April 5, 1974
Page 9959
MEDICARE AND THE PROPOSED COMPREHENSIVE HEALTH INSURANCE PLAN
Mr. MUSKIE. Mr. President, the Senate Committee on Aging's Subcommittee on Health of the Elderly, of which I am chairman, held hearings on March 12 and 13 to examine the effect of the administration's proposed new comprehensive health insurance plan – CHIP – on health care for older Americans. That plan is only one of the national health insurance proposals Congress will be examining this year, and our hearing addressed only some of the questions that must be answered in this evaluation process. But the information we did receive suggested that the administration plan would not meet the needs of the elderly.
Our hearings showed that although CHIP would offer some improvements over earlier proposals, it would create an unwieldy and perhaps unworkable apparatus which would impose increased health care costs on most elderly Americans while failing to guarantee needed improvements in the kinds of health care they receive. The increased costs would come in the form of "cost sharing"– in other words, higher deductibles and coinsurance. And the benefit increases included in the plan, while helpful to some of the elderly, would still not cover many of the health needs of most of our senior citizens.
The testimony of Nelson Cruikshank, president of the National Council of Senior Citizens, summed up CHIP very well by saying it seems to "take a lot from a great many in order to give a few people very little."
The witnesses who testified at our hearing were most concerned about the additional cost-sharing charges that would be imposed on medicare beneficiaries, particularly the 20-percent coinsurance charges at the beginning of a hospital stay. CHIP would provide coverage of hospital and medical costs combined, but with a deductible of $100, plus a coinsurance charge of 20 percent. Under the administration's proposal, out-of-pocket hospital charges to patients for an average hospital stay of 12 days at $110 per day, for example, could rise from the current $84 to $342. Thus, out-of-pocket health costs for many of the elderly would be increased beyond their already high levels.
Secretary Caspar Weinberger of the Department of Health, Education, and Welfare, who testified before the subcommittee in defense of the administration plan, justified this increased cost sharing by saying it would bring about "cost consciousness" on the part of the patient and cut down on "overutilization" of health care services. But we examined that same argument last year in hearings on the administration's previous proposal to increase medicare charges. And we found that evidence available at that time suggested that cost-consciousness would only decrease utilization when it put health care beyond the financial reach of the patient. Secretary Weinberger produced no new evidence to dispute that conclusion, and our other witnesses persuasively challenged his argument.
One witness, Melvin Glasser of the United Auto Workers, pointed out the basic weakness of the cost sharing argument. He said:
These claims ignore the basic fact that approximately 80 percent of all health care costs are controlled today by physicians, not consumers. They place people in hospitals and nursing homes and discharge them; they order prescription drugs and no one else can. Further, it is exceedingly naive to suggest that consumers have free choice to shop among physicians or hospitals to choose the best at the lowest price. Those who make such assertions have not tried to do so.
Representatives from the American Association of Retired Persons-Retired Teachers Association AARP-RTA also addressed this issue and said that the "overworked contention" that rising health costs are due to overutilization is a myth. They said the administration's bill would probably exacerbate the problem of rising costs because it leaves reimbursement procedures and standards to the uncontrolled discretion of the Secretary and the States.
Although CHIP has no built-in provision for controlling rising costs, it does have built-in provisions for increased charges and for increasing these charges as costs rise. The AARP-RTA witnesses also gave useful testimony about their own health insurance proposal.
So our hearings showed that the increased cost-sharing provisions under CHIP would raise the out-of-pocket health costs for many of the elderly compared to medicare as it exists today. This conclusion alone indicates that the administration plan would be a step backward.
Our witnesses were also concerned about the provisions of CHIP relating to the low-income elderly. For those who qualify under an income test, CHIP would provide a system of lower cost-sharing charges. This would replace the current system where medicaid is used as a supplement to medicare for the needy aged, since medicaid would be abolished except for a residual long- term care program. And even though the administration plan would reduce charges for the low- income aged, it is likely that CHIP would be more costly for many of them compared with medicare supplemented by medicaid.
For example, CHIP would include a 10-percent coinsurance charge for persons with incomes of $1,749 or less. All of the proposed charges and income categories are given in the following table:
[Table omitted]
Persons in income categories I and II – with incomes up to $3,499 – are now eligible for medicaid, which not only covers almost all costs including Medicare charges, but in many States also provides for coverage of items such as hearing aids and eyeglasses. These items will not be covered under the new proposal.
