[Senate Hearing 108-192]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-192

                     THE FUTURE OF HUMAN LONGEVITY:
                 HOW VITAL ARE MARKETS AND INNOVATION?

=======================================================================

                                HEARING

                               before the

                       SPECIAL COMMITTEE ON AGING
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                             WASHINGTON, DC

                               __________

                              JUNE 3, 2003

                               __________

                           Serial No. 108-12

         Printed for the use of the Special Committee on Aging



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                            WASHINGTON : 2003
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                       SPECIAL COMMITTEE ON AGING

                      LARRY CRAIG, Idaho, Chairman
RICHARD SHELBY, Alabama              JOHN B. BREAUX, Louisiana, Ranking 
SUSAN COLLINS, Maine                     Member
MIKE ENZI, Wyoming                   HARRY REID, Nevada
GORDON SMITH, Oregon                 HERB KOHL, Wisconsin
JAMES M. TALENT, Missouri            JAMES M. JEFFORDS, Vermont
PETER G. FITZGERALD, Illinois        RUSSELL D. FEINGOLD, Wisconsin
ORRIN G. HATCH, Utah                 RON WYDEN, Oregon
ELIZABETH DOLE, North Carolina       BLANCHE L. LINCOLN, Arkansas
TED STEVENS, Alaska                  EVAN BAYH, Indiana
RICK SANTORUM, Pennsylvania          THOMAS R. CARPER, Delaware
                                     DEBBIE STABENOW, Michigan
                      Lupe Wissel, Staff Director
             Michelle Easton, Ranking Member Staff Director

                                  (ii)

  


                            C O N T E N T S

                              ----------                              
                                                                   Page
Opening Statement of Senator Larry E. Craig......................     1

                                Panel I

Newt Gingrich, Ph.D., Former Speaker, U.S. House of 
  Representatives, Atlanta, GA...................................     2
Richard Hodes, M.D., Director, National Institute on Aging, 
  Bethesda, MD...................................................    29
Peter Boettke, Ph.D., Director, Mercatus Center Global Prosperity 
  Initiative, Arlington, VA......................................    42

                                Panel II

Stephen  C. Goss, A.S.A., Chief Actuary, Social Security 
  Administration, Baltimore, MD..................................    63
James Vaupel, Ph.D., Director, Max Planck Institute for 
  Demographic Research Rostock...................................    71

                                 (iii)

  

 
  THE FUTURE OF HUMAN LONGEVITY: HOW VITAL ARE MARKETS AND INNOVATION?

                              ----------                              --



                         TUESDAY, JUNE 3, 2003

                                       U.S. Senate,
                                Special Committee on Aging,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:09 a.m., in 
room SD-628, Dirksen Senate Office Building, Hon. Larry E. 
Craig (chairman of the committee) presiding.
    Present: Senators Craig, Carper, and Stabenow.

       OPENING STATEMENT OF SENATOR LARRY CRAIG, CHAIRMAN

    The Chairman. The Senate Special Committee on Aging is 
convened.
    Good morning everyone. Let me thank you all for attending 
today.
    What a pleasure it is to share with you a phenomenal fact 
current in America today. People are living longer than ever 
before and, in most instances, living better. Americans enjoy 
an average life expectancy of almost 80 years of age. If you 
are Bob Hope, that life expectancy is 100 years and holding. 
Just last week he turned 100 years old and, in typical Hope 
style, declared that he was so old they had canceled his blood 
type. We are currently investigating that type of blood.
    The future of human longevity, especially for Americans, 
seems bright indeed. Research on extending longevity has been 
legitimized over the past decade by advances in biotechnology 
and genetics.
    These advances have occurred largely in industrialized, 
free enterprise democracies. We hope to learn more about the 
powerful link among market processes, innovation, and human 
longevity. Longer life spans will have dramatic impacts on 
America.
    Today's hearing will examine and educate us on the market, 
innovations, connections to longevity, and the impact such 
trends could have on our lives. Specifically, we want to learn 
more about the power of market forces to quietly spawn medical 
innovation, promoting longer lives and improving the quality of 
life for older Americans, and we want to better understand the 
long run pressures on Medicare and Social Security looking at 
the future of life expectancy in this country.
    The topic of today's hearing is especially relevant at this 
time. Within the month legislation to improve and strengthen 
Medicare will likely be before the full Senate. Increasing 
choices in Medicare as the baby boomers move into retirement 
over the next 5 to 20 years is critical to delivering high-
quality and cost-effective care.
    Similarly, our Social Security system faces the same 
challenge of an aging population. The future of Social Security 
is no less important than Medicare to America's seniors.
    Our hearing today will help enlighten the Congress 
regarding the promises, blessings, and challenges of increased 
longevity.
    So with that, today's first panel, we are pleased to have 
three witnesses. Testifying before the committee today is a 
longtime friend and associate, a Congressman, former Speaker of 
the House, Newt Gingrich; an expert in markets innovation, and 
in health care. Joining Speaker Gingrich on the first panel is 
Dr. Richard Hodes, Director of the National Institute on Aging, 
and Dr. Peter Boettke, Director of Global Prosperity 
Initiatives at George Mason University at the Mercatus Center.
    Gentlemen, thank you all very much for being with us. Newt, 
Congressman, speaker, welcome to the committee and we will turn 
the time to you.

