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utilize the available Government hospitals to the fullest degree practical.

Mr. Mahon. Without objection you can insert a statement in the record at this point.

General WERGELAND. I will be glad to do that. (The information to be supplied follows:) In September 1958, a permit system was initiated. Complete freedom of choice between civilian and uniformed services medical facilities remained the prerogative of those dependents who were residing apart from their sponsor. However those dependents who resided with their sponsors were required to apply for their medical care to a uniformed services authority. If the necessary medical care was available, such case was rendered in the uniformed services medical facility. In those cases where, because of shortages in staff or facilities, the medical care was not available, the dependent was issued a medicare permit. This permit (now known as the nonavailability statement) authorized the dependent to seek care from civilian sources.

By this single action, the optimum utilization of medical facilities of the uniformed services was assured. Dependent patient loads in the Federal hospital system showed an immediate upturn and rapidly reached the estimates established by the Surgeons General as optimum levels. We plan to continue the permit system in operation.

Mr. ANDREWS. Do you consider under this program eligible dependents of active duty members to be only the wives and children?

General WERGELAND. The spouses of the active duty personnel and their legitimate children.

Mr. ANDREWS. What about the case of a man who has a dependent mother and she is receiving an allotment?

General WERGELAND. No, sir; they are not included. The law does not include them.

RISING MEDICAL SERVICE COSTS

Mr. ANDREWS. You speak on page 7 of the effects of rising medical service costs. Will you elaborate on that?

General WERGELAND. Yes, sir.

We have had a gradual increase in our hospital service costs in the program although it is not increasing quite as rapidly as before. We estimate a 2 percent increase this year in the hospital service cost. You will find a variance between this current year and next year of $1.24 a day for hospitalization.

Mr. ANDREWS. What about medical fees?

General WERGELAND. We have made no changes in the fees of the doctors. We do not anticipate any increase.

Mr. ANDREWS. Whatever increase you have will be in the cost of hospital services?

General WERGELAND. That is correct.
Mr. OSTERTAG. What did you say, $1.24?
General WERGELAND. $1.24 per day—a rise.

FREE CHOICE OF HOSPITALS OF DEPENDENTS NOT LIVING WITH SPOTSES

Mr. ANDREWS. A wife or husband has no choice about selecting a civilian hospital against a military hospital if there is space available for the patient in the military hospital ?

General WERGELAND. And she lives with her sponsor.

Mr. ANDREWS. In the case where a wife lives in a separate city from her husband ?

General WERGELAND. She has freedom to choose where she wishes

to go.

Mr. ANDREWS. Suppose there is a military hospital in her home, or near the city where she resides, does she still have the free choice?

General WERGELAND. The law says she has free choice, and there are sufficient numbers of other dependents living with their sponsors to keep our military services medical facilities at an optimum capacity by use of the permit system.

Mr. ANDREWS. If she is with the husband and there is space available in the military hospital, she must go there?

General WERGELAND. That is right.

COST PER PATIENT DAY

Mr. ANDREWS. Could you tell me what the difference between the cost per patient per day is between the civilian hospital services and the military hospitals, or service hospitals?

General WERGELAND. We do not have the service hospital costs. We can tell you exactly what it costs us as far as the civilian hospital services are concerned. In the fiscal year 1960, those figures are the actual costs we paid during the fiscal year 1960. Those are true and genuine.

Mr. ANDREWS. For civilian hospitals?
General WERGELAND. For civilian hospitals.
Mr. ANDREWS. What is the average ?

General WERGELAND. This includes the cost of the physician's care as well as the hospital's, for fiscal year 1960, it is $50.11 for all services; $45.20 for the Army; $53.60 for the Navy; $50.50 for the Air Force; Public Health Service, $51. That includes the doctor fees. It is the total cost per day for the care.

Only a certain portion is hospital cost, but we can break that down for you, too.

