at this moment any need for any additional increase other than that which is now projected by law?

NEED FOR ADDITIONAL FINANCING?

Mr. DAVID. No, sir. At this time we do not see any need for any additional financing of the hospital insurance program. The program is financed, we believe, on a conservative basis and even though hospital costs in 1966 did increase by 162 percent or so, this is within the range of the estimates made on the costs of the program, and there is no basis up to this point for changing the financing of the program or increasing the income of the program.

I might mention that one of the elements in the conservative financing of the program is that the cost estimates assume that the base on which the social security contributions are paid; namely, the base of $6,600, at present, will not be increased over the next 25 years.

Now, to the extent that wages do go up, as they have been going up over all the years and decades in our history, to the extent that wages do go up and this base is increased, as the Congress has increased it from time to time over the years, there is additional income to the hospital insurance system and there is no corresponding increase as a result of that in the cost except insofar as costs go up as wages go up generally.

Senator SMATHERS. Can you foresee the day when those who avail themselves of medicare will not have to make any $50 contribution, for example, themselves?

Mr. DAVID. Mr. Chairman, I think that it would be foolhardy to say that one could foresee that day.

As you know, there are really three deductible provisions in the medicare program. One of them is the $40 deductible in the hospital part, and the other big one is the $50 deductible in the medical insurance part. Unfortunately the one that causes the greatest amount of difficulty in administration and understanding is that $50 deductible in the medical insurance part. That is a lot of trouble for the patient and for the doctor and for the carriers and for the Government and for everyone; but that particular deductible would be one that there would be less clear basis for cutting down or eliminating than would be the case with the $40 deductible in the hospital part of the program. That would be one on which I imagine that the day might come when we would find, on the basis of experience and surveys and the data growing out of the operations, that it might not be necessary any longer to have that deductible.

ARGUMENTS ON DEDUCTIBLES

There are certainly arguments both ways. It is clear that the deductible must have some effect on deterring people from going into the hospital and getting services that they do need, and there can hardly be any doubt that it has some effect in deterring people from getting services that they don't need.

I think that it has to work both ways but, on balance, it remains to be seen whether it will be feasible and desirable to either cut down or eliminate that deductible.

My opinion is that it may easily come to a point where we can say that it would be safe and prudent and that we will have the financing to cover the cost of the hospital services without that deductible. I think that is a possibility.

In the case of the $50 deductible for the medical insurance part of the program it is not quite so easy to see the time when that will be eliminatable, if I can coin a word there. If we were to eliminate that deductible right now the $3-per-month premium that is paid by the people 65 or over financed by the Federal Government would have to be increased to, we estimate, about $4.75 a month. It makes that much difference to eliminate the bills before they reach the $50 level.

Of course, another small item there in eliminating that $50 deductible would mean that we would be dealing with a great mass of smaller bills and administratively that would add quite a lot to the load.

Senator SMATHERS. It would be pretty difficult for you to say there is some administrative benefit in having this $50 medical deduction. Mr. DAVID. Yes; I would say there is some benefit in it, but I want to be very sure I am not understood to be saying that we would object to the elimination of the $50 deductible for administrative reasons. I am sure we would not want to take a position like that.

It is true that it would increase the administrative load, but we would not object to it for that reason.

Senator SMATHERS. All right, sir. Go ahead.

Mr. DAVID. As to the services of physicians, our current information on use and charges is still scantier than what we have for hospitals. Under part B of medicare the patient must first incur $50 in costs to cover the deductible. Then he must pay the bill and get a receipt, unless his physician has agreed to accept assignment and to be paid by medicare directly for the reasonable charges that are determined under the program.

Senator SMATHERS. On that point, you say you don't have any experience yet?

Mr. DAVID. I didn't say we didn't have any experience. I said we have scanty experience so far.

Senator SMATHERS. Thus far what is your experience? I will tell you what mine is; you tell me what yours is.

Mr. DAVID. Well, we have quite a lot of experience, Mr. Chairman. Are you referring to the

Senator SMATHERS. That is right. How many of the doctors would prefer to deal directly with the patient?

