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Administration in cutting Medicare coverage was again demonstrated at the December
1982 and January 1983 meetings of the Advisory Council on Social Security. This Council
has been asked to focus its studies and recommendations on what needs to be done in

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At the December meeting, Chairperson Dr, Otis Bowen listed four issues the Advisory
Council needed to consider: 1) Should access to Medicare be automatic for those
entitled to Social Security? 2) should access to Medicare be limited to the financially
needy? 3) Should access to Medicare be limited to those with conditions for whose
treatment there are no other resources available? 4) Should Medicare be the primary
Questions of improving protection for elderly and disabled recipients were not presented.
for consideration, nor was the Council asked by officials of this public body to look
at ways of reducing economic barriers to health services.
The Council's January meeting focused on the Administration's new hospital prospective
payment proposal Medicare. A representative from Health and Human Services (HHS)
described this plan, submitted to Congress in December, under which rates would be
set by diagnosis-related groups (DRGs). Questions were raised about inherent incentives
for hospitals to increase numbers of admissions, HHS's plans to monitor the delivery
of services, the likelihood that the system would lend itself to rate manipulation, and
hence cost increases, possible harmful effects on health maintenance organizations, and
the inability of the system adequately to compensate public hospitals.
PUBLIC HEARINGS: Public hearings were held in conjunction with each of the two
Council sessions, At the December hearings, representatives of groups of the aged,
the disabled, labor, health, and religious organizations, pointed out the consequences
for the beneficiaries of further proposed cuts. With 25% of Medicare beneficiaries
classified as poor or near-poor, and the average beneficiary spending 20% of income
on health costs that Medicare does not cover, these groups opposed increased co-
payments, increased deductibles, and vouchers.
Mel Glasser of the Health Security Action Council (HSAĆ) doubted the reasonableness
of making a beneficiary with a $5000 income, $1000 of which he already pays for health
care. Cost-concious, through increased cost-sharing. Bert Seidman of AFL-CIO in
commenting on the Administration proposal to institute a 10% co-payment for the 2nd
to 66th hospital day, estimated the average 10-day stay would cost the patient $600
minimum, or 2 months of an average widow's benefits. James Hacking of AARP
questioned whether the health services foregone because of cost-sharing requirements
would be excessive, unnecessary care, or needed preventive or early treatment services,

Several groups cited their opposition to limiting Medicare to only the financially needy. Hacking opposed any means test as a flagrant breach of contract. Henry Nicholas of the National Union of Hospital and Health Care Employees also strenously opposed any change in the social contract between the government and its citizens. Father Harvey of Catholic Charities pointed out that means-tested programs have been far more severely cut than social insurance programs. Speaker after speaker cited the inadequacy of present benefits and their concentration on expensive institutional care rather than on care for the predominant problems associated with chronicity and aging. Numerous witnesses called for coverage of drugs, eyeglasses, dental care and long term care.

Jacob Clayman, testifying for the Leadership Council of Aging Organizations, called for health-system-wide cost controls (public and private) as did Seidman of AFL-CIO

and Glasser of HSAC. Medicare-specific cost containment, said Hacking of AARP, will : not contain costs over the long run. Several groups called for system-wide prospective reimbursement, with assurances of accessibility and quality. At the January hearings, testimony by groups of insurors, providers, and others demonstrated the conflict and uncertainty about what needed to be done. The Health Insurance Association of America (HIAA) affirmed support of the extension of a hospital prospective payment plan to all payors, public and private (although not necessarily the DRG plan). The "Blues" stated their opposition to such extensions too regulatory. The Group Health Association of America (HMOs) reported the problems and increased costs they have experienced with the New Jersey DRG system. Trustees of voluntary hospitals recommended increasing co-payments for people with gross incomes over $40,000. There was general discussion of means-testing, and the HHS staff was asked to look at alternative ways of means-testing for Medicare. NEXT PUBLIC HEARINGS: San Francisco 2/24/83, Chicago 3/9/83. For information, contact the Council at 200 Independence Ave., S.W., Washington, D.C, 20201 (202-7558670).

