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If you dissect this example you can see where Medicare simply does not provide for a satisfactory method of health care for Mr. B's needs.

1) It could not provide home care which would certainly
have decreased the number of days he spent in the hospital
and the number of emergency visits required. Union County
Visiting Nurse and Health Services has provided an eight
year demonstration program of health education and monitoring
in senior citizen housing. There has been a definite
reduction in hospital recidivism and institutionalization
as a result of this program. Health funding should be
included in considerations for health maintenance and
health monitoring programs so that people are enco

couraged
to take responsibility for their own health.

2) Because of the DRG (Diagnostic Related Group) the hospital is rewarded on a cost basis for emptying the bed as soon as possible - in this case before the patient was well enough to function on his own thus the hospital bed is freed for another patient. New Jersey instituted the DRG only two years ago. Many of us feel that the system has not been proven and that it is too soon to use this as a model for a nationwide system of health care.

3)

Because of the medical cost involved Mr. B didn't want to see a Doctor in the first place, nor was he willing to go into the hospital; therefore he, like many older people delayed treatment until he was very ill. Perhaps some method could be devised where physicians had to except assigned medicare payment who fell in an low income bracket. This is now being done by New Jersey Blue Shield/Blue Cross.

This testimony provided by: Jocelyn B. Helm, Director

Princeton Senior Resource Center

And:

President of the New Jersey
Gerontological Society*

*These statements do not necessarily reflect the position of all the members of the society.

PREPARED STATEMENT OF THE AMERICAN MEDICAL ASSOCIATION

The American Medical Association takes this opportunity to comment on

the financing problems of the Social Security System.

The short term financing problems of the old-Age and Survivors (OASI)

and Disability Insurance (DI) Trust Funds and their long-range solvency

problems represent

major problem for

this

country today.

These

problems are not new, representing the second time in less than six years

that the Social Security system finds itself on the verge of bankruptcy.

Included within the Social Security system are the Hospital Insurance

Trust Fund and the Supplementary Medical Insurance Trust

Fund

which

finance Parts A and B, respectively, of the Medicare program.

The

Medicare program 18 a primary source of medical benefits for the vast

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solvency of the Medicare program be maintained in order to assure access

to high quality care for the nation's elderly.

While the Medicare trust

funds do not face the immediate difficulties of the OASI fund, pressures

are projected to begin near the end of the century.

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however, in this statement we limit our comments to concerns relating to

the soundness of Medicare trust funds.

Medicare' is an "entitlement" program that promises benefits

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benefits to all who have worked and contributed to the hospital insurance

fund.

Medicare also provides benefits to disabled persons under age 65

and persons who have end stage renal disease and require transplantation

or dialysis.

Medicare benefits and administrative costs

are paid from

two

trust

funds created under Title XVIII of the Social Security Act, passed in

1965.

Unlike other Federal health programs, Medicare is

not

financed

solely by general revenues.

The Hospital Insurance Trust Fund, covering

hospital and other institutional benefits (Part A), is financed mainly

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to 1.35% in 1985 and 1.45 percent in 1986. The wage base is increased

each year by a formula reflecting general wage growth.

The Supplementary

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revenues and through monthly premiums paid by Part B participants.

The

general revenue share of Part B funding has grown from 50 percent in 1971

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intent of Congress to assure mainstream medical care for the elderly and

not have

the aged of the nation shunted into a second-class system of

care.

In this regard, Medicare has been a

success.

However, budget

problems, the problems of a sluggish economy, and short-term borrowing to

bail-out the OASI trust fund raise the specter of a failure of the Health

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of the trust funds is a difficult task, dependent on the assumptions used

and the definition of actuarial soundness that is adopted. According to

the Report of the National Commission on Social Security Reform issued in

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depleted by the early part of the 1990's and possibly even by the end of

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Public Law 97-123 on December 29, 1981, which allows interfund borrowing

The authority originally

among the three social security trust funds.

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Recommendation #13 of the National Commission on Social Security Reform

18sued last month calls for the authority for interfund borrowing by the

OASI Trust Fund from the Hospital Insurance Trust Fund to be extended

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Hospital Insurance Trust Fund already, and further large borrowing is

expected.

In considering reforms affecting the OASI Trust Fund, Congress

must also address the issue of the Hospital Insurance Trust Fund and

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strength as

soon as possible to avoid a Medicare funding crisis created

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Medicare beneficiaries should be penalized, possibly by benefit cut backs,

due to a Medicare bail-out of Social Security.

We recognize the difficulty of the issue facing the Congress with

respect to Social Security and appreciate the efforts of the National

Commission on Social Security Reform.

The AMA truly hopes that Congress

will act

to provide both a short-term and a long-term solution to the

problems of financing Social Security.

We urge Congress to avoid the

fate of the last ma jor modifications in the Social Security program which

were intended to carry Social Security "through the end of the century"

yet proved to be little more than a "band-aid" solution that lasted only

a few years before severe problems resurfaced.

There is a need to do what is necessary, i.e., to "bite the bullet";

in that regard, the AMA supported the provision in TEFRA

to subject

federal employees to Medicare contribution requirements;

likewise, the

AMA supports the recommendation of the Commission on Social Security that

new federal employees be asked to contribute to Social Security.

The

Congress should

explore

the

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federal

employees within the system.

In addition, the AMA offers the suggestion

that Congress may wish to consider increasing the HI portion of the

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Medicare

Hospital

Insurance

Trust

Fund

and

thus

avoid

solvency

difficulties in the future.

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