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These increasing charges under Medicare are one reason why it covers only 40 percent of per capita health bills for the aged. These charges impose a severe burden on older people and I am convinced that it is time that this upward trend be halted. To this end, I introduced legislation in the last session of the Congress which would have frozen the hospital deductible and coinsurance at the 1973 rates. This proposal was adopted by the Senate as a part of the amendments to H.R. 3153 but was referred to committee by the House. The $84 deductible rate, and coinsurance increases subsequently went into effect January 1, 1974, thus increasing the upward trend.

In chart 4, we see how the President's proposal to combine parts A and B of Medicare and impose a 20 percent coinsurance charge would affect costs for hospital stays. This chart assumes an average cost of $110 for hospital charges per day.

It also assumes for illustrative purposes that there were no other coinsurance or deductible charges prior to hospitalization.

Medicare now imposes a deductible of $84 but no coinsurance charges until after 60 days of hospitalization in a benefit period. This is shown by the straight line at the $84 level at the bottom of the chart.

Under the President's proposal, there would be a $100 deductible, and 20 percent coinsurance charge after the deductible is satisfied, beginning on the very first day and $22 for each succeeding day until the maximum charge of $750 is reached. The maximum would be reached on the 31st day.

This proposal, it can be seen, will certainly increase costs for patients with short-term hospital stays over the current Medicare program. Medicare, as we saw in chart 2, covers a larger proportion of hospital

CHART 4.

PRESIDENT'S PROPOSAL INCREASES HOSPITAL COSTS FOR MEDICARE PATIENTS

BASED ON $110 HOSPITAL CHARGES PER DAY

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expenditures than any other type of care, but this proportion is likely to drop under this proposal because most hospital stays under Medicare are short term.

According to the American Hospital Association, the average hospital stay for persons over age 65 was about 12 days in 1973. In our illustration, the 12-day stay would cost $344 under the President's proposal compared to the present charge of $84.

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Turning to chart 5, this has a distribution of hospital stays in 1971 which illustrates how few patients have long hospital stays. Only 1 percent of the patients had stays of longer than 60 days. It is only this 1 percent which now pays coinsurance for hospitalization covered by Medicare. Under the President's proposal, everyone hospitalized would have to pay coinsurance charges unless they had already incurred $750 in cost-sharing charges in the same year.

Chart 6 gives us some information to help evaluate the value of the administration's proposed coverage of out-patient prescription drug costs above a $50 deductible. This chart shows the results of a survey of supplementary medical insurance enrollees-those with Medicare part B insurance-and their charges for prescription drugs in 1971, the latest figures available.

About 25 percent had no charges for drugs. A total of almost 40 percent had drug costs, but of less than $50-so the coverage of drugs with a $50 deductible would not help them. Another 18.3 percent had charges of between $50 and $100-so less than half their drug costs would be covered. Although because of rising costs there have been

some changes in the distribution of drug charges since these figures were collected, they indicate that under the administration plan many of the aged would still have to pay for all of their drug costs. or a good portion of their drug costs.

CHART 6.

AVERAGE ANNUAL CHARGE PER SMI* ENROLLEE
FOR PRESCRIPTION DRUGS, 1971

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$140

$180.

No $0.1. $10- $20. $30- $40- $50- $60- $80- $100.
Charge $9.99 $19.99 $29.99 $39.99 $49.99 $59.99 $79.99 $99.99 $139.99 $179.99 & Over

CHARGE FOR PRESCRIPTION DRUGS

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The drug benefit under the proposal would at least add something to Medicare coverage. But the proposed home health benefit would reduce the current home health benefit and impose coinsurance charges, and this is illustrated in chart 7.

FURTHER REDUCTION OF HOME VISITS

The number of home health visits now authorized under Medicare is 100 under part A and 100 under part B, for a total of 200 per year. The administration plan would reduce this number and it would apply a new coinsurance charge of 20 percent to home health visits. Thus, a home health benefit-which is inadequate now-would be further reduced.