Mr. ANDREWS. I wish you would for the record.
General WERGELAND. Yes.
(The information to be supplied follows:)

Division of cost per patient-day for civilian medical care under medicare 1

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1 Based on expenditures of $58,696,274 through Dec. 31, 1960. Does not include $5,203,726 in fiscal year 1960 funds to be expended subsequent to Dec. 31, 1960.

Mr. ANDREWS. That is the total cost per day for a patient, including hospital services and medical fees?

General WERGELAND. Yes, sir.

We will show you the actual costs per day average for fiscal 1960 because we have that figure.

Mr. ANDREWS. Do you not have some estimate as to the cost for a patient for one day in the service hospitals?

General WERGELAND. Mr. Fogelberg, who represents the service from the Army point of view, may be able to give you a figure.

Mr. FOGELBERG. The average cost per inpatient day of operating Army hospitals, for fiscal year 1960, was $25.68.

Mr. ANDREWS. Do you have it for the other services?
Mr. FOGELBERG. Yes; for the Air Force, it was $31.62; for the
Navy, $22.11; for the general medical service hospitals of the Vet-
erans' Administration, it was $23.44.

Mr. ANDREWS. Do you have the Marine Corps figures there?
Mr. FOGELBERG. That is part of the Navy figure.

Mr. ANDREWS. They are below the Army and considerably below the Air Force?

Mr. FOGELBERG. Yes, sir. That is basically due to differences in policy.

Mr. ANDREWS. The cost of keeping a military dependent in those hospitals is figured at that same cost for a serviceman?

Mr. FOGELBERG. No, sir. This is the overall cost of taking care of all patients in these Federal facilities. Special studies have indicated that it costs more to provide care to dependents within a service facility than it does an active duty person.

Mr. ANDREWS. Why?

Mr. FOGELBERG. They take more care. They are in for a shorter duration. That is reflected in the rates of reimbursement which are charged.

I might illustrate that by quoting a rate for you, sir.

Mr. OSTERTAG. You are speaking of per diem costs in the first instance ?

Mr. FOGELBERG. Yes, sir.
The
per

diem reimbursement rates are based on the average cost of operating those hospitals.

For example, if we put an active duty Army person in an Air Force, Navy, or any other Federal hospital, we pay at the rate of $23 per patient day. If we put one of our military dependents in there it is $34. It is a difference of $11 per patient day, and that is supposed to reflect the cost differential between treating an active duty person and the dependent of an active duty person.

Mr. OSTERTAG. The dependent probably gets more nursing ?
Mr. FOGELBERG. They are in for a shorter duration.
General WERGELAND. The acuteness of the case.

Mr. OSTERTAG. In arriving at the daily cost of operating the service hospitals, do you take into consideration the personnel pay of the servicemen who are at the hospital?

Mr. FOGELBERG. Yes. It includes the pro rata share of all costs of operating the hospital. That includes military personnel and all other costs.

Mr. OSTERTAG. Including doctors?
Mr. FOGELBERG. Doctors yes, sir, enlisted men and the like.

Mr. OSTERTAG. Percentagewise, you show there are more patients in your service hospitals.

General WERGELAND. Yes, sir.

TOTAL COSTS OF PROGRAM

Mr. OSTERTAG. But dollarwise, the civilian hospitals get far more than the service hospitals where it costs twice what it is in the civilian hospitals.

I believe you stated in the fiscal year 1960, the cost of this program was $63.9 million.

General WERGELAND. Yes. Mr. OSTERTAG. What does your appropriation show for military? Mr. FOGELBERG. It is in project 2420, page 407. Mr. OSTERTAG. This program is costing more than these figures shown on page 3.

Mr. FOGELBERG. The civilian portion of the program under the Medicare Act is under project 2440,

General WERGELAND. This is only the civilian portion of it. : Mr. FOGELBERG. The direct costs of operating Army hospitals, dispensary and dental service units, are in project 2420, and for fiscal year 1960, the cost was $63,623,150.

