« PreviousContinue »
tion that we do in connection with all of the other matters involving OASDI, we would recommend to you that you impose a 1-percent payroll tax.
So that that would be a half percent on the employer and a half on the employee.
Senator GORE. Well, in either eventSecretary FLEMMING. But you see, I mean, I get your point, and, of course, I think in weighing the two, you do have to take into consideration not only when you weigh that $24 but when you weigh the $250 deductible and the 20-percent cost-sharing provision, all three of those put together, what it can mean to the individual in terms of being helped on long-term illness. I appreciate that you or the others might take issue with me on feeling that that is the No. 1 problem, that is the problem we should concentrate on.
But in evaluating our plan, I think that you do have to keep in mind the fact that that is what we did concentrate on, namely, developing the very best practical benefits that we could in order to deal with the long-term illness.
Senator GORE. But even though I acknowledge with appreciation your concern for the catastrophic illness, your plan lays itself wide open for people who may have been advised of an impending physical catastrophe to take advantage of it.
Secretary FLEMMING. Well, I mean, I get your point there, but after all is there anything wrong with it! If they have been advised of it and in all probability it is going to take place, they are going to be up against this heavy expense and of course this is one of the reasons why we build in the deductible and the cost-sharing feature so that there is some check on the use of the services and on the
that might be incurred. Let's assume that our enrollment period was the month of January, just to take an illustration, in a given State, and let's assume that in the month of December a person who is 70 or 71, who had not yet ever come into the program, is advised of the necessity for a major operation, advised that it might lead to other complications, and so that person said "Well, in January, I will; when the enrollment period comes around I will enroll in order that I can take advantage of the program."
I appreciate that is what insurance people would call adverse selection, and yet considering the nature of the problem, and considering the income that this person has and so on, I don't think the Government should object to that kind of an adverse selection.
Senator GORE. Well, I would like to examine that a moment with you. I realize you have had a long and a hard day. I noted with interest that you would not apply the property test but rather an income test.
Secretary FLEMMING. That is right.
Senator GORE. So let us imagine a couple with an income of $3,000 per year. I believe
I believe your limit would be $3,800 per year; would it not, Secretary FLEMMING. For a couple; yes. Senator GORE. For a couple. Secretary FLEMMING. Yes.
Senator GORE. Let us assume that this couple is retired, that they have a comfortable home, without encumbrances, of some reasonable
value, say $25,000, and that they own a farm. It is very possible to own á farm of a thousand acres and have no income at all.
But this farm is perhaps worth $100,000, and let us assume that the same couple has $100,000 invested in Government victory bonds on which they receive 212 percent interest, $2,500, and a few other odds and ends that would make their total net worth a quarter of a million dollars.
Yet under your plan by paying $24 they could receive Government payment of a hospital bill, I believe you said, up to
Secretary FLEMMING. There isn't any limit.
I here. Under the social security approach, there isn't any consideration of need at all, of course.
And people such as the ones here you have described, plus people who are drawing salaries of $25,000, $50,000 a year, and so on, could, I mean would be, not could, but would be under the plan.
I recognize that under the kind of a plan that we have proposed there would be some people who would or could qualify for it, and you and I would agree they did not need this kind of help and assistance in dealing with a major medical illness.
But certainly a much smaller percentage than in the case of social security would be willing to take that kind of a calculated risk, in other words, that some such as you have described would slip in, in order to be able to avoid all of the administrative complications and all of the personal negative reactions that are involved in the application of a means test. In other words, I am not very enthusiastic about a means test, and I know the problems that it involves.
I mean that are involved in it when you get over into it in the welfare field.
So in order to avoid that, I am willing to take a calculated risk on having some people come under this plan who don't need this help, but again my point is that under this plan you would have a much smaller percentage of persons under the plan who do not need help than would be the case under social security.
So that I think this is better from that viewpoint-if you judge it against the test of are we helping only the people who need it, I would say we are coming closer to helping only the people who need it under our plan than you can under a social security approach.