In his message transmitting his proposal to Congress, the President said that he did not "consider our current approach to longterm care desirable because it can lead to overemphasis on institutional as opposed to home care." I agree, and I have introduced legislation to increase the number of home health visits allowed under Medicare, and to make other liberalizations in the home health benefit. It seems contradictory for the administration to agree in principle with the need for home care, but to propose a cutback in home health benefits.

Many of the problems with the administration proposal, illustrated by these charts, can be traced back to the principle of costsharing meaning increased out-of-pocket costs. When we began our series of hearings a little over 1 year ago, I asked this question in my opening statement: "How can many of our elderly realistically expect to receive adequate medical care, in the face of these Medicare cutbacks?"

The cutbacks to which I referred would have resulted from administration proposals to raise the costs of Medicare to almost 21 million older Americans.

It came as no surprise, to me at least, when the administration could not find anyone in either House of Congress to make a serious effort to advance that cost-sharing legislation.

In fact, the Senate took a step later in the year which indicated its concern about the high cost of Medicare to participants in that program by voting in favor of my proposal to hold the line on the increase in the Medicare hospital deductible and coinsurance charges.

The Senate vote, I firmly believe, was a clear signal to the effect that the relentless rise in the costs of Medicare to the consumer must be stopped, before this essential program becomes too expensive to help the people it was meant to serve.

And yet, the administration has again come forward with a proposal which raises objections very similar to those expressed last year. The difference is that now the Medicare cost-sharing is tied to the plan described by President Nixon as his comprehensive health insurance program, meant to serve all age groups, not just older persons. Once again, these provisions are described as "improvements." Once again, there is talk of cost-sharing.

Once again, we are told that less is more.

The President's comprehensive health insurance program deserves serious congressional scrutiny and debate. These 2 days of testimony before the Subcommittee on Health of the Elderly will begin that process.

Senator Frank Church, who is chairman of the full committee, has submitted a statement which I will be delighted to include in the record at this point.

PREPARED STATEMENT OF SENATOR FRANK CHURCH

Mr. Chairman and members of the Subcommittee on Health of the Elderly, I will take just a few moments to comment on the timeliness and importance of these hearings.

It seems to me that the subcommittee has acted promptly and wisely to provide a forum for discussion of the President's proposed comprehensive health insurance plan and its potential impact upon health care for the elderly.

The President's proposal, made on February 6, is significant for several reasons; for example, it offers some protection against catastrophic illness, and it clearly recognizes that there are major deficiencies in the present health care systems. These and other features of the administration plan-as they affect all age groups should receive careful congressional consideration and extensive debate.

To the Committee on Aging and in particular this Subcommittee on Health, however, it already is apparent that early attention should be given to those provisions of the President's program that have direct meaning for older Americans.

These hearings provide the opportunity for that kind of dialog. One issue which, I hope, will receive particular attention is the administration's proposal, once again, to increase cost-sharing for older persons now covered by Medicare.

Today, Medicare beneficiaries pay an $84 deductible before hospital charges are paid by the program. There is no coinsurance charge until after 60 days of hospitalization.

The administration's proposal would require a $100 deductible and 20-percent coinsurance for all covered hospital services.

INCREASE OF 20 PERCENT ON INSURANCE

Nor is that all. The monthly premium now paid for supplementary medical insurance would increase by about 20 percent, from $6.30 to $7.50. Home health visits would be cut from the present authorized 200 visits to 100 visits per year with no liberalization of the present stringent requirements to qualify for home health benefits.

Drugs are supposed to be included, but we have no details as to whether the proposed coverage of drugs would equal the legislation which I have sponsored and which has already passed the Senate. We do know that there would be a steep $50 deductible before any prescriptions are paid for.

Finally, it is certainly meritorious that the administration's plan would cover hospital stays without limit for those who require lengthy hospitalization. I have sponsored, and the Senate has passed, legisla

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