 STATEMENT OF NEWT GINGRICH, Ph.D., FORMER SPEAKER, U.S. HOUSE 
                OF REPRESENTATIVES, ATLANTA, GA

    Hon. Gingrich. Let me say, first of all, thank you, very 
much, Mr. Chairman.
    I think the topic you have raised is amazingly important. 
Let me just give you a specific example. I talked to one of my 
closest advisors last night, Dr. Steve Hanser, who had just 
spent a month in Europe. I said what were you seeing in Europe?
    Being a typical American with President Bush traveling, I 
thought I would get sort of a feedback about U.S.-European 
relations. He said, ``I was in four countries and I saw four 
topics: pensions, pensions, pensions, pensions.''
    He said there is a pension system crisis in every European 
country he visited that he was followed by a health system 
crisis and followed by unemployment because the European answer 
has been to stagnate with a welfare state they cannot afford, 
which has actually caused a tremendous loss of jobs.
    So you are placing on the map with this hearing the moment 
to decide whether successful aging in America is an opportunity 
or a problem. I would argue that it is an opportunity, and that 
only bad public policy turns it into a problem.
    If you look at the total range of scientific breakthroughs 
that we are currently developing, we are about four times the 
speed we were in the 20th century. That is, literally between 
2000 and 2025, We will have as many breakthroughs in new 
science and new technology as we had in the entire 20th 
century.
    Information technology, biology, and nanoscale science and 
technology are the key areas. Dr. Sam Stupp, who is a world 
class specialist in nanoscale science at a firm called 
Nanomateria, believes that within a decade we will begin to see 
the ability to regenerate spinal cord injuries, to potentially 
regenerate retinas, and that this kind of breakthrough, this 
consistent evolution, is incredibly important in developing the 
future.
    If I could draw sharply the contrast something that Bill 
Novelli, the head of AARP has often discussed baby boomers want 
a second start. They do not want a long retirement. They do not 
want a period of doing nothing. They do not want to decay. They 
do not want to be a burden.
    They want to see the years of aging as a process of healthy 
independent living where they are doing interesting things in a 
way that is significant. It is vital that we not allow 
bureaucracy to cutoff access to all the new developments, all 
the new technologies, and all the new opportunities.
    I find it a great irony that in competing with the Soviet 
Union and in advising Third World countries, we consistently 
say that market systems work better than centralized 
bureaucracies, yet in health we stay with centralized 
bureaucracies.
    In the book that just came out that I co-authored, Saving 
Lives and Saving Money, we outline how to move toward a much 
more market-oriented system. At the Center for Health 
Transformation, we are developing those ideas. I can summarize 
it in four driving principles and then one example.
    The first principle is patient safety and patient outcome. 
If we simply design a system where we allow patient safety and 
patient outcome to be the dominant factor, we will rapidly see 
the kind of changes we need. For example, electronic 
prescribing would save dramatically in doctors' time, in money, 
and in patient safety. Forty percent of all prescriptions today 
require a callback either because the pharmacist cannot read 
the writing, because the medicine prescribed is inappropriate, 
or because there is a less expensive medication available that 
the doctor could use.
    The result is that people die, and people get sick. 
Medication error is the largest single cause of senior citizen 
emergency room visits. Yet, we have had for years a palm pilot 
model of electronic prescription which would save money and 
save lives.
    So the first thing we ought to consider are the appropriate 
outcomes? In Medicare, for example, you would have a 
comorbidity management system for everybody because 50 percent 
of all Medicare spending is on 5 percent of the population, and 
that 5 percent has five or more comorbidities. That is they 
have five different diseases simultaneously. If you handled 
them as five separate diseases in one human being, you get all 
sorts of secondary effects. But if you deal with the person as 
a single person, you have enormous improvement in their 
outcomes, as demonstrated with two quick examples.
    There is a firm called Evercare which specializes in people 
in nursing homes over 80 years of age, a third of them with 
Alzheimer's.
    They put together an electronic medical record, and the 
first thing they do, on average, is reduce the senior citizen 
from 22 medications a day to 6. Sixteen fewer drugs a day. That 
reduces hospitalization by 50 percent.
    It is an amazing outcome story. So, the Medicare reform 
this year should absolutely include comorbidity management and 
making sure that people have all of their diseases treated in a 
medically correct way, something which Dr. Zerhouni out at NIH 
is working on and believes could save up to 40 percent of the 
cost of the current system.
    The second principle is to take all the breakthroughs in 
information technology and computerization and apply them 
directly to the health system. It is possible today to have an 
electronic intensive care unit. There is a firm called Visicu 
that has one. Both of the examples are in Saving Lives and 
Saving Money.
    That electronic intensive care unit, it is estimated by the 
Sunterra Hospital System, is saving one life per bed per year 
in better care. It is accelerating recovery by 20 percent, 
allowing them to use the same number of intensive care beds 
more often, and it is improving nurse retention while 
minimizing hospital-induced illnesses.
    Now this is a fact. What I am describing is not a theory. 
The Senate can visit Norfolk and see a facility at work today 
which is changing history. If you apply information technology 
across the board, you get computer order entry of drugs in 
hospitals which could save up to 50 percent of medication 
errors in hospitals. This is in the Administration for Health 
Research and Quality report.
    Britain, for example, has now bid having an electronic 
health record for every person in Britain. One of the people 
who designed that program, the head of Health Trio, which runs 
an electronic health record program for Brigham and Women's 
Hospital in Boston, estimates we could have an electronic 
health record for every American for about 10 cents per month 
per person. That is $28 million a month for the whole country 
to have an electronic health record, which would dramatically 
improve outcomes, dramatically improve accuracy, and would both 
save lives and save money, which seems to me ought to be the 
goal.
    The third principle is to create a culture of quality. I 
will just give you two examples where the funding is perverse. 
Two million people a year get diseases in hospitals, 1.5 
million a year get diseases in nursing homes. In other words, 
if you are in a hospital for more than four days, the odds are 
even money the hospital will give you a disease, which it will 
then charge you to cure.
    But if you are a hospital that does a fabulous job, if you 
had a perfect record and nobody in your hospital got an 
additional disease, you would reduce the number of days of 
hospitalization, and you would lower your gross revenue, and 
you would end up losing money.
    Now it is fairly easy to have CMS decide that the best 25 
percent of all hospitals will get a bonus and to share with the 
hospitals one-third of the money they save the government. 
There is no question we can have a data base that statistically 
proves this. There is no question you could create the right 
incentives. But we do not today.
    The same thing happens with the hip and knee surgeons. If 
you are a great hip and knee surgeon and you have a fabulous 
outcome and everything works perfectly, you actually get paid 
less than if you are an inadequate hip and knee surgeon. It is 
exactly the opposite. It is as though we paid for our Ferrari 
and we got a Subaru, and we paid for a Subaru and we got a 
Ferrari. It is exactly the opposite of a sound, intelligent 
system of using the market to create a culture of quality and 
to create a system of quality.
    Last, if you really want an efficient health system, you 
want to rethink the health system from the ground up, from 
individuals first, and then going to the patient, and then 
going to intensive care.
    Let me make this clear. When we first started drafting 
Saving Lives and Saving Money, we talked about patient-centered 
care until we visited the Nestle's laboratories in Switzerland. 
Nestle's has over 150 scientists who work on nutrition every 
day.
    They made the point that probiotics, the right important 
bacteria in your digestive system, is as important as 
antibiotics. You can invent, for example, a priabar that would 
be for osteoporosis. You can literally invent a health bar for 
diabetics.
    Their argument is, and this is something that Dr. Zerhouni 
at NIH agrees with emphatically, that you can design a system 
that starts not with the patient, but it starts with the 
individual in a prediabetic environment, a pre-illness 
environment.
    We are working with Novelli and Ortiz to design a national 
standard for diabetes. Part of that national standard would be 
to know that you are prediabetic and how you ought to change 
your diet and exercise before you ever become diabetic. If you 
are ever to become diabetic you have the ability to learn as 
early as possible before any damage is done to you, and to 
learn how to manage yourself to minimize the four great risks 
of diabetes.
    I mention diabetes because it is the largest single health 
driver in Medicare. It is every seventh dollar of Medicare. 
Heart disease, kidney dialysis, amputation of legs, and 
blindness are the four major outcomes of diabetes. We should 
not undervalue this 17 million Americans are diabetic, and 
another 8 million are prediabetic. Unfortunately, the rate has 
gone up because of poor diet and exercise patterns in the 
country.
    My point is that you want to think about aging from the 
standpoint of keeping the individual healthy as long as 
possible, incentivizing health, informing health, from taking 
care of self-management by the individual as a patient, and 
then going to traditional medical care. It is a very different 
model than the current system.
    I will close with one example of what is clearly 
technically possible.
    When I am out on the speaking circuit, I start the general 
audience by walking them through automatic teller machines, 
self-service gas stations with credit cards, and using 
Travelocity or Expedia or one of the Internet-based airline and 
hotel reservation systems. I do that to get audiences into the 
rhythm of realizing that in their daily life, they now do 
things that involve very sophisticated levels of information 
handling and they do it routinely and they do not even notice 
it.
    Then I say, ``Now let us talk about health where you get 
paper records, paper prescriptions, paper billing, et cetera.''
    I would hope that the Congress, as it looks at Medicare, 
would think of a 21st century model of the drug benefit. I will 
describe it very briefly. Based on the Travelocity model, it 
goes back to your market point. I really worry about going to a 
pharmacy benefit manager model where you are going to have 
aggregated purchasing by third parties, rebates becoming 
kickbacks in political language, an ensuing chaotic mess.
    What I would recommend is that you go to the doctor with a 
Travelocity model of Medicare benefit in mind.
    If you had a very rare disease or a very rare genetic 
circumstance, the doctor would give you the precise 
prescription for one drug only. The government should then 
figure out what it is going to subsidize that purchase. But in 
most cases, particularly for chronic illnesses and for things 
that are not tremendously acute, what you are going to get is a 
prescription for a class of drugs. This is how the whole 
pharmacy benefit management model works, where you have $10 co-
pay, $20 co-pay, or $30 co-pay.
    I would reverse the system. The doctor and you should have 
access to a Travelocity-style page where you see every drug 
available for that particular problem. I would include 
medically appropriate over-the-counter medicine. It is absurd 
to take Claritin, which was one of the most widely prescribed 
drugs in the country until it went over-the-counter the second 
the price crashed, we do not count it as a medical expense. We 
are incentivizing high cost and then act shocked that we get 
high cost.
    The current system encourages the pharmaceutical company to 
have the highest possible price so they can offer the biggest 
rebate to the pharmacy benefit manager so that they then have a 
lower-price based on this. It would be like going into a car 
dealership and being told we have a $600,000 Ford, but for you 
Senator Craig, we will give you a $560,000 rebate, so you are 
getting a $40,000 purchase. Don't you feel good about that 
rebate? That is how the drug business is today. It is totally 
backward.
    What ought to happen is that the senior citizen, in 
consultation with the doctor and with their pharmacist, could 
pick any drug out of this list and the government ought to 
finance 100 percent of the least expensive drug. Then make that 
dollar value available on an open formulary for anybody else to 
buy any drug they want.
    So if you saw the commercial last night, fell in love with 
it and were convinced, and you want to put up $150 bucks out of 
your own pocket, it is your right as an American.
    But if you decide you need an effective--and again, 
medically effective, quantitative data analysis based, FDA and 
NIH supervised medically appropriate, least expensive drug, 
your government will pay for all of it.
    Now, if you want to have a range of choices, fine. We 
should not restrict you. I just suggest you look and think 
about that.
    That would be a market-oriented system that would teach the 
drug companies to worry about the value of their drugs, teach 
them to have an end-state price, would teach the individual to 
look at what their choices are and make the choice, and 
dramatically increase the range of freedom and most importantly 
be the right step toward a Medicare for the baby boomers--that 
allow the baby boomers to have control of their own lives.
    [The prepared statement of Mr. Gingrich follows:]

