172 SOCIAL SECURITY AMENDMENTS OF 1960 Senator HARTKE. All right, now to another matter, have you dro the reinsurance proposal of 1954 as being unworkable and unsuit Secretary FLEMMING. Yes. Senator HARTKE. In your opinion this is equally unsatisfacto far as the administration is concerned, Secretary FLEMMING. What do you mean equally unsatisfactor Senator HARTKE. Equally unsatisfactory as the social security proach. Secretary FLEMMING. I wouldn't say that. I just think we hav a much better approach here. Senator HARTKE. All right, but you have dropped for all in and purposes Secretary FLEMMING. If we had not dropped it I would have i here because there is what I am recommending and backing. Senator HARTKE. You are very strongly in favor of the deduc provision, isn't that right? Secretary FLEMMING. That is right. Senator HARTKE. And you recognize, of course, I hope, that u your proposal, that there is no incentive for diagnostic medical ca there is no incentive under the deductible provision for diagno examinations. Secretary FLEMMING. Well, in our package of benefits we have physicians' services unlimited." Senator HARTKE. But after they pay the deductible Secretary FLEMMING. Let's keep this in mind, the fact that t $250 applies to any of the services that are listed in the package their dental bills, all of the bills that they may incur in connect with any of the services in this benefit package would apply to $250. After that the plan picks up. Senator HARTKE. Let's come back to this, aren't you willing to ag at least there is a deterrent to seeking preventive diagnostic tre ment? Maybe not a complete bar, but certainly a deterrent by havi the deductible feature? Secretary FLEMMING. I don't know that I will concede that, no. I mean because I think there are other incentives at work that wou lead to a person moving in that direction. Senator HARTKE. Well, the most important one is though enou money to pay the bill, isn't it? Secretary FLEMMING. There is not any question about that. Senator HARTKE. Sure, Doctor John Porterfield-the Deputy Su geon General-testified that this, is in his opinion, one of the re needs and I think you are acquainted with him, are you not? Secretary FLEMMING. Yes, sir. Senator HARTKE. The real need is for preventive medical care f these people. You agree with that. Let me assume then that th is a deterrent to preventive medical treatment. Now, about the statement this morning concerning the overtaxir of hospital affairs. You are acquainted with the McNamara pr posal which permits a direct care in the home and also that he do not have to go to the hospital before he goes to a nursing home & was required in which you objected to in the Forand bill did you not Secretary FLEMMING. I testified this morning that I felt that th McNamara bill on that particular point, assuming without regard to the basic approach, was an improvement over the Forand bill. Senator Javits testified the same way just a few minutes ago. Senator HARTKE. All right, fine. Now then, in regard to physicians. you feel that one of the basic deficiencies in the McNamara and Forand bills and the others is the absence of physicians' fees? Secretary FLEMMING. Let me put it this way: My conviction is that the real need here is to provide protection agaisnt the costs of long term illnesses. If we are going to provide protection against the costs of long term illnesses, I think it is necessary to include physicians' services as well as all of the other services that we have identified. Senator HARTKE. I won't find myself very far from you on that point. Then in regard to that, however, you must realize that if you are going to provide physicians' services it must increase the overall costs; we can agree on that. I am not talking about how much and where, but if you are just going to add physicians' fees. Secretary FLEMMING. Sure. Senator HARTKE. It is going to increase the overall costs. And also by the testimony given here, the McNamara proposal and your proposal, are estimated to run about the same $1.2 billion and $1.3 billion, isn't that right? Secretary FLEMMING. I think that is the estimate of the McNamara proposal-about $1.3 billion. Senator HARTKE. Therefore, it is reasonable to assume that the difference in picking up this additional cost for physicians' fees has to be covered in the amount which is taken in the deductible feature because this being the major difference Secretary FLEMMING. Well, I would want to analyze the two sets of benefits pretty carefully before I agreed with that generalization, you are certainly correct that one of the factors that leads to the additional cost which is reflected in the deductible is the physicians' services but I am not at all sure that there may not be some other things in our package which also add to the costs in terms of taking care of the long term illness, in other words, I would like to have somebody check both sets of benefits carefully. Senator HARTKE. I am not going to hold you to it but as