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PEPPER COMMISSION REPORT

Recommendations of the Pepper Commission Regarding a Public Program for Long-Term Care Services

THURSDAY, JUNE 14, 1990

HOUSE OF REPRESENTATIVES,

COMMITTEE ON ENERGY AND COMMERCE,
SUBCOMMITTEE ON HEALTH AND THE ENVIRONMENT,

Washington, DC.

The subcommittee met, pursuant to notice, at 10:06 a.m., in room 2123, Rayburn House Office Building, Hon. Henry A. Waxman (chairman) presiding.

Mr. WAXMAN. The meeting will come to order.

First of all, I would like to apologize to my colleagues, to Senator Rockefeller, and to everyone here for my tardiness in getting this meeting started. I tried to get here as quickly as I could, but I just wasn't able to get away from another meeting as fast as I would have liked.

Today, the subcommittee meets to review the recommendations of the Pepper Commission regarding long-term care reform. It was my pleasure to serve as a member of this panel and help fashion the plan the Commission ultimately adopted. While the proposal may not be everyone's first choice, I believe it is the best choice available to us today.

For years now, we in Congress have heard the pleas of elderly and disabled Americans and their families. They are concerned because Medicare pays for only limited nursing home care and community services. They are fearful because Medicaid-the only public program that helps with nursing home bills-requires impoverishment as a condition of receiving assistance. And they are worried that the private insurance coverage that is available is beyond their reach.

As a result, their message to us is always simple and clear: the system is not working. It's not working for those who need services, it is not working for families and friends trying to provide services. And it's not working for Federal and State governments that pay for services.

For years now, we in the Congress have been promising to fix this broken system. We acknowledge Americans need something better. We know Americans want something better. And we pledge that Americans will have something better. . . sometime in the future.

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But with the Pepper Commission plan, we can take the first real steps into that future.

We can put in place a home care benefit that will provide help with personal care to severely disabled Americans of all ages. We can put in place upfront coverage for the first 3 months of nursing home care to enable those who can, to return home without facing the financial devastation of even a short stay. And for those requiring additional institutional care, we can put in place a program to assist with nursing home bills that prevents impoverishment and preserves dignity.

Making this plan a reality won't be easy, and it certainly won't be cheap. But when I look in the faces of families struggling to care for an aging parent or a disabled child, I am firmly convinced that Americans are ready and willing to make the necessary commitment.

There are no more excuses to explain our delay. We have before us a blueprint for action. It is time to move forward.

Before calling on our first witness today, I want to recognize colleagues for opening statements.

Mr. Bliley.

Mr. BLILEY. Mr. Chairman, I have a statement, but I will yield to my colleague, the gentleman from Florida, who has a markup going on at this time to let him go ahead of me.

Mr. BILIRAKIS. Thank you, Mr. Chairman, and I appreciate Mr. Bliley yielding to me.

We are contacting the Energy and Power Subcommittee upstairs, Mr. Chairman, to find out what is going on with the markup, and I will try to stay here as long as they don't need me.

I am pleased, Mr. Chairman, that our health subcommittee is continuing to review the recommendations of the Pepper Commission. Because I represent, as you know, such a high number of older persons, I am especially interested in discussing issues surrounding legislation health care proposals.

Before I begin, however, Mr. Chairman, I do want to take this opportunity to say that here we go again, trying to find short-term solutions to a long-term problem. As long as we keep trying to revamp bits and pieces of our health care system, keep putting out these small fires-or at least we think we are putting out these small fires-the longer it will take to do what I think is really necessary, and that is overhauling our entire health care program.

I like to think that long-term health care should be a part of our overall revamping of the entire health care picture. But before we do that, Congress needs, to take the time to study the national health programs of other nations. It would be particularly interesting to see how these countries deal with the aging population and what legislation health care alternatives are available.

We know long-term health care is a top priority for older Americans. For example, last year when Congress considered repealing the catastrophic health law, seniors told me they did not want or need catastrophic benefits, what they really needed was comprehensive, long-term, health care coverage.

In the past, I introduced a bill entitled "The Elderly Americans' Economic Security Act," which would provide a tax incentive for keeping families together. I think that is part of the solution. The

legislation would amend the Internal Revenue Code to provide a tax credit for families choosing to care for elderly members in the home rather than institutionalizing them. The head of the household would be able to claim any and all health care expenditures for an elderly dependent as a tax deduction, just as a child dependent would be treated.

Another component of the bill involves doctors and nurses, and it just might bring back the house call. A tax credit would be provided to those doctors and nurses who, in their spare time, donate time and energy to provide care for those elderly in the home who cannot take full care of themselves.

Finally, the bill would allow tax-exempt withdrawals from IRA's for the purpose of long-term health care, and others have introduced legislation to do the same thing. Amounts paid for custodial care in or out of nursing homes or the insurance premiums would be included.

This bill, Mr. Chairman, provides an incentive, as I said earlier, for a new togetherness for the American family as well as an alternative to costly institutional care.

I have had seniors tell me that the last thing they want is to become a burden on their family--I am sure we have all heard that-but in many cases older persons are given little choice but to depend on their relatives for assistance. This presents a difficult situation for both the family members and a sick person because it forces families to make emotional decisions, and I believe the legislation that provides assistance to these families is a positive step. Mr. Chairman, the Pepper Commission deserves much credit, as you do, for having been a very integral part of it, because through its report the long-term health care dialogue has been reignited. Once again, the biggest problem facing us today is, how do we finance a comprehensive long-term health care package? I am hopeful that our witnesses will be able to shed some light on this particular segment of the long-term health care debate and share with us some of their ideas on what steps they believe we can take toward solving this problem.

Again, Mr. Chairman, I do appreciate your holding this hearing, and I plan to be here as much as I possibly can, and, again, I appreciate Mr. Bliley yielding to me just in case I might be called away at any moment.

Thank you, sir.

Mr. WAXMAN. Thank you very much, Mr. Bilirakis.

I would like to now recognize Mr. Bliley for his opening statement.

Mr. BLILEY. Thank you, Mr. Chairman.

The problem of long-term health care for our Nation's elderly is one of the most important issues that our committee will face. In less than a decade, 33 million people, 12 percent of the U.S. population, will be 65 or older, and we face the fact that something must be done for these people. A very small percentage of those 65 to 75 require long-term care services, but the likelihood that long-term care will become necessary increases with age.

Once a person's resources are depleted due to this care, where are they to turn? To private insurance? To Medicare? These two categories cover only 3 percent of long-term care. Almost one-half

of our nursing home residents have to rely upon Medicaid to pay their bills.

How can we most efficiently and cost effectively address the problem of how to look after our elderly? This question applies to our disabled as well. What is the best way to get them the help they need?

I thank the witnesses we have before us today for coming to testify and look forward to hearing from them.

Thank you, Mr. Chairman.

Mr. WAXMAN. Thank you very much, Mr. Bliley.

Mr. Fields, do you wish to make an opening statement?

Mr. FIELDS. No, Mr. Chairman; thank you.

Mr. WAXMAN. Thank you.

We are pleased to have as our first witness Senator Jay Rockefeller. We would like to have you come forward to the table.

Senator Rockefeller chaired the Pepper Commission, which has given us recommendations in the area of acute care and on the subject matter of today's hearing, the question of long-term care. I do want to acknowledge the fact that in this area-which is the catastrophe the elderly and disabled fear the most-we did come up with a broad, bipartisan consensus as to how to move forward. I would like now to have Senator Rockefeller present to us the Pepper Commission's on long-term care reform.

We are pleased to have you with us.

STATEMENT OF HON. JOHN D. ROCKEFELLER IV, A U.S. SENATOR FROM THE STATE OF WEST VIRGINIA, AND CHAIRMAN, PEPPER COMMISSION

Senator ROCKEFELLER. Thank you, Mr. Chairman. I want to not just thank you in the customary manner for holding these hearings but to genuinely mean it when I say it.

I came from a morning discussion which reflected, I think, some of the gloom and doom going on around Washington right now because of a budget summit that doesn't seem to be moving, and everybody is saying we are not going to be able to get anything done this year.

I don't buy that, and you don't, and I think that is one of the reasons that you are having this hearing, because you are determined to see things happen in not just long-term care but access to health care and other things which you so totally and helpfully to this particular neophyte chairman, of the Pepper Commission, that is, you helped me so much.

We didn't go through that year-plus of incredibly hard work just for the fun of it, we did it because we want action to take place, and if there is anything where cost effectiveness, trying to do something smart now and saves money later, is true, it is in the health care field. As has been reflected in the earlier comments of some of those who have spoken, the problem is only getting worse.

I really thank you for, just right in the middle of all of this stall of the budget summit, holding this hearing, because I am determined, and you are determined, and I think your committee is determined, to see something happen with respect to the Pepper Commission work and have it turn into legislation, and I believe it

will happen; I believe it will happen. It may take a post-November special session, and I would welcome that. I can think of nothing better I would like to do in the months of November and December than to be back here fighting for health care, if that is what it takes, if that is what it takes.

I want to also before I start-and I promise to be brief-to thank you again, Mr. Chairman, and also Mr. Wyden, for your leadership on this side on the Medicaid Home and Community Care Options Act, which is absolutely essential. It is something which is affordable. It would start out as a modest amount, which we fought for last year, which I thought we were going to get last year, but which didn't quite happen. It is to help the poor and the frail elderly. It is one step, but it is an enormously important step, in using Medicaid, trying to get away from its institutional bias more towards the home health care bias, giving States a much easier way than the 2176 option that they now have.

On long-term care, Mr. Chairman, as you know very well, virtually nobody in this country has security when it comes to the physical and economic tragedy that strikes when long-term care is up against the American family. We have listened in the Pepper Commission to scores of families and scores of tragedies, talking about their problems facing long-term care.

The one that I will relate this morning is the one of Charles Keeney of Charleston, WV, caring for his father who has Alzheimer's disease; that is not exactly a 9-to-5 disease, that is all encompassing, all debilitating, not just for the victim but also for the family. Because he is a good son, like kids hopefully would be, he moved his parents, brought them back from Ohio to Charleston, into the house next to his own; he got that house.

Now, because of caregiving to the father-the mother can't really take care of the father-he is on his second or third mortgage. They haven't had a vacation in several years, the Keeney family. He has been saving money to send his son to college at West Virginia University. That has now gone; that money is now taking care of his father with Alzheimer's. And he is doing the right thing, but the American system isn't doing the right thing by him.

In all, between 9 and 11 million Americans of all ages-it is not just people 65 and older, it is all ages-need long-term care, and we know that what we have in place to help them cope with long-term care in this country now is wholly inadequate. We understand that, and the burden falls on family members, and we just let that continue and decline to take action, coming up with all kinds of ex

cuses.

Medicare, which is meant to serve the medical needs of the elderly and disabled, is just—you know, forget it when it comes to longterm care; it is virtually no help at all; I think it pays maybe 2 percent at most. Medicaid is doubly flawed, one, because a person has to go into impoverishment before Medicaid even becomes a possibility, and then, when that happens, the institutional bias goes to nursing homes, and that is incredibly inexpensive, and that is not necessarily where people want to be or ought to be.

Private long-term care insurance is growing very fast, but the affordability of it is a major problem. It sticks in my mind-and I am

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