better used? Obviously, it would be a saving. How much of a saving, we can't tell. I wish we could at this time, and I am hoping that we can begin to assemble some figures on that. Senator CHAFEE. Well, Mr. Chairman, I am not sure it is obvious it will be a saving. As I understand the CBO figures, by 1992, it will cost an additional nearly $2 billion. Am I correct in those statistics that I have? The ones I have on CBO, it costs $45 million in 1988, $130 million in 1989, $355 million in 1990, $800 million in 1991, and $1.8 billion in 1992. I suppose the difference is that a lot of people who are currently being cared for now at home by families probably at considerable strain to the families and are not in nursing homes would be eligible under this program. I suppose that is where the difference comes in the spending. Are you going to have any Administration witnesses? The CHAIRMAN. Yes, we are going to have an Administration witness, and I think the point is we really haven't projected much in the way of savings on this, and I think there are obvious savings to offset some of the costs. So, I don't know that our CBO cost projections are accurate. That is my point. Senator CHAFEE. Well, I think there is another virtue to it also, and that is I think that there is a humanitarian side to it as well. I think when an individual is able to be with their families and be part of the time in, say, a day care setting, with the companionship that comes there plus the warmth that is felt at home, these individuals will remain healthier in every aspect, physically and mentally. Furthermore, in a day care setting, if there are problems, they can be spotted in advance. At least, that has been my experience in seeing them in action in my home State. The CHAIRMAN. I think you are correct, Senator. Before we go to our first witnesses this morning, I will ask unanimous consent that other members of the committee have permission to submit statements if they wish to do so, and those statements will appear in the record at this point. [The prepared statements of Senators Heinz, Reid, and Pressler follow:] OPENING STATEMENT OF SENATOR JOHN HEINZ, RANKING MINORITY MEMBER FOR THE SPECIAL COMMITTEE ON AGING HEARING ON ADULT DAY CARE April 18, 1988 Mr. Chairman, I commend you for your timeliness and foresight in holding this hearing on Adult Day Care, and for your sponsorship of the Medicare Adult Day Health Care Amendments of 1987. I am pleased to be a cosponsor this legislation, which would establish Medicare coverage for up to 100 days each year of health and rehabilitative day care for Medicare eligible persons over the age of 18. Throughout our recent consideration of legislation to protect older Americans from Catastrophic Health Costs, we heard repeatedly that the greatest financial risk borne by the elderly is long term care. We also know from many years of hearings and countless studies that the aged and disabled strongly prefer any form of long term care that will allow them to stay at home, rather than be institutionalized. Adult Day Care is one of several essential community based long term care services, such as home health and home supportive services, which are responsive to these needs and preferences of the elderly. We have taken some significant steps toward improved coverage with the catastrophic care legislation approved by the Senate on October 27th. In that legislation, we improved the short term Home Health and Skilled Nursing Facility benefits provided by Medicare. Nonetheless, like Hercules in his struggle against Hydra, Congress faces a monster with more than one head. Providing for short-term acute care costs still leaves American families facing the greater financial catastrophe of a long-term, chronic illness. Mr. Chairman, the typical recipient of Adult Day Care services is a woman over 73 years of age with an income of less than $500 each month, who relies upon her children to care for her around the clock. Adult Day Care centers offer critical daily services which help family caregivers to continue the very difficult task of supporting their disabled loved ones at home, by freeing them to work and attend to other business away from home during the daytime. Without this |