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    The Chairman. Mr. Speaker, Congressman, you have challenged 
us once again. That is why I was excited when we found you 
would be available to come with this panel today to visit about 
the innovations in the marketplace, the thinking you are doing, 
and the work you are doing with others.
    Before we turn to our other two panelists, let me recognize 
colleagues that have joined us today, and ask Senator Stabenow, 
do you wish to make any comment before we resume the panel?
    Senator Stabenow. Thank you, Mr. Chairman. Welcome to a 
former colleague in the House of Representatives. It is a 
pleasure to have you with us.
    The Chairman. When I was in the House, Senator Carper was 
there, along with Congressman Gingrich, and we worked together 
on many issues.
    Senator Carper. I do not know that we are the three amigos, 
but sometimes we were.
    The Chairman. On occasion.
    Senator Carper. Maybe on some of these issues we can be 
again. Newt, it is great to see you. Thank you for joining us.
    To our other witnesses, we are delighted that you are here, 
and we look forward to your testimony. Thank you.
    The Chairman. Thank you both.
    Now let me turn to Dr. Richard Hodes, Director of the 
National Institute of Aging. Doctor, welcome. We are glad to 
have you with us today.

STATEMENT OF RICHARD HODES, M.D., DIRECTOR, NATIONAL INSTITUTE 
                     ON AGING, BETHESDA, MD

    Dr. Hodes. Thank you, Mr. Chairman, and members of the 
committee for the invitation to speak to you about longevity 
and innovation in aging research.
    As the Chairman mentioned, and as Mr. Gingrich reinforced, 
we are really living in an era of unprecedented longevity, as 
well as quality of life in which more and more Americans and 
citizens of the world live not only longer lives but lives that 
are robust and high-quality. Longevity has increased from 
around 1990 where the life expectancy in this country was about 
49 years of age, to the current time when we are in the high 
70's and approaching 80, facts we will hear a good deal about 
in the demography session to follow this.
    However, there remain great challenges to those in older 
life, challenges of disease and disability. These challenges 
will be addressed by new areas of technology. Some of them we 
have heard mentioned, nanotechnology, computational biology, 
proteomics, genomics, and I hope to share with you in these 
next few moments some examples of these.
    It is urgent that we apply such technologies to early 
diagnosis, to identification of people at risk, and ultimately 
to the installation of favorable behaviors, to engender 
lifestyles that will minimize disease and disability.
    In the examples that I would like to share with you today, 
I think we see on the horizon the outcomes of an ever 
accelerating degree of discovery, which I agree with the 
previous speaker, really bodes well for the future if we are 
only able to apply the success of research in a variety of 
areas.
    Let me begin with some examples. One of the most intriguing 
areas of research in longevity is that which deals with the 
role of genes in life expectancy and longevity. This is 
research which has proceeded in a variety of species ranging 
from yeast to worms to flies, ultimately with application to 
humans.
    What is illustrated here is one example, in the graph to 
the right, which shows you the life expectancy of C. elegans, a 
worm. You can see what is plotted here is the number of the 
population that survive at various ages.
    In the first curve, that falls off to the left, you can see 
that about 50 percent of animals have died by about 2 weeks of 
age. Some live as long as 20 days. But the remarkable finding 
illustrated here is that mutation in a single gene of the 
17,000-some-odd genes in this species results in the curve you 
see to the right, a shift which is equivalent to a doubling or 
tripling of life span.
    Moreover, if one looks at the table to the left, one can 
see this is only typical of a variety of mutations that have 
this kind of effect. Importantly, they teach us something in 
that they fall into defined and understood pathways of 
metabolism. In this case, for example, pathways that have 
homologs in the human and relate to insulin and insulin-like 
receptors. So they point the way toward the biology of human 
behavior, disease and open avenues to understand what 
determines longevity, absence of disease, and multiple targets 
for future interventions.
    In addition to research aimed at longevity itself it is 
critical that we address some of those disease which still 
challenge both lifespan and quality of life, and I would like 
to address just briefly examples from two of those arenas. The 
first that I will touch upon is the area of neurodegenerative 
diseases. These are diseases such as Alzheimer's disease and 
Parkinson's, which take a terrible toll on those who are 
affected, predominantly those in older age.
    Much of what we have learned about the diseases has come 
from technical innovation. One of the innovations that has been 
most exciting is that of imaging. So we have learned, and many 
of you are aware, that techniques such as MRI or PET scanning 
allow us now to have structural and functional insights into 
what goes on in the brain, including the human brain.
    Illustrated here are some recent findings, yet to be 
published which illustrate a new technique in which a gene has 
been engineered that acts as a reporter. So that when cells and 
parts of the brain are damaged by an insult, they actually 
induce a product which causes the emission of light, a 
luminescence that can be detected by cameras very sensitive, 
models like those used to detect light from stars at great 
distance.
    What you see here is actually the colored image of damage 
to brain cells caused by, in this case a chemical insult, that 
makes it possible to study both the normal biology of brain, 
the effect of insults, ultimately the effect of interventions 
designed to reverse or prevent damage to nerve cells. All this 
in a living animal and hopefully therefore technology that will 
be translated to understanding of the human condition and human 
disease.
    The second area mentioned moments ago that is an enormous 
cause of disability and disease is that of obesity, secondary 
in large measure to behavioral changes in the population and 
responsible for a good deal of the morbidity associated with 
diabetes, heart disease, and cancer.
    What is illustrated here is yet another new technology, 
that of using RNA interference, in which types of RNA are 
capable of neutralizing the messages which are encoded by each 
of the genes in an organisms' genome or chromosomes. This 
experiment was conducted using such a technique in 
understanding what influences the regulation of fat metabolism 
and obesity.
    In this case, every one of the 17,000 genes effectively was 
neutralized and the effect of each of these events plotted. As 
you can see, the discovering here was that some 305 genes, when 
inactivated, caused a decrease in fat. That is decrease in the 
red staining you see. Some 112 genes, when inactivated, caused 
obesity, again providing now multiple targets for our 
understanding of this important public health problem and our 
opportunity to address it.
    These examples pose a reason for being optimistic of our 
ability to maintain not only the extension of longevity that 
has been evident over the past years, but to do so in a way 
that minimizes disease and disability.
    I thank you, Mr. Chairman and members of the committee, for 
holding a hearing on this very important subject. Thank you.
    [The prepared statement of Dr. Hodes follows:]