MEDICARE VOUCHERS AGAIN: Rejected by the Congress in December 1982, the Administration's plan to allow Medicare beneficiaries to opt out of Medicare and receive credits to buy a prepaid insurance plan, H.M.O., of preferred provider program has surfaced again. This is of grave concern because of its potentially adverse effect on beneficiaries and on the long term soundness of the basic Medicare structure.....

A brochure, written for laymen, discussing Medicare vouchers, is available from the Health Security Action Council. l-5 copies, no charge; 6-100 copies, 154 each; 100 or more, $14 per 100; 1000 or more, $130 per 1000. HEALTH INSURANCE FOR THE UNEMPLOYED: Health Security Action Council Chairman Douglas Fraser called on Congress to provide health insurance for unemployed workers and their families. Testifying January 24th before the Energy and Commerce Committee of the House, Fraser, speaking also for the UAW and the AFL-CIO, estimated 25–30 million people lost health protection in 1982. With predictions of slow economic recovery and up to 5 more years of high unemployment rates, Fraser said: "This tragic. by-product of unemployment may .... cost the nation as much in damaged and lost lives as the unemployment itself".


Describing the impact of joblessness on the health of the unemployed and their families,
Fraser said: "This intolerable situation would not have existed if Congress had enacted
a universal, comprehensive national health insurance program we have however, a
massive serious problem that calls for immediate attention". Fraser suggested possible
approaches to needed protection: 1) Require private insurance to provide longer
continuation after lay-off, and shorter delays before coverage at new job entry; 2)
Liberalize Medicaid eligibility to provide for the unemployed; 3) Publicly finance
continuation of the worker's company health plan for at least a year after lay-off; 4)
provide an essential minimum package beginning when unemployment benefits start, and
continuing for a year, or until new employer-provided benefits take effect.
Fraser's testimony was given added import by the release of a Food Research and
Action Center study which reported that a century long decline in infant mortality
rates had been reversed from 1980 to 1981 in eight states and several major urban
centers. At least one state Health Director attributes increases in infant deaths in
part to unemployment and decreased access to health services.
spearheaded a letter-writing campaign to the New Jersey Congressional delegation to
bring to their attention the urgency with which their constituents view the need for
health insurance for the unemployed. They have also worked on the news media, with
letters, news articles, and radio coverage. The New Jersey Council found it useful to
have the staff of members of Congress in their congressional district join them in visits
to the nearest unemployment offices, where the jobless have been able to help them
understand what it really means for them and their families to be without health
insurance. : Said Wilkotz: "With the Administration's lack of concern ..., the time has
come when our elected officials must prove they deserve our votes by their votes in
PRICES, COSTS AND PREMIUMS: As the controversy about how to contain runaway
health care costs escalates, the figures and the terms continue to confuse the issue.
In late January the N.Y. Times reported "Health Care

Costs up 11%, nearly triple overall
rises". (Consumer Price Index for 1982 rose 3.9%). But it wasn't costs, it was prices
that rose 11%. Costs are numbers of services times.prices. The 1982 figures for costs
are probably higher than an 11% increase, and are not out yet.
of particular interest is, the Bureau of Labor Statistics report that private health
insurance premiums rose 15.9% in 1982 - more rapidly than the increases in hospital
room rates or physicians' fees. Health Insurance Association spokesmen attributed the
premium increases to larger numbers of medical services used, and cost shifting from
Federal payors. As Pederal payments are increasingly limited, providers are inclined
to make up the difference by increasing charges to private insurance payors,
TAX CAP ON HEALTH INSURANCE: Rejected in 1982, the so-called "tax cap" "on
health insurance premiums is again being proposed by the President. - Above à certain
ceiling, probably $2100 per year for a family plan, and $840 for a single plan, the
amount an employer pays for worker health insurance would be added to the worker's
taxable income. Group plans with good coverage cost more than this. · Cost-shifting
from public to private sector insurance is contributing further to runaway increases in
private insurance premiums. Pamily coverage under the VAW-General Motors Michigan
plan, for example, costs $3624 a year. The proposed tax cap would cost the average
worker with such coverage several hundred dollars a year in added taxes,

A broad based coalition is working to defeat the tax cap.

