19566 EXTENSIONS OF REMARKS July 13, 1987 EXTENSIONS OF REMARKS LONG-TERM CARE INITIATIVE ternatives, but it does rely heavily on the Mr. LUNGREN. If you can say it in 10 sec­ utilization of an IMA or health care savings onds, all right. account instrument. Dr. DREW. I can say it in 10 seconds. Is the HON. DAVID DREIER It seems to be, if I may take this opportu­ clock running? We could take the similar OF CALIFORNIA nity, to be the most viable form of carrying notion of a long term care IRA and not use IN THE HOUSE OF REPRESENTATIVES through the private sector initiative. it to build up a total amount of accumulated Monday, July 13, 1987 Mr. LUNGREN. The concern I have is that I reserves, but we could link up with the in­ have got people in my district who feel surance industry and say, look, let's build up Mr. DREIER of California. Mr. Speaker, as strongly the way you do, as to the private a cumulative amount, give people a tax the House begins consideration of misguided sector, and the encroachment of the federal credit for a fixed number of years and then legislation to saddle elderly Americans with a government. They are either of the baby let them build up money into an IRA or prohibitive tax increase to pay for catastrophic boom generation or they're parents of the health care savings account and use that baby boom generation and they are now health care benefits, I want to bring to the at­ money, that pool fund to purchase an annu­ being confronted with the tremendous pros­ ity from the insurance industry, and pay for tention of my colleagues some private sector pects of health costs. They don't know a the premiums, the policy. There's another alternatives that were offered during an April way out and they're basically saying, Con­ option, but again each of these require a 30 Republican Study Committee hearing on gress of the United States, throw me a life­ holding company or some mechanism that catastrophic and long-term health care protec­ line and save me. I don't care what it is, just would take care of those who cannot afford tion. Today, my colleagues PHIL CRANE and make sure I'm taken care of. to pay for this care. FRENCH SLAUGHTER have presented some of Dr. DREW. This would be an approach, Mr. DREIER of California. Thank you very sir-an initial approach to begin to phase much, Doctor Drew. the comments made by expert witnesses at this thing in and give people an option. the hearing. I want to submit for the RECORD Now, I would like to call on my colleague, Mr. LUNGREN. You predicated part of this French Slaughter for a question. some questions, and subsequent answers, on the statistics that are presently avail­ Mr. SLAUGHTER. I am very much interested that arose as a result of those recommenda­ able, I think you said 5 percent of those in your proposal, but I gather from it tions. would be utilizing the nursing homes. though that those who would be making the Mr. DREIER of California. Thank you very Dr. DREW. Yes, although I would like to investments in to individual medical ac­ much, Dr. Drew. We appreciate the testimo­ again qualify that, typical academic back counts say, would, in effect, indirectly be ny and I apologize. Chairman Volcker was pedaling. Five percent of the elderly popula­ paying the cost to provide a net coverage to testifying downstairs before the Banking tion, at anyone point in time, are in nursing the people who did not use that mecha­ Subcommittee on which I serve and that is homes, only 5 percent. However, that is age nism? why I had to leave. graded. As you move up the age scale, those Dr. DREW. Yes, sir, you're correct. It's I see that we have been joined by two of people who are 65 plus, those people who going to have to be some fund set aside for my colleagues, a new member of Congress, are 85 plus, the probability or the percent­ that and the question is, what is the best age increases to 23 percent, so while you Cass Ballenger of North Carolina and my may feel confident that my chance of being way to do that. Should we do that through friend, Dan Lungren from California. in a nursing home is one in 20 at age 65, taxes, which is certainly one way to do it or We are under time constraints but I would when you become 85, your chances drop should we do it through this investment in­ like to ask my colleagues if they would like down to 1in4-1 in 5. strument. to take a moment and ask any questions of Mr. LUNGREN. And as the older element of Mr. SLAUGHTER. Well, I think it's a very in­ the panelists. Dan. those over 65 become the larger proportion teresting proposal. I would like to mention We recognize on the Study Committee by of those over 65, a larger percent age of the though, as far as the proposals that have seniority and, of course, the chairmanship total elderly would be- been made for health care savings accounts of the Republican Study Committee certain­ Dr. DREW. In nursing homes. and individual medical accounts and so on, ly should entitle you to ask questions first. Mr. LUNGREN. In nursing homes. one virtue it has for the people at the lower Mr. LUNGREN. Doctor Drew, you have pre­ Dr. DREW. And if I might also state, that end of the economic scale is that it will keep sented a very intriguing proposal here. How is directly related to the cost of this care. Medicare solvent and will be able to pay the would you see this proposal phasing itself in Why? Because those people who become benefits provided by law. If we don't do with the existing private sector approaches older require higher levels of care and we something, that's not going to be possible that are already available, the various insur­ will have more of them. either, so there is a very valuable benefit to ance-even with their shortcomings, the Mr. LUNGREN. I visited a nursing home in people at the lower end of the scale in this ones that are presently in existence, do they my district and I think in the 15 years, approach that we have put into legislative somehow complement your approach or do when it was first in existence, the average form. they wither and die as far as this particular age was somewhere between 69 and 70 and Dr. DREW. Again, if I may, Congressman, program? when I visited it recently, I believe, the av­ my research has indicated that of all the Dr. DREW. No. As a matter of fact, one of erage age was 81. trade offs in the cost and benefits of all the things that we worked on very exten­ Dr. DREW. Yes, and it will continue to go these alternatives, that that one, with all sively in this approach was to try and inte­ up. deference to the one you gentlemen have grate all the financial institutions who Mr. LUNGREN. In a 15 year period of time come up with, I think is clearly the closest would be selling these instruments. Our they have had the average age go up 11 to addressing the major issues to the private only concern was if you try to sell a private years. And, you're right, in terms of the ne­ sector. Thank you. sector, you have a private sector solution, cessity for care increasing as well. Mr. DREIER of California. Thank you very how do you accomodate this lower end of Dr. DREW. The dilemma, of course, was much. the market. So, to the extent that these in­ how to reconcile these private sector alter­ Mr. LUNGREN. Mr. Chairman, I was just surance companies, banks, whomever would natives with this criticism that I think that struck by the fact that we are confronted sell these instruments, these IRA's or IMA's we're all going to confront, you know, some with problems in most states. I know in or whatever you want to call them, health how that we are pernicious, we're evil, we California, with some people who are not in­ care savings accounts, the critical compo­ don't have any concern for the elderly, for surable under normal circumstances for pur­ nent of this would be to set up-it would those who cannot afford these alternatives, poses of driving a car and we could have set have to be a joined organization, kind of a and I think there are mechanisms in the up a system where the state actually pro­ holding company. private section to do that, if we construct vides the insurance, but we do in California, I have an extensive outline of this propos­ these holding accounts-these holding com­ as many other states, is we require the in­ al and how this would work in detail with panies with this notion of an aggregate ac­ surance companies to, in effect, take a cer­ me today. I would be happy to share it with count. It's just an alternative. It's an illus­ tain percentage of those people, so we, in es­ you, but in view of the time, I did not do it.