Mr. DAVID. Actually, as I remember it, it is very close to 60 percent of the doctors in the country do accept the assignments in either all cases or in some cases.

Senator SMATHERS. That has been my experience.

Mr. DAVID. Forty-three percent, as I recall it, refuse to accept assignments in any cases. There is a great variation in different parts of the country in this respect. In some parts of the country a very high percentage of them, like 80 percent, do accept assignment in some cases. Of course, obviously, there are some cases where the bill is very large or the patient is in a very low income bracket and it is pretty much out of the question for him to have paid the bill and then get reimbursed on the basis of the receipted bill.

Senator SMATHERS. I think doctors believe that it is a more certain source of payment to operate under the assignment method and to work with the medicare program than to wait for the individual to come in with $35 or $25 and build up to the $50.

Mr. DAVID. Yes.

Senator SMATHERS. It has been my observation from talking with them that they are happy to go that route.

Mr. DAVID. When the payment is made under the assignment method, the bills are prepared by the doctor or in the doctor's office and they are properly prepared and completely prepared in a very much higher percentage of the cases and they do go through much more rapidly.

Senator SMATHERS. Right.

Mr. DAVID. Well, after you have gone through all these steps of the receipted bill and the claim has gone to the intermediary, it is paid and a report is sent to us and we have to tabulate it-all that is a time-consuming process-and we don't have as much information yet as we are going to have.

There is no doubt that this process of paying the bill to the physician confuses older persons and causes real hardship for those whose physicans are unwilling to accept assignment and they do not have the cash to pay the large bills or the resources to cushion delays in reimbursement.

The Social Security Administration has made available the services of our district offices to help older persons with their claims. This has speeded the claims process, but it obviously cannot affect the basic character of a system which includes reimbursement of a portion of paid charges after a deductible is met. That is just inherently a complicated process.

SSA CURRENT MEDICARE SURVEY

Recognizing that delays in information would occur, the Social Security Administration began last July a current medicare survey. As with most of our major surveys, the Bureau of the Census is acting as our agent in the collection of the data. We are now getting information from a national sample of beneficiaries on their current medical care and expenses. We should have a basis for estimating how many people are meeting the deductible and what is the accruing liability of the system, for bills, that is, that may not come in for a number of months hence.

The survey suggests that during the first 6 months about two-thirds of the people enrolled under part B of the medical insurance part made some use of the services.

In the first month less than 4 percent met the deductible and were eligible for reimbursement. By December of last year 22 percent of all the enrollees in the medical insurance part, one-third of those using covered services, had met the deductible; 22 percent of all and onethird of those who had used covered services had met the deductible. At the time medicare was adopted, we estimated that the program would cover perhaps 40 percent of the aggregate medical costs of the aged.

We do not have any basis, up to this point, for modifying that figure.

I might add, Mr. Chairman, that if we did not have the deductible and the coinsurance provisions in medicare that the 40-percent figure that I mentioned, the 40 percent of all medical costs of the elderly that are covered under this program would be increased, we think, to about 50 percent.

Senator SMATHERS. Say that again.

Mr. DAVID. Yes, sir. We estimate that at present, of the total medical expenses of people 65 and over, the medicare program covers about 40 percent of those total expenses.

I might mention here that outside of what is covered by the medicare program there are all the long-stay cases in psychiatric hospitals and the expenses that are covered in veterans' hospitals, which are not under this program, long-stay nursing home care cases, and drugs, of course, private duty nursing, and a variety of other things that are not covered and are not really subject to coverage under any kind of an insurance program.

But we have 40 percent in total, this is our estimate, 40 percent of the total expenses of the people 65 and over that are covered by medicare. That 40 percent would be increased, we think, to about 50 percent if there were not the provisions for the deductibles and the coinsurance, by which I mean, as you know, the payment by the patient of 20 percent of the cost.

Senator SMATHERS. However, as I understood you a moment ago, you don't want to eliminate all of that.