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    The Chairman. Thank you very much, Doctor. We appreciate 
your presentation on some of that new work that is going on. I 
think you filled the bill this morning.
    Now let me turn to Dr. Peter Boettke, Director of Global 
Prosperity Initiative.

 STATEMENT OF PETER BOETTKE, Ph.D., DIRECTOR, MERCATUS CENTER 
          GLOBAL PROSPERITY INITIATIVE, ARLINGTON, VA

    Dr. Boettke. Thank you, Mr. Chairman and members of the 
committee, for this opportunity to add my comments to the 
record on this very important public policy issue.
    I have spent my entire career, I am an economist, and I 
have spent my entire career investigating the basic question of 
why some countries are rich while other countries are poor, 
particularly with respect to countries that are now referred to 
as transitioning economies or less developed economies.
    The main points that I want to make on the relationship 
between economics and the question of longevity is the first 
one, which is reinforce a comment that has been made by both of 
our speakers, which is that modern man in Western democratic 
capitalist societies benefits from medical care, medicines, and 
medical technologies that enable them to live longer and more 
fruitful lives to such an extent that even kings and queens of 
a previous era would have been envious of.
    Economic growth, GDP, is not an end in itself. We do not 
eat growth rates. We pursue economic growth because it enables 
people to live better lives. Economic growth is the greatest 
hope for the world's poor and measurements of economic freedom 
are positively correlated with economic growth. Economic growth 
is positively correlated with human longevity.
    I have these graphs here which are plotting different 
countries that we have data for. In the graph on the left, we 
have countries ranked by their economic freedom, and we have 
their per capita GNP rates over here.
    What we see is that countries that are defined as repressed 
are the ones that we find struggling in terms of economic 
survival. The ones that we rank as most free on this index of 
freedom, we are looking at things like monetary policy, 
security of property rights, tax rates, regulation, open 
international trade, basically a composite of about 10 
different variables.
    Then on the next graph on the right, what we are looking at 
is the per capita GDP rates and then the life expectancy that 
is experienced in those countries. We see in both of these 
examples, what we have is a relationship between--as we get 
more economic freedom we get higher rates of economic growth. 
As we have more per capita GNP, what we end up having is longer 
lives.
    To put it simply, wealthier is healthier.
    So the most important public policy issue that we face in 
addressing the problems of less developed economies, or the 
transition economies, or in our own country is to pursue public 
policies which allow markets to flourish and to generate 
economic wealth.
    The contrast between the command and control approach 
versus the open society is most evident in the Soviet Union and 
in the less developed countries. Just last week in the New York 
Times, Mary Feshback, a demographer from Georgetown University, 
reported findings about the difficulties that confront Russia.
    The data provided shows that the Russian population will 
decline by 30 to 40 percent by the year 2050. For every 10 
babies that are born in Russia, 17 Russians die. Death by 
tuberculosis in 2001, for example, were 29,000 compared to 781 
in the United States. Heart disease deaths per 1,000 people in 
2001 were recorded as 893, compared to 352 in the United 
States, more than twice as many.
    Current life expectancy in Russia is 58 for men, 72 for 
women versus the life expectancy we experience in the United 
States.
    On that issue, I should point out that between 1960 and 
1985, the Soviet Union was actually the only industrialized 
country in the world to experience a decline in life 
expectancy. So it is not because of the recent transitions that 
life expectancy is going south. In Russia this is actually a 
longer-term trends that dates back to the Soviet era.
    Markets, in contrast, give us the freedom and innovation 
that enables us to live longer lives. Human longevity, I would 
argue, is a function of four things. The increases in 
technological efficiency and economic organization that reduce 
the physical labor required for us to produce output.
    Second, the increases in technological efficiency that 
improve the work and general environment in which we work and 
live.
    Environment, the general environment, environmental quality 
is actually a luxury good. As our incomes go up, we actually 
consume more environmental quality. So one of the things that 
we want to do is make sure that incomes are going up.
    Increases in medical knowledge, including treatments and 
medicine, and increases in medical technology, which include 
diagnostic techniques, surgical procedures, and equipment. Each 
of these four things are the result of the open society and its 
market economy. Markets give us the freedom to prosper.
    In conclusion, I just want to emphasize the point that an 
open society is a necessary precondition for the sort of 
improvements in our economic environment and generates the 
medical innovations that enable us to live longer and more 
enjoyable lives.
    I want to take this opportunity to thank the committee for 
holding these meetings on this very important topic. Thank you.
    [The prepared statement of Mr. Boettke follows:]