Senator GORE. Well, one fault of your plan is that it permits a citizen who has been advised of arson to take out insurance on his house. It seems to me that we must choose here between a health, hospitalization, medical care program, that is truly national in character, or to take a far more restrictive
suggested, which will not cost as much, but which can be greatly abused. In making that choice, it seems to me that where you have given great emphasis, and I applaud you for giving emphasis, to the catastrophic illness, the lifetime illness, the invalid, but the thing that you have overlooked, it seems to me, and you understand, I have not given this the study to which you have given it, is the
value of preventive medicine, a stitch in time, visits to the doctor's office or to the nursing
such as you
home, if an old person whose means are very limited must bear the first $250 cost of hospitalization.
Secretary FLEMMING. Not of hospitalization, I mean of all conceivable types of expense that could be incurred in this area, but go ahead, yes.
Senator GORE. The reluctance depends heavily on his limited means which might discourage and forbid the possibility of corrective attention which might come much cheaper than the cataclysmic, catastrophic illness that might occur otherwise.
Secretary FLEMMING. Senator, I certainly appreciate the point of view that you have expressed there, and I think it is one that should be given consideration. I would be the last to deny the desirability of our doing everything we can to encourage people to prevent, I mean to take steps that will prevent major illnesses. I certainly think that both Federal and State Governments and private groups and so on should do everything they can along that line.
I appreciate the fact that a good case can be made for putting the emphasis on first dollar costs as over against putting the emphasis on the long-term illness.
And I appreciate the fact that you don't necessarily have to choose between the two. You could say it is both-and, it is not either-or, but I think both of us would probably agree if we tried to make it both—and, the initial expenditure would get up to a figure where it would probably be very difficult for us to get any program started; I mean there would be a resistance to the program because of the expense involved.
So, faced with that kind of a situation, our feeling was that it was better, in order to get the Government's participation in this area off dead center, to concentrate on the long-term illness, and to come up with a plan which would really take care of that in an adequate manner, recognizing that there are other programs and so on that can help out on the first dollar costs.
I know reasonable people can differ on that. I mean, as to our choice, but as we went into the problem, the thing that impressed us more than anything else was this terrific burden that the long-term illness puts, not only on the older generation, but on the next generation also, because, as you and I know, the older generation use up their life savings in order to take care of it, and then the next generation comes along, and they use up their savings, and this gets to be kind of a vicious circle, because their savings are savings that otherwise would be used to educate their children, who are coming along and they can't use it for that purpose.
In other words, we feel that the situation that presents a terrific problem for the older generation and for the next generation is this long-term illness, and we felt that it was better to concentrate on that and come up with a plan that would really take care of that situation. I think you can see that if a State came in under our plan as we have outlined it here that it really would do a good job of taking care of the long-term illness.
Now, the Forand approach didn't really take care adequately of the point on which you have put your finger either, because it just provides hospital and nursing home benefits for a comparatively short period of time, so there isn't really any of the preventive aspect there.
I appreciate that Senator McNamara’s bill, the bill that you have introduced, moves in the direction that you have talked about, and your bill also, moves in the direction of doing a better job on the long-term illness than the Forand bill would do. It doesn't do as good a job as our package would on the long-term illness but it certainly moves in that direction. This is, I appreciate, a matter of judgment, but we just felt that that situation is so serious that this is what we ought to concentrate on and what we ought to try to get the Government to do something about.
Senator GORE. Well, as I have said to you, I appreciate your efforts, and I am not going to keep you longer.
Secretary FLEMMING. Might I say this, Senator Gore. I want to be fair to the staff who have worked on this. When you first asked me about that enrollment figure my memory just slipped for a moment, we had a rather long discussion on that, I recall that very distinctly, because again we are focusing the attention on the long-term illness. I started out by hoping that we could avoid an enrollment period, but I was persuaded by the staff that we couldn't, just as you recognized we couldn't, and in our draft bill there is definite provision for that. I just wanted to make that clear. My memory slipped on it for a moment.