Mr. ANDREWS. What I would like to know is how much did the program cost overall? How much did you spend in military hospitals in fiscal year 1960 ?

I have the figure of $63.9 million for civilian hospitals. What was the military cost, or the cost for the use of military hospitals?

General WERGELAND. We would have to get that all together, services and civilian portion of Medicare.

Mr. FOGELBERG. There is another confusing thing here, sir. This budget is prepared on what we call a direct obligational basis, that is, the amount that Congress appropriates to this program. However, we do a lot of work for other services on a reimbursable basis.

So to get the total cost for fiscal year 1962 for project 2420, which is for the operation of Army hospitals, dispensaries, and dental service units, the amount estimated for fiscal year 1962 is $110,814,000, of, which $67,888,000 represents direct obligational authority, or appropriated funds. The difference between those figures represents reimbursements from other services.

Mr. ANDREWS. I want to try to find out what this Medicare program cost. You have given us the figures for the cost of civilian hospitals.

Mr. FOGELBERG. Yes.

Mr. ANDREWS. I would like to have you add to that for the 3 fiscal years, 1960, 1961, and 1962, the cost of the Medicare program to the military hospitals.

If you do not have it at this time, supply it for the record. : Mr. FOGELBERG. I will be glad to do that. (The material requested is on p. 261.) Mr. ANDREWS. What I want to know is the overall cost of the medicare program, for those 3 years.

Mr. WHITIEN. Would you like an indication as to whether that reflected any return, or charge for hospitals, or was it just out-of-pocket daily cost?

With regard to Government hospitals, unless some point is made of it, you will have a problem as to what the total investment of the Government is in the hospital and whether the figures are just merely the cost of day-to-day operations.

Mr. ANDREws. He has already given us the cost per day per patient for dependents in military hospitals, $34 a day.

Mr. FOGELBERG. That is right.

Mr. ANDREWS. What I am interested in is the total cost of the program to the Government. The only figures you gave were for the civilian hospitals.

Mr. WHITTEN. Off the record. (Off the record.)

Mr. OSTERTAG. Í would like to raise the question why this program, or this part of the program, should not be put together with the other program in the first place so it is all part and parcel of the same thing. I do not see how, from the standpoint of dollars and cents you can deal with it realistically the way it is presented here.

Mr. FOGELBERG. The Medicare program is a part of the budget program 2400. It just happens to be a project under that budget program, so from the viewpoint of the budget program, the whole thing is together. It is just a separate project where we analyze the Medicare program.

In another project, we analyze the cost of operating Army hospitals. That is in 2420.

In another project, 2430, we reflect costs of providing care to Army beneficiaries in the hospital facilities of other services. It is split for ease of analysis. It is under the same budget program.

Mr. OSTERTAG. You are presenting here a special project without our being able to see the whole picture of which this is only a part; is that correct?

Mr. FOGELBERG. 2440 is the total picture insofar as the Medicare program carried out by the executive agent is concerned. It is not the total picture of providing care to the dependents of the uniformed services.

In order to provide the total picture, we would have to break out of project 2420, that portion relating to dependents which is provided in Army hospitals, and also break out of the other project that portion which is provided care in other service hospitals, but still you do not have it, because the Navy and Air Force each provide care for dependents in their own hospitals.

(The information may be found on p. 261.) Mr. Flood. When do we get that?

I came in here at 2 o'clock under the impression I was going to listen to a well-planned budget. We have been troubled with this program for years and now we think it is working, and today we are advised we are finally going to have a presentation on the Medicare program that will satisfy us so we will know what is going on, how much it will cost, how successful it has been, and that we do not have.

Mr. Mahon. I think it has been a pretty good presentation.

Mr. Flood. What you have heard is. But that still is not the Medicare program. What we heard could not be improved on. The presentation was fine.

Mr. ANDREWS. I think you have heard it all except the cost that is incurred by sending patients to military hospitals. You have that on a daily basis, $34.

All you have to do is to multiply it by the number of patients you have.

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