HEW Secretary Caspar W. Weinberger suggested the answer to that comparison in his testimony that the loss of some benefits by some current Medicaid eligibles is inevitable.
He explained that–
Services which are currently covered under many State Medicaid programs but which will not be covered under CHIP or the residual Medicaid program includes dentures, adult dental services, hearing aids and eyeglasses for adults.
While the Secretary added that he believes that the States will continue to provide these services, he gave no indication that the Federal Government would continue to provide States with funds for these benefits – and it is unlikely that the States could make up the difference from their own revenues.
Nelson Cruikshank made another important point about the low-income assistance provisions of CHIP – that it would change the nature of the medicare program
The main reason for the enactment of Medicare was to give to the elderly, most of whom are retired, the same basic protection against the costs of illness and the indignity of a means test that was enjoyed by most people in the working age group. The Nixon proposal flies in the face of this insurance concept and in its place offers certain protections which rest on proof of low income. Thus it would substitute the principle of welfare for the sound and proven principle of social insurance with entitlement as a right based on contributions made during the beneficiary's working years.
In addition to the cost-sharing and low-income provisions, CHIP includes some improvements in medicare: coverage of catastrophic illness, coverage of out-of-hospital prescription drugs, and an improved mental health coverage. While these improvements are worthwhile, our witnesses pointed out that they would not provide a great deal of benefit for most of the elderly.
Catastrophic hospital and medical coverage under CHIP would provide protection against large health costs only after initial payment of deductibles and coinsurance charges. But there is no provision for coverage of catastrophic illnesses that require long-term care in a skilled nursing home, an intermediate care facility, or in the home. The catastrophic provisions are needed, but they would give additional help only to a small number of the elderly compared to present medicare coverage.
CHIP would also provide some coverage of out-of-hospital prescription drugs, an improvement in medicare which is long overdue. But the value of the proposed coverage is limited by the imposition of a $50 per person deductible, and by coinsurance charges. And it was not clear how this benefit would be administered.
CHIP would also change medicare's coverage of mental health. CHIP would cover 30 days of hospitalization or 60 days of partial hospitalization, instead of the present medicare lifetime limit of 190 hospital days. This would adversely affect those elderly persons who suffer a mental illness requiring long hospitalization. But on an outpatient basis, CHIP would provide 30 visits to a comprehensive community care center or not over 15 visits to a private practitioner. This is some improvement over the present dollar limit for doctor visits of $250 per year.
Some existing medicare benefits, however, would be reduced. Home care coverage, in fact, would be reduced from the present 200 visits under medicare parts A and B to only 100 visits under CHIP, and a coinsurance charge would be added. Posthospital extended care would be limited to 100 days per year as compared to the present provision of 100 days per benefit period or "spell of illness," under which it is now possible to have more than one benefit period a year. In general, long-term care outside of a hospital is left to a residual medicaid program which would benefit only the low-income aged.
In addition, the administration of the program raises many problems, including its implementation by the States. If some States do not choose to pass enabling legislation, there could be two medicare programs – an "old" medicare program in one State and a "new" medicare program in another. Aged persons who moved from State to State might find their eligibility rights changed or even questioned. Witnesses from the AARP even suggested that this would raise constitutional questions.
Mr. President, the testimony which I received at these 2 days of hearings has convinced me that the administration's proposal will not adequately improve medicare. Although the current medicare program now pays for only 40 percent of an aged person's health bill, it does provide important protection for the aged – particularly for short-term hospital stays. This protection must not be diluted by the imposition of added charges which will shift an even higher proportion of health costs to retirement incomes.
And the differences and inequities now existing in the Federal-State medicaid program would not be improved by uniformly reducing the number of health services which would receive Federal funds. To the needy aged who now receive dental care and eyeglasses and other health aids from medicaid, these services mean, in the words of one of our witnesses, the differences between a "decent life and a living death."
We certainly cannot expect immediately to legislate a program which will take care of all the deficiencies in our medicare and medicaid programs, but the administration's proposal not only provides little improvement but would worsen health coverage for many elderly Americans. This renders invalid any claim for overall superior coverage by this proposal.