HEARING - U.S. Senate Special Committee on Aging

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Second, I think the private insurance companies sometimes are
less than definite and less than clear on just what their "Medigap"
policies cover. I think it is essential for the holders of these policies
to be able to clearly understand what they are paying for, what
they can receive in benefits, and how it blends in with Medicare.
Finally, we must provide peace of mind to the thousands of
Americans who are frightened by the catastrophic costs that result
from debilitating health conditions.
So this morning, we are holding our first hearing on catastrophic
coverage, and on Wednesday we will meet jointly with the House
Aging <strong>Committee</strong> over in the Cannon Building, at 2 o'clock. At that
time, we will hear from Dr. Bowen, Secretary of the Department of
Health and Human Services, who will discuss with us his proposal
for catastrophic coverage.
The witnesses we are going to hear from today will tell us in
their own words how they are afflicted, but before we turn to them,
Senator Burdick, do you have an opening statement?
STATEMENT BY SENATOR QUENTIN N. BURDICK
Senator BURDICK. Mr. Chairman, I want to thank you and congratulate
you for calling this hearing on catastrophic health care.
It is a deep concern of mine and of my constituents in North
Dakota. In fact, several years ago, I held a field hearing in Bismarck,
North Dakota, on the future of long-term care. Many of the
questions raised then remain unanswered.
Today, 28 million Americans are 65 or over, and the elderly are
the fastest growing segment of our society. The elderly population
doubled between 1950 and 1980, and it's expected to double again
in the next 40 years. The number of "old-old," those aged 85 or
over, will increase by 75 percent before the end of the century,
from 2.8 million to 4.9 million. The need for long-term care among
this age group can only be expected to increase accordingly.
Nursing home expenditures totaled a staggering $35.2 billion in
1985. The figure for 1986 is closer to $39 billion. When we break
the totals down, we find that the average cost of a year's stay in a
nursing home is $25,000. Right now, patients are paying over half
of the cost out of their own pockets.
A recent survey of the elderly found that nearly two out of three
live alone, and over a third of all households age 66 and older
would be impoverished after only 13 weeks of nursing home care.
By the end of a year, the figure grows to 83 percent.
Just who are we talking about here? Nearly 16 million Americans,
or about one family in five, incur "catastrophic" out-of-pocket
medical costs every year. And, unfortunately, insurance hasn't
come up with the answer yet-premiums can run as high as $1,451
a year per person. This is simply not affordable for most of our Nation's
elderly, who rely on fixed incomes.
Even for those who can afford "Medigap" insurance, it turns out
that most policies go no further than Medicare. They effectively
provide no coverage for nursing home stays.
The burden has been falling onto Medicaid so far, but this
system is far from perfect. Before Medicaid will pay, patients must