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    The Chairman. Dr. Boettke, thank you very much for your 
testimony and analysis of different countries. I think that is 
extremely illuminating.
    I was just in Russia. I think that my life would be much 
shorter if I had to live there. The only thing enjoyable about 
it was the visiting of the Winter Palace. I must say that.
    That is not a criticism of Russia. It is just the reality 
at never having been there before. It was a shock to me that I 
was not prepared for, as it relates to the country and how it 
was functioning and not functioning. Recognizing that the 
things we take for granted just were not there.
    Having said that, Mr. Speaker, let me turn to you. As I ask 
this question, the rest of you may wish to respond to it 
because obviously, Dr. Hodes, your testimony certainly lends to 
what Speaker Gingrich has said in his opening statement, that 
breakthroughs of the next 20 years will equal the entire 20th 
century as it relates to health and health-related areas. 
Clearly some of the things you were talking about is on the 
cutting edge of that kind of innovation and technology.
    Newt, I have known you as a Congressman, and a historian, 
and now you are an observer of technological development and 
trying to bring it into context with your books and your 
speaking. Why? Why are we on this phenomenal path of 
acceleration at this moment in our Nation's history?
    I am obviously much more aware of it, probably because I am 
getting older, but also because I chair this committee and I 
tend to focus and read more. I found it interesting the other 
day, the attention of a small clip on the news and in the 
paper, a lady out in California died, the oldest living 
American, 113 years of age. She had worked until she was 97. 
She had lived independent until she was 102. She passed away at 
113.
    Obviously she has been assisted along the way, she probably 
had some good genes, too. But respond to that comment, if you 
would, about that phenomenal acceleration that is currently 
underway?
    Hon. Gingrich. I think there are a couple of factors. First 
of all, I think the Congress and the political system deserve 
some of the credit. We came out of the Second World War having 
discovered, with Vanover Bush's leadership, how dramatically 
science could impact national security. We created institutions 
like the National Science Foundation, the National Institutes 
of Health. As you will remember, even in trying to balance the 
budget and work on spending in the late 1990's, we committed to 
doubling the size of the National Institute of Health budget.
    I would point out that the Hart-Rudman Commission, which I 
helped create with President Clinton and then served on after I 
stepped down, issued its first warning when it came out in 
March 2001, arguing that the greatest threat to the U.S. was a 
weapon of mass destruction going off in an American city 
probably by terrorists, and that there was a need for a 
homeland security agency. After September 11, that got a great 
deal more attention than it got before September 11.
    But the second warning we made was that the failure to 
continue investing in science and math, and the failure of 
science and math education was the second greatest threat to 
the U.S. after a weapon of mass destruction going off in a 
city. We said that it was, in fact, the failure of math and 
science education ``is a larger threat to the United States 
than any conceivable conventional war in the next 25 years.''
    So I would say to you, on one hand, I am very optimistic 
about the scale of change. On the other hand, I am very worried 
about how much of that will be done by Americans in American 
labs as you project out over the next 20 years.
    What has happened is basically a three-part process. First, 
massively bigger investment of resources. Without the scale of 
investing, and without the Advanced Research Projects Agency, 
you probably would not get the Internet for another 30 years. 
It is a Government-funded program and it was Government funding 
which led to the breakthroughs that created modern personal 
computing. The whole process of that investment in basic 
education, in graduate fellowships, in research grants, in 
research facilities is very important.
    The second is that the rise of the Internet creates an 
ability to transmit knowledge in real-time, which becomes its 
own multiplier. Ideas that used to take 20 years or 30 years to 
be transmitted suddenly start to permeate the system almost 
overnight.
    The third is that there is a cumulative breakthrough in 
knowledge, and I would say this one of the things that we tend 
to undervalue as non-scientists, and in instrumentation. It was 
impossible 25 years ago to look at an atom. There are now 
instruments that allow you to look at a single atom.
    Now that breakthrough creates new capabilities. I say this 
because I think one of mistakes I participated in as speaker 
was too narrowly focusing our investment. I think we should 
have insisted on dramatically increasing the National Science 
Foundation at the same time we increased NIH.
    I say that because it is math and physics which makes 
possible MRIs and CAT scans, and other important life-saving 
devices.
    What you have today is more scientists and technicians 
working at much higher speeds through the Internet with very 
significant investments getting breakthroughs.
    My last comment would be on nanoscale science and 
technology, where I participated with the NFS in several 
workshops. This is not a topic to take the committee off on in 
detail. But it is very hard to overstate how profound the 
transition is when you enter the area of nanoscale science and 
technology and you enter the zone of quantum mechanics.
    The reason I was intrigued with what Dr. Stupp is doing is 
that you are beginning to get folks who approach all of this 
biological activity not as a function of genetics, but as a 
function of what actually happens at the atom and molecule 
level on the presumption that if you can re-create that, 
without regard to how it happens, the impact is stunning.
    They are literally beginning to think you can regrow spinal 
cords by developing precisely what happens when the atoms and 
the molecules work together to create the original spinal cord.
    This is so profoundly different than any approach we had 15 
or 20 years ago. It would be a great surprise to me if we did 
not equal the 20th century in the next 20 or 22 years.
    The Chairman. Either of you gentlemen wish to add to or 
make comment in relation to that?
    Dr. Hodes. I certainly would be happy to.
    I would echo very strongly the very perceptive comments 
that have been made. While it is always a little uncomfortable 
for scientists to make specific predictions which are not 
research-based, I think if one simply takes the trajectory of 
scientific discovery as measured in almost any parameter 
conceivable, and projects from recent past to the future, it is 
hard to arrive at any expectation or prediction other than that 
which was just expressed, namely that we are on such an 
accelerated rate of increased discovery that the next decades 
are going to proceed at a pace that we have never seen before.
    I would also agree very strongly with the general comments 
made about the contributions to this role. There is, above all, 
to be credited the genius of individual scientists. But 
scientists have always had that genius.
    I think the way in which their contributions have been 
accelerated and multiplied is very much reflective of just what 
you have heard. When a single discovery is communicated almost 
instantaneously, and enhanced by the availability of technology 
and means of communication, this produces the exponential 
change in rate of discovery, communication, translation from 
one step to the next.
    It is no longer the laboratory in an individual room by an 
investigator meticulously crafting a conclusion which he puts 
down on paper which weeks or months later is presented to a 
scientific meeting. It is now clearly instantaneous 
communication of technologically enhanced discovery that is 
responsible for this growth.
    It is important, I think, as well to reinforce the 
significance of the support by Congress over these past years, 
most notably in this past 5 years with a doubling of the NIH 
budget.
    A great deal of what I have reported as examples, as case 
studies, and the progress that has been made, has been 
enormously dependent upon the investment by the American people 
through Congress and the administration in these areas.
    The Chairman. Well, the good news is while we recognize the 
value of that investment in the biological sciences and health, 
we are beginning to recognize that we are not making any 
equivalent investment in the physical sciences. I think that is 
beginning now to percolate upward here because we are seeing, 
as you have explained, Congressman, the clear commingling of 
those and the acceleration that happens when those sciences 
come together effectively. That work, or at least those 
considerations, are well underway now.
    Let me turn to my colleague, Senator Stabenow.
    Senator Stabenow. Thank you, Mr. Chairman. Thank you again 
to everyone.
    I could not agree more that this is an exciting time in 
terms of technology and innovation, and that there is much to 
do in this area, and that it is a wise investment for the 
United States to be able to be focused in those areas.
    Newt, you were talking about prevention. I think one of the 
important areas for us to refocus both Medicare, Medicaid, 
other insurance systems, is on prevention and the dollars that 
can be saved here.
    But I am wondering, we are about to enter into a Medicare 
debate this month, about how we proceed under Medicare. 
Medicare is the one piece of universal health care we have in 
this country. We have made a commitment for older adults and 
for the disabled in our country. We also will be debating 
issues of costs in prescription drugs and how we bring down 
those costs using market factors in order to be able to lower 
prices for our businesses large and small and individuals, and 
so on.
    I am wondering, Mr. Speaker, if you might speak--you were 
talking about market forces. I know, in reading just a little 
bit of the beginning of your book, you talk about the market 
forces and how we use that to bring down prices which will 
affect what we can do under Medicare prescription drug benefit, 
what we can do in the private sector.
    I live in Michigan right next to Canada. We can look across 
the river and see another country where American-made drugs are 