to that, that is a fair assumption at least for the moment subject to it being checked by your staff, is that right, and if it is incorrect, I am sure your staff could supply that information for the record to correct it at this point. Secretary FLEMMING. I am certainly willing to agree that this is one of the factors that leads to the additional costs, the additions of physicians' services; there may be some other factors in there. Senator HARTKE. So we must agree then that the McNamara proposal is less expensive as far as overall costs in regard to the fact that it eliminates physicians' fees? Secretary FLEMMING. No; the McNamara bill basically is less expensive because of the fact that it does not do as good a job of taking care of the costs of long-term illnesses as does the proposal that we have submitted to the committee. Senator HARTKE. You mean as far as any other type of thing except physicians' services. I am Secretary FLEMMING. Well, we are right back where we were. sorry I just can't react off the cuff on that. I would like to have the opportunity of analyzing it a little more carefully. Senator HARTKE. Let me state then that it is my opinion that this is the primary difference in services. Will you accept my statement, how is that? I don't want to put words in your mouth, you see. Secretary FLEMMING. I indicated in the testimony that I gave this morning by taking a specific example which did not include a large amount in terms of doctors' services, that our package of benefits would be much more helpful in dealing with long-term medical expense than the McNamara bill. Let me just give you that figure again. You will recall I was talking about a woman in her 70's who had had a stroke, was in the hospital 30 days, skilled nursing home, 22 months, private duty nurse for 5 days, medical services in the hospital $125, medical services in the nursing home every other week, $22, drugs $100, and I said that under the McNamara plan that she would receive $3,350 of assistance, and would be called upon to pay $3,575. Under our plan she would receive $5,140 of assistance and would be called upon to pay $1,833. There is much more in that than just the additional physicians' costs or fees. This is geared to a long-term illness and does a much better job for the individual in also giving assistance to a long-term illness than does the McNamara plan and of course is way ahead of the Forand plan. We have, the other factors that we have, just quickly, we have longer durations as far as nursing home and hospital care is concerned, we also have surgeons' fees, and we have dental services and drugs, and as I recall it, the McNamara plan makes no provision for drugs. (NOTE. The McNamara bill provides for inclusion of the costs of "very expensive drugs" on or after July 1, 1962.) Senator HARTKE. I didn't plan to get into that example just for the sake of the record to clarify, I just would like to give you an example of a 68-year-old man, cardiac failure, hospital 30 days, home treatment 120 days, medicines, drugs, and so forth, under your proposal portion would be $766 and under the McNamara proposal the cost to the individual would be $56. For a widow with carcinoma of the breast, surgery, home visits, nursing home for terminal care under the McNamara proposal would cost her $350 and under your proposal would cost $594. Single man-bronchial pneumonia treated at home under the McNamara plan would cost him nothing, under your plan would cost him $200. Married person, fractured hip, hospital surgery, nursing home and home care under McNamara proposal $345, and under your plan would be $583, and I would imagine if both of us dug up cases we would probably stay here all afternoon coming up with various proposals showing which plan was doing the best job and costing the least amount of money. Secretary FLEMMING. Senator Hartke, the difference is a clearly reconcilable difference. The proposal that we have placed before the Congress is designed to deal with heavy cost of long-term illnesses. The other proposals which are before the Congress place their emphasis on first-dollar costs. The Forand bill would be a first-dollar cost of a fairly short-term illness. The McNamara bill moves in our direction, but that is the reason for the difference. I have got illustrations just like yours here, and it depends on the duration of the illness. We feel that the most serious issue confronting the country at the present time are these long-term illnesses that elderly people become involved in. Senator HARTKE. Well, I would hope that you are right but according to your statement on page 8, you point out the fact, which I commented upon very carefully, that the problem. here involves about 12 million people who do not pay income tax and 210 million who are the recipients of public assistance. I am not going to argue that with you but I feel if you read your own figures you will find out this does not deal necessarily just with long-term illness but with people who have a present need for medical attention and who are not getting it. That is the problem. Secretary FLEMMING. But how are you going to take care of this person with a long-term illness using the illustration that I used? You are asking that person to find $3,500 some place under the McNamara bill in order to take care of the expense incurred. Senator HARTKE. Well, the man who has an income of less than a thousand dollars, is not going to come up and pay a $3,500 doctor bill. Secretary FLEMMING. What are you going to do for that person, that is my problem? Senator HARTKE. I would imagine Secretary FLEMMING. That is our problem, it seems to me. Senator HARTKE. Well, you and I probably are going to disagree there on what part of the problem is and that is that. Secretary FLEMMING. I think the person is better off if the plan pays $5,100 and the individual has only got to get the $1,800. I think that is better than forcing the individual to find $3,500. Senator HARTKE. Well, the average for this group shows that their health and medical expenses according to the Secretary of Health, Education, and Welfare is $177. Secretary FLEMMING. That is an average. I also pointed out if you read a little further on, that 15 percent or 24 million aged have total expenditures on the average of $700 per year. Senator HARTKE. What percentage of this group upon which you feel there is such a present human need, what percentage of that group are in the so-called $6,000 class? Secretary FLEMMING. What I have said is that 15 percent of the persons 65 or over, or 24 million have some total medical expenditures on the average of $700 per year, and I then went on to point out that the only reason or the reason you have that high average is that you have these people who become involved in illnesses that spread out over a year or 2 years. Senator HARTKE. In other words, we can assume even from your own statements that certainly 85 percent of these people have expenses of less than $700 per year. Secretary FLEMMING. That is what I have said here, yes. Senator HARTKE. So we are certainly dealing with far less than 15 percent, we are dealing with $6,000 a year. Secretary FLEMMING. Senator my point is this: We have not made any start in dealing with this problem. Let's get started by identifying the most serious problem that we have got namely the people who are up against these heavy expenses for long-term illness. Senator HARTKE. All right, let me ask you in regard to your provision regarding physicians, payment of physicians' fees and setting up physicians' schedules which are required, does it not call for the schedule of fees being approved? Secretary FLEMMING. Well, any State that entered into this plan would certainly, just as it does under public assistance, have to set up a fee schedule of some kind. Senator HARTKE. All I want to know is do you think this in any way interferes with the physician-patient relationship? Secretary FLEMMING. I do not. Senator HARTKE. Do you think your proposal would not? Senator HARTKE. If we established a separate fund for medical benefits on a payroll deduction method, how could that possibly affect the "orderly development of the retirement survivor disability features of the social security system" as indicated in your statement? Secretary FLEMMING. Simply because of the fact you are putting an additional load on that particular form of taxation and I don't care whether the fund is separate or not, it becomes perfectly clear to the person who is paying the payroll tax instead of paying 9 percent he is paying 10 or 11 or 12 or whatever the case may be. Senator HARTKE. He is paying his withholding tax whenever you increase his taxes on withholding. Secretary FLEMMING. Sure, but whenever anybody comes before this committee in the future, and asks for an improvement in the retirement or survivorship or disability features of the bill, and says "This is going to take another 1 percent as far as the payroll tax is concerned" people are going to say "Well, we have got to look at that in relation to the amount of payroll tax that is required for health insurance," and inevitably they will be in competition with one another. Either you will go the whole distance and take care of all of them and build your payroll tax up to a very high figure or you will decide that you are going to take one and not the other, and human beings may suffer as a result. Senator HARTKE. Let me ask you a question and I think you can answer this and I think I know what you will answer, do you consider your proposal fiscally responsible? I Secretary FLEMMING. Well, didn't I already answer that? thought I spoke on that for 3 or 4 minutes in response to Governor Rockefeller's statement. Senator HARTKE. I am not asking for 3 or 4 minutes but just yes or no. Secretary FLEMMING. Didn't I answer that a little while ago? Secretary FLEMMING. I mean in response to your question, didn't I answer it a little while ago? Of course I consider it fiscally responsible. |