Senator GORE. I concluded that either your memory or your staff work had slipped, and I am glad that you were generous enough to say it was your memory.
Secretary FLEMMING. It certainly was, no doubt about it.
Senator GORE. Well, our brief discussion here illustrates that neither can claim to have either a perfect or final answer to this problem, and if the lightning shouldn't strike you out in Chicago and I survive Los Angeles [laughter), we will have an opportunity to discuss this further.
I do want to join you in your feeling that the House bill in and of itself is inadequate. I can't go along with your approach. I feel it is necessary to have a truly broad based program, and that your eloquent presentation argued for a broadening of the program.
As I have looked over the report on the House bill, it appears to me that 4 States out of the 50 would receive, according to the estimates, 60 percent of the benefits from the program. Would you agree with that?
Secretary FLEMMING. You mean that is under title 6?
Secretary FLEMMING. That is right. I mean-of course you understand, Senator Gore, on that I want to be perfectly fair to the House bill and title 6, these estimates are estimates that you have to build up by using an awful lot of subjective judgment because there are not any floors or ceilings lly written into title 6. I mean a State can set any kind of a needs test that it wants to set. It could provide a cutoff point at $2,000, $3,000, $4,000, $5,000, so that those who have to work on the development of cost estimates are somewhat handicapped because they have to kind of speculate as to what the State, what certain States might do and what certain other States might do.
Senator GORE. Well, I agree with that, and I acknowledge that. But, even so, for the sake of discussion, the best indexes we have are the estimates we have been supplied.
Secretary FLEMMING. That is right.
Senator GORE. And according to those estimates 4 States would receive 60 percent of the benefits, and the benefits estimated for 44 States would approximately equal that estimated for 1 State.
Secretary FLEMMING. I am sure you have stated that correctly. I will ask Mr. Myers—is that correct?
Senator GORE. Is that correct?
Mr. MYERS. It is correct that 60 percent will go to the four highest States, and the remainder of the States would get just a little more than the 1 largest State, was that what you were saying, Senator Gore?
Senator GORE. I was saying that 44 of the 50 would receive approximately the same amount, according to these estimates as 1, and that is out of all proportion to the number of old people or to the needs involved, and, as I understand these tables they are based upon, the present legal qualifications for old-age assistance in the respective States. Is that generally correct?
Mr. MYERS. Yes, Senator. As we try to point out in connection with these estimates, it is very difficult to make them, particularly on a State by State basis, since it is difficult to know just which States are going to act and to what extent.
Secretary FLEMMING. Of course I might say this, Senator Gore, I think you could take any of one of the proposals pending before the committee and telescope it with title 6, and that is why I have no hesitancy in saying we recommend approval of title 6, because it can do some good and then I went on, of course, to indicate that I feel that nevertheless the plan that we have recommended should be adopted. Now, I got into a little difficulty this morning on the cost of the two plans. There would be some overlapping because some people obviously would be eligible for the plan that we have proposed and consequently wouldn't come under this plan on title 6, but I think if you look at title 6 carefully, I think we could probably all agree on the fact that it is not in conflict with any of the proposals that are here. In other words, it could supplement any of the proposals.
Senator GORE. Well, as you know, the leadership of the two parties in Congress have agreed that Congress will recess this weekend and return early in August, I believe it is, and, therefore, this will give you an opportunity and me an opportunity and other members of the committee an opportunity to study this problem with greater care, so it is entirely possible that the committee will wish to extend to you an invitation to return.
Secretary FLEMMING. I would be very happy to at any time.
Senator GORE. And I will have some witnesses to suggest when we return. I am going to suggest to the committee that it invite Governor Rockefeller to testify, he having presented a challenging program today.
Senator FREAR. In other words, you want all the presidential candidates to testify? [Laughter.]
Senator GORE. Well, by then, there will only be two. [Laughter.]
Senator FREAR. Before I recess the committee, Mr. Secretary, and this is a suggestion only, you call Glacier National Park and turn that Under Secretary of yours loose over there and you think you might get a different telegram than the one that was read here this afternoon.