offered at half the price that they are in our country. I 
wonder if you might speak to the notion of opening the border. 
We have free trade around the world. We have free trade 
certainly between Canada and Mexico and other countries.
    I have legislation with colleagues that is specific to 
Canada that would open the border to free competition, 
understanding that their safety system in terms of FDA-type 
approvals are very, very similar to the United States, and the 
fact that those prescription drugs already come back and forth. 
It is just under the auspices of the companies right now, as 
opposed to individuals or pharmacists.
    But how do you see market pressures in the global economy 
as it relates to pricing for prescription drugs which are such 
a big driver today in the whole question of cost as well as 
quality of care?
    Hon. Gingrich. You have asked an extremely important 
question. I appreciate you raising it this way. I think it 
really breaks into three components.
    First of all, on the Canadian issue, I think as long as the 
regulations are the same, I personally do not see why NAFTA 
does not apply to Canada. I would draw a difference with Mexico 
where I think it is very hard to determine whether you are 
getting counterfeit drugs or inappropriate drugs.
    But it does strike me as utterly irrational to expect 
somebody in Detroit, in a free society, to voluntarily only buy 
from their own drug store, knowing that if they go across that 
bridge they can get it at half price.
    Now I would point out that in both France and Canada 
generics are much more expensive than they are in the U.S. but 
nonetheless I still agree with you, maybe to the horror of some 
of my former colleagues.
    Senator Stabenow. I can quote you as supporting our bill 
when this comes up?
    Hon. Gingrich. As you know, the Congressman from Minnesota, 
Gil Gutknecht, has also had a similar bill on the House side. I 
said two years ago that I did not understand why we were 
punishing Americans by artificially restricting them as long as 
the drugs are effective.
    So first of all, I do think that you make a strong case.
    There are two other considerations. The reason I proposed 
the Travelocity model is that I am really worried--and your 
state is taking a leading role in this--and by the way, I do 
not blame them for this about Medicaid. When you get to 
aggregated purchasing with governments, governments inevitably 
cheat. Why do the Canadians get such cheap prices? In part 
because they say to the drug companies, ``we will steal your 
license if you do not sell it to us.'' Why do the French get 
such cheap prices? Because they say, ``we will steal the 
license and give it away.''
    By the way, in France they actually spend more per capita 
on drugs than we do. But the American-made drugs are very cheap 
while the French-made generics are very expensive. It is pure 
nationalism masquerading as health policy.
    In the long run, if every place in the world cheated the 
drug companies at the same rate that the French do, you would 
have very little new drugs coming in and it would be a very 
severe problem.
    But the answer is not to artificially keep high drug 
prices. The answer, first of all, is to get to a genuine 
pricing mechanism that is real, where you know that of these 12 
drugs, this is what their real price is and you choose. The 
sooner we can get to that, you will have exactly the same 
downward pressure on pricing you get from Travelocity and 
Expedia and the airlines industry. This is not a pro-big 
company position.
    All the old airlines find it very hard to compete with 
Southwest and Southwest has made a profit for 29 consecutive 
years, because they are structured differently in their cost 
structure. I think you would have a similar period of 
difficulty.
    The other comment I want to make is that, when you are 
thinking about health costs, it is true for the last couple of 
years that drug prices went up faster. However, last year 
hospital prices went up faster.
    I think you will find very rapidly that trying to solve one 
piece at a time never quite works because costs just shift 
around in the system. That is why you want to go as much as you 
can and this is not about transferring money. Taking care of 
senior citizens is important, and we should do it. But getting 
the decision as close to the senior citizen as possible, and as 
far away from the public and private bureaucracies, actually 
leads to better decisions and ultimately to lower costs.
    Senator Stabenow. I think it is an interesting comment, 
using the Travelocity approach. In Michigan one of the things 
that was done under a prior Governor was setting up 
formularies, essentially what prices--what kinds of drugs would 
be paid for under Medicaid and you would have to justify going 
beyond that, in terms of efforts of looking at costs, cost-
effective drugs and so on.
    Of course, this is something highly fought. In fact, our 
state was sued by the major companies, as a result of trying to 
get a handle on something like this.
    So I think, assuming that--I would guess they might call 
this price-fixing or something like that, but I think you are 
absolutely correct that finding what is the lowest effective 
medication and pricing that, and being willing to pay for that, 
and then people can have a different drug if they choose. If 
they want to go with the pretty pictures on television and go 
with something higher, they can. I think that that is an 
interesting approach to look at.
    Hon. Gingrich. Let me just comment very briefly. There are 
two distinctions. The first is, I believe in an open formulary. 
When you get into closed formularies, you end up with somebody 
other than you making a decision that eliminates your right to 
choose a drug. So this would be an open formulary that you 
would pay the difference.
    The second is the co-payment model we got to is actually 
perversely reversed. If I go in and I know I have to pay $10, I 
actually have an incentive to buy the most expensive drug 
because psychologically I think I am getting a better return on 
my $10. So I am actually driven toward more expensive drugs 
because if it is an $80 drug, I get back $8 for every $1 I put 
in. Whereas, if I only get that $40 drug, I am only getting 
back $4.
    If, on the other hand, you subsidize up front, then I get 
the least expensive drug for free, and I am taken care of. But 
if I want to then add out of my own pocket beyond that, it is a 
much clearer economic system than the way we historically, in 
the last 20 years, evolved into the current copay model.
    Senator Stabenow. Just in closing, a comment. I would say 
for those who have insurance, at this point they are not 
probably looking at the price, I would say, in terms of what 
you are talking about. But for those who do not have insurance, 
most of whom are seniors and so on, they are clearly looking 
for the cheapest price that they can find at this point in 
time, given the choices that they have to make. I think the 
debate this month in the Senate will be very important as we 
decide how to strengthen Medicare.
    Thank you, Mr. Chairman.
    The Chairman. Thank you. Senator Carper.
    Senator Carper. Thanks very much. I just want to start off 
by asking, is it Mr. Boettke or Dr. Boettke?
    Dr. Boettke. Dr. Boettke.
    Senator Carper. Is it Dr. Hodes?
    Dr. Hodes. Yes.
    Senator Carper. Mr. Gingrich?
    Hon. Gingrich. Yes.
    Senator Carper. All right.
    Let me ask Dr. Boettke and Dr. Hodes to just respond to a 
couple of things that our former speaker has talked about. 
First of all, let us just take one of the issues that you 
raised, and that is the electronic prescribing of medication. 
Your reaction to what he is suggesting, good idea? Bad idea? Do 
you see any problems with it?
    Dr. Boettke. No, I think actually that Travelocity model 
seems to be a pretty interesting one. I have not looked into 
it. I would like to look into it more.
    I do think that the former speaker made extremely important 
comments about trade and pricing and also competition, and I 
think he also made very important comments----
    Senator Carper. Let me stop you, Dr. Boettke. I want to 
take a very narrow thing that he said, that he was talking 
about.
    Speaker Gingrich, just take a minute and tell us again what 
you are talking about, the notion of prescribing medication 
electronically rather than by paper.
    Hon. Gingrich. There are two powerful reasons you want to 
have electronic prescription. The first is accuracy. Doctors' 
handwriting is often not as clear as it could be. Very small 
marginal changes can lead to people getting killed, which has 
happened last year in this city, a young lady was given 10 
times the dose because they misread what the prescription 
should have said. So the first is an electronic prescription 
done on a Palm pilot or something else that is very accurate.
    The second is that by being type electronic, it lends 
itself to measuring by an expert system to determine whether or 
not you are already taking a drug you should not be taking. Let 
me give you an example.
    In Rhode Island a few years ago, 25 percent of all the 
emergency room visits by senior citizens was a result of being 
given the wrong medicine. So for both accuracy's sake in 
writing and for accuracy's sake in measuring it against your 
own medical record, I think electronic prescriptions will 
dramatically improve the system.
    Finally, because 40 percent of all prescriptions currently 
require callbacks, you both save lives and save money because 
the pharmacist will not be calling you back and the doctor will 
not be wasting their time re-explaining what they have already 
done.
    Senator Carper. Dr. Hodes, your reaction to what he is 
suggesting?
    Dr. Hodes. I think these are extremely good points and 
importantly they are based not only on intuition, which would 
support them, too, but on a good deal of testable hypothesis. 
This actually is an important area of ongoing research, as 
well.
    In particularly with older individuals who, even under the 
best management, are likely to have, as has been noted, a 
number of comorbidities and face the challenge of needing 
medications for multiple conditions, it is a real challenge 
even to the most sophisticated of physicians and pharmacists to 
track appropriately the multiple potential interactions. The 
data base that is the underpinning to an electronic 
prescription system really allows one to address this.
    One can go still further, I think, on the same theme and 
talk about measurement of compliance and the importance 