Senator Bob Packwood recently spoke to a gathering of representatives from HSAC, business, labor, senior citizens groups, professional societies and the insurance industry. He said he expected a tax cap would lead to sizeable cutback in company health plans. It would place a heavy burden on the lowest paid workers in any group, older workers, workers in regions of the country where health costs are highest, and in hazardous industries and environments. PROFITING FROM SICKNESS: While President Reagan in his state of the union message referred to the need to contain health care costs, health-for-profit has become one of America's fastest growing industries. Wall Street brokers recommend one profit maker whose net profits rose 61% a year and cash dividends 47% a year for the last five years. At least ten commercial entrepreneurs are similarly well-regarded on Wall Street. They are rapidly changing the face and the focus of sickness care in America, as Paul Starr describes in "The Social Transformation of American Medicine". Profitmaking chains own kidney dialysis centers, labs, medical office buildings, ambulatory surgical centers, and shopping mall emergency centers. Large insurance companies are buying HMOs; nearly 80% of nursing homes are operated for-profit. 600 of the 6000 U.S. community hospitals, are owned hybrafit-making_companiesamwbich_8]52. marec 300 more under contract. In the first quarter of 1982, one company reported $48. million profit, and recent acquisition of hospitals in 13 states. The curbing of Health Systems Agencies (HSA ended review of hospital applications, eight for-profit chains applied to build in two suburbs within 5 miles of major hospitals. Combined with the increase of physicians per capita, expected to be down to 1/440 people by 1990 (now 1/536 people), the face of health care will be drastically altered in ways unrelated to budget cuts and consumer needs. Concern about the public and inner-city hospitals, and the availability of decent care for the poor and those with complex illnesses has increased when the profit makers take over. As for-profit chains advertised $40,000 salaries for a nursing director, New Orleans Charity Hospital had to close 700 of its 1500 beds because it could not afford nurses salaries. The Health Advocate reports that Cook County Hospital is managed by Hyatt Medical Management, a subsidiary of American Medical, which owns a fleet of airborn C.T. scanners, ready to fly instantly anywhere in the world. At Cook County Hospital, emergency scans are frequently dela for 24 hours, and then done in private hospitals, which charge the County $800 per scan. The Committee to Save Cook County Hospital wonders why Hyatt has been unable to find just one earthbrund scanner for the patients of Cook County.

Health Security Action Council
1757 N Street, N.W.
Washington, D.C. 20036




"Milton Wilkotz
State Chairman
Health Security Action Council
1214 Mantle Way
Toms River, N.J. 08753

New Health Care Cost Containment Plan Proposed

A broad based coalition has proposed a comprehensive plan to contain fast-rising health care costs as an alternative to further destructive Cuttacks is such programi a.; Medicinci mini Medicare.

Called H.A.L.T., or Health Action to Limit Takeaways, the plan was drawn up over the past several months by health care experts working with the Health Security Action Council. The coalition includes more than a hundred labor, consumer, religious, senior citizen, business, civii rights and farm groups.

Legislation embracing the cost containment proposals will be introduced earl. in the next session of Congress, according to MOLTSN WILHOTZ Chairman of the Health Security Action Council. Naj Winkoricaised in "The only constructive alternative that has been offered thus far to further cuts in programs.

If adopted, the plan would iminediately save $5 billion annually in federal expenditures and would result in comparable savings in the private health sector.

Over several years, the H.A.L.T. plan is aimed at bringing down yearly increases in health custs to the level of increases in the Consumer Price Index. Over the past year or so, the health care component of the C?! has continued rising at a double-digit pace despite the overall lessening of inflation: ,;

The plan would be implemented in two phases. Under the first phase, hospital and nursing homes charges, doctors' fees and other health care costs would be limited to the necessary cost increases of previous year.

These limits n charges would include the Medicare and Medicaid prograns as well ilds private insurance.

After two years of this initial phase, the plan would be fully in place. The states would have the flexibility to work out specific budgets to contain lealth care costs within the general cost increase limits, as well as federal guidelines. These budgets would be determined in annual negotiations anong a state health commission, Medicare intermediaries, providers, insurance companies and consumer representatives.

She is. A.I.T. plan is "comprehensive rather than drastic;" according to Melvin A. Glasser, Director of the lealth Seality Action Council. "It's a systematic rather than a piccome il f':'I och

22-020 0-83-11

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