Mr. DAVID. No, I think it is much too early to say that it would be feasible or prudent or desirable on the basis of what we know now to eliminate those deductibles. We are recommending, though, that the deductible on the outpatient hospital services, the $20 deductible be eliminated.

Senator SMATHERS. This may not be the time to ask it, but it keeps occurring to me and maybe any one of you can answer. I was down making a speech in a town in Florida and the president of the local medical society apprehended me, I guess that would be the right word, and said, "I have a genuine complaint." I asked him what it was. He said:

It does not make sense under the Medicare Program to have the doctors who are today generally operating out of clinics with therapy machines and with radiologists operating the clinic for us to take a doctor out of there and go out 14 miles to see some out-patient. When we get out there we can't carry the equipment we need to take care of him so we have to tell him when we get out there, "You come back in." So what has happened? You have an hour out of the office driving out and driving back. We don't have the facilities with us. The only thing we can carry is the black bag unless we are strong as Teddy Kennedy, in which event we can carry a few more things. But we don't have the facilities with us so all we do is go out there and say to these people to come back to the office the next day and we have to charge them or get it charged to the clinic. It does not make any sense.

What kind of an answer would you give to that?

Mr. DAVID. Mr. Chairman, that trip out there for 14 miles is not in any way connected with the requirements of the medicare law or regulations or program in any way. There is nothing in medicare that calls for this doctor to make the 14-mile trip that he would not otherwise make.

Senator SMATHERS. Isn't there some provision in the law which does require that if a doctor signs up or takes an assignment of some kind that patients may call him?

Mr. DAVID. No, sir.

Dr. SILVER. The law makes no such requirement, Senator. It only involves reimbursement. The law does not prescribe in what fashion the physician is to be paid.

Senator SMATHERS. I thought he made a good point. The fellow was not so concerned about the fact that it would be the money involved, he said it was the time involved.

Now, you have a doctor there who raised his hand.

Mr. WEISS. Of course, time is money. One is that this is not the usual situation. According to the information we have, only one out of every 20 physician visits are out of the office or out of the clinic or out of the hospital.

Senator SMATHERS. I would suspect that is right, but one out of 20 is a pretty high percentage, I would suspect, in a situation where the doctors are getting together for, I think, sensible reasons. You can ask one fellow to look at your back and one fellow to look at your foot, and the dentist could do this, and so on.

The clinics are naturally becoming hospital centers and I think it is a good idea. The whole point this fellow was making, and he made it vociferously to the point that I got the idea that this was a rather common practice, that somewhere if they participated in this program they were required to go out and see these people.

Mr. DAVID. No, sir.

Dr. SILVER. This is a general problem in medical practice in the United States today. There was a time when most or almost the whole of medical practice was in visiting patients and in seeing them in their homes, and today this has been reduced considerably.

Senator SMATHERS. Right.

Dr. SILVER. For many of the reasons you point out, that so much more can be done and needs to be done in the hospital or in the doctors' office. But it is a general problem of medical practice.

Patients still like the comfort and security of having the doctor come visit when they feel sick.

Senator SMATHERS. I want to ask you this question as a blanket question because I am going to send this doctor your answer: Is it a fact that there is no provision of the medicare program which requires the doctor to make a visit to a patient's home on the call of the patient in order for the doctor or the patient to qualify under the medicare program?

Mr. DAVID. There is no such provision.

Dr. SILVER. No such provision.

Senator SMATHERS. No such requirement?

Mr. DAVID. Nothing remotely resembling it.

Dr. SILVER. The doctors don't sign up for medicare, a patient goes to see his doctor and then the bill that is incurred under those circumstances

Senator SMATHERS. Suppose they come in and they are treated for awhile and you put them on an outpatient status, they are required to be on outpatient status. At that point is there a provision which would require that the doctor make the trip, 14 miles out to the farm?

Mr. DAVID. No.

Senator SMATHERS. And 14 miles back and take an hour and a half out of his office.