especially with older individuals with very complicated drug 
regimens. That can be used by providing electronic feedback not 
only for the prescription writing, but as well for the 
monitoring of prescription compliance, as well.
    So these are important areas, important recommendations, 
and important areas of ongoing research to extend still further 
the possible application of information technology to the 
application of optimal therapies.
    Senator Carper. Is there any role for the Congress with 
respect to this notion that Speaker Gingrich is suggesting? Is 
there something we ought to be doing or ought not to be doing?
    Hon. Gingrich. Here I am a Theodore Roosevelt Republican. I 
believe the Federal Government has an absolute obligation to 
mandate safety in health standards. I like the idea that if I 
go to McDonald's, I know that the water is drinkable and the 
beef is actually beef. I want the delivery system to be free 
market, but I want the rules of the game within which the 
delivery system competes to be established by the Government, 
which was the Theodore Roosevelt breakthrough with the Food and 
Drug Act, for example.
    I believe that the Medicare bill absolutely should have a 
very powerful section on patient safety. I believe that from 
the Administration for Healthcare Research and Quality, from 
the National Institutes of Health, from the Institute of 
Medicine, from the Food and Drug Administration, you can pull 
together a set of recommendations.
    I also believe that institutions like AARP would be very 
supportive of establishing a higher standard for the country on 
computerized order entry of drugs which will save a substantial 
number of lives, on electronic prescriptions, on a number of 
other steps that could be done. So that you could require, for 
example, that within three to five years every hospital in the 
country would either have an intensive onsite or an electronic 
intensive care unit. There is no question this saves lives.
    These are things that are not going to happen for a 
practical reason inside the current system. No hospital 
administrator can take on their doctors when their doctors are 
the primary source of the patients for their hospital. The 
system is just gridlocked today.
    In some cases, we ought to have Federal funding I would 
argue that the biological threat to this country is four times 
as great as the nuclear threat, and that we should have the 
equivalent of Eisenhower's interstate highway system as an 
investment in Internet technology for biological survival in a 
real threat.
    In some places I would have the Federal Government 
involved. In rural areas, I would look at some things that need 
to be done differently. But on balance, this bill should not 
leave the House and Senate without a very strong patient safety 
component that includes these kind of breakthroughs.
    By the way, the best people I talk to believe this bill 
will actually cost less than the current system if you do it 
right. It will not cost more. Whether you can get CBO to score 
that it is argument I am having with CBO. But if you look at 
the scale of the breakthroughs, with comorbidity management, 
with electronic prescriptions, with computer order entry, with 
an electronic health record, this should be a substantially 
less expensive system than it is today.
    Senator Carper. I was just wondering, Mr. Chairman, if we 
got a patient--and one of our witnesses talked about an elderly 
person--who may be seeing a variety of doctors, taking a 
multitude of prescription medicines or non-prescription 
medicines, whose job is it to oversee the entire regimen, the 
entire medical medication, if you will, that a person is 
taking? If you are seeing, again, a variety of physicians, 
taking a variety of medicine, whose job is it?
    I think you said if you deal with--talking about 
comorbidities--if you deal with the person in the totality, who 
is the you?
    Hon. Gingrich. Lois Kwan, who is the head of a major 
subsidiary of United Health and one of the smartest health 
managers in the country, has testified and has worked with 
staffs on the Hill on comorbidity management, and absolutely 
believes--and she helped develop the Evercare model I described 
earlier, which literally currently saves the Federal Government 
money--improves the quality of life for senior citizens, and is 
stunningly effective.
    She absolutely believes you can build a system. In the end 
you want doctors and patients to be in charge, not bureaucrats. 
But you want to build systems that make that easy. You want to 
build incentives that make that easy.
    I think there is a growing belief that you could have an 
intelligent comorbidity management system that would again be 
part of an electronic health record. Because if you do not have 
that, you cannot make it work at a practical level.
    When my mother first went into long-term care, I was 
stunned to realize that she was taking, at one point, 17 
different medications from three different doctors, none of 
whom looked at her total record. It was breathtaking.
    But CMS today does not design the incentive system, does 
not design the payments, does not design the structure. I think 
there is some obligation of Government to think through how you 
design the structure to empower the doctor and the patient to 
have this kind of intelligent capability.
    Senator Carper. Mr. Chairman, I am reminded a little bit in 
this discussion with respect to comorbidity management of an 
earlier witness that we had before us on a similar subject, a 
closely related subject. I am reminded of some work that is 
being done within the Democratic Leadership Council on this 
issue, I think some very good work.
    I look for issues and ways that we can work together to 
face our challenges, and God knows, we have got a huge one with 
respect to health care costs and health care cost containment 
and better outcomes.
    I think that with issues like comorbidity management, 
electronic prescribing of drugs, electronic patient records, 
that is a field that is well worth mining.
    We have not been able to get into issues of privacy 
concerns, and I have heard some of those raised. I cannot stay 
longer, but I just would note for the record that I am 
encouraged by the conversation we have had here, Mr. Chairman. 
Somewhere along the line we need to have a further discussion 
on privacy.
    Thank you. Nice to see you. Nice to see you all.
    The Chairman. Dr. Boettke, I have one last question to ask 
of you. I could ask many more, we are running out of time this 
morning.
    But when we talk about longevity, we are not just concerned 
about making sure people live longer lives. In this country it 
is longer lives and a better life in that longer life.
    You talked about the comparatives you have looked at and a 
market-driven system, or if you will, a free system, open free 
enterprise system that tends to do that. What are the 
conclusion you draw? Why is this happening where it is not 
happening elsewhere?
    Dr. Boettke. Well, as our economic wealth increases, we end 
up by having a more array of choices in our life. We can live 
different types of life, each to our own in some sense. Our 
wealth enables us to engage in more leisure. If we look at how 
much leisure we can enjoy today versus how much leisure our 
ancestors, our grandparents or what not could enjoy, look at 
various different technological innovations that have been 
driven by markets, say for example even the invention of the 
electric light which enabled people now to enjoy a personal 
life at home, work hours and what not, how much time we have to 
spend in order to generate a house, even given the rise in 
housing prices, the real amount of work that we have to expend 
now in order to purchase a house versus what our grandparents 
did.
    The market society has generated tremendous amounts of 
wealth which enable us to enjoy the fruits of a productive 
life.
    So as we get older, we also want to have more fruitful 
lives, more meaningful lives that we can live out. The wealth 
that is generated by a market society actually provides that 
for us.
    What I was going to say before was that I thought that a 
point that Mr. Gingrich raised before in his original comments 
about the Europeanization of America in certain public policy 
issues, that is when you go around the world you see problems 
with pensions, problems with health care, problems with 
unemployment. I would also add problems of environment in the 
transition economies and our developing economies. The very 
policies that a lot of these countries pursue are the things 
that do not allow them to fix those problems.
    The last thing that we should engage in is trying to engage 
in the Europeanization of the American system which would, in 
fact, exacerbate our problems with our health care system and 
our unemployment problem.
    So to conclude, I think that what we need to do is make 
sure that we follow smart public policies which free up 
individuals to bet on ideas, find the financing to bring those 
bets to life, and to allow our economy to grow. With that you 
will end up by having people be able to expend more of their 
money on leisure, on the environment, on living better lives as 
we extend our lives through these benefits of innovations.
    The Chairman. We think that is probably a pretty good 
thought to end this panel on. So thank you gentlemen, all very 
much for your participation today. Newt, I will look forward to 
getting a copy of that book.
    Hon. Gingrich. This is yours.
    The Chairman. There it is. OK. Hand delivered, that is even 
better.
    Gentlemen, thank you.
    Thank you all much. We would ask our second panel to come 
forward, please.
    Newt, if we could get you to move to the back of the room, 
thank you, we will get our next two panelists up.
    Gentlemen, thank you very much for being with us today. You 
can see, by the tone of our first panel, some of the energy and 
the excitement that is going on out there. Of course, our great 
concern that as we craft public policy in these areas that we 
do it right so that we do not stifle any of that which is 
moving in the market today, and at the same accomplishes 
something that our society can afford.
    So with this second panel, Stephen Goss, Chief Actuary at 
the Social Security Administration. Stephen, we thank you for 
being with us and Dr. James Vaupel. Dr. Vaupel is Director of 
the Max Planck Institute of Demography in Germany and a senior 
researcher with the Terry Stanford Institute of Public Policy 
at Duke University. Doctor, thank you very much.
    Steve, we will turn to you first for your testimony. Thank 
you.

  STATEMENT OF STEPHEN C. GOSS, A.S.A., CHIEF ACTUARY, SOCIAL 
             SECURITY ADMINISTRATION, BALTIMORE, MD

    Mr. Goss. Thank you very much, Mr. Chairman. It is a 
pleasure to be with you today.
    During the last century, human longevity has literally 
exploded, as much as the world has become industrialized. 
Productivity and income rose to unprecedented levels, 
permitting vast improvements in the standard of living. 
Innovation in agriculture permitted adequate nutrition for 
whole populations. Innovation in engineering resulted in 
sanitary and safe living and working conditions. Innovation in 
medicine has resulted in immunizations and antibiotics that can 
be provided through primary medical care to all within these 
populations.
    In recent decades, Europe, North America, and Japan have 
experienced great increases in life expectancy at age 65, 
averaging nearly one year of increase per decade. Some 
countries have risen faster, most notably Japan, and some 
slower.
    The United States has been about average in this group, as 
you can see on the first chart. The average increase in the 
United States over the last three decades has been a little bit 
less than one year per decade.
    Each year the Social Security Trustees report to the 
Congress on the actuarial status of the Social Security Trust 
Funds. This assessment depends critically on assumptions about 
the future course of longevity in the United States, among 
other variables.
    How good have these projections been in recent years? The 
second chart indicates that the period life expectancies 
projected as of 1983 and 1992 in these reports for the year 
2000 were pretty accurate. If anything, projections in 1983 
were little bit optimistic, slightly overstating the life 
expectancy for 2000, particularly for women. This is true both 
for life expectancy at birth and life expectancy at 65.
    For the future, mortality at higher ages is what we pay 
most attention to. Three-fourths of all deaths now occur in the 
United States at ages 65 and above. Chart 3 shows that in 1900 
less than one-fifth of all deaths were at age 65 and over. 
Advances in infant mortality and reduction in mortality rates 
at ages below 65 have been dramatic during the past century.
    Rates of improvement in mortality for the total population, 
men and women combined, is shown in chart 6. In the interest of 
time, I will not talk much about charts 4 and 5 above, for men 
and women separately.
    The average annual decline between 1900 and 2000 for the 
age group 65 and over of a little over seven-tenths of one 
percent is about twice as large as experienced during the most 
recent 18 years of this period in the United States.
    Going forward, we believe that achieving mortality 
improvement for the aged at about the same rate as we averaged 
for the entirety of the last century is reasonable. This will 
be no small assumption to achieve. Matching the accomplishments 
of the last century, including with the pure positive effects 
of improved sanitation, nutrition, medical accessibility for 
all will not be easy. AIDS, SARS, antibiotic resistant 
microbes, along with increasing obesity and declining levels of 
exercise in the United States remind us that mortality 
improvement will not be automatic. There are forces that 
operate in the opposite direction.
    For ages under 65, there is some agreement that mortality 
declines will diminish, the rate of decline will diminish from 
the level of the last century. The 1999 technical panel 
appointed by the Social Security Advisory Board endorsed the 
trustees' pattern of relative rates of improvement by age 
group. Moreover, the rate of improvement has diminished for 
this age group, under 65, through the last century, with slower 
average rates for the last 50 years and for the last 18 year 
period.
    Implications for the cost of social insurance, Social 
Security as well as Medicare are substantial Social Security 
benefits are indexed to reflect the average wage growth and 
price inflation and thus, are relatively insensitive to 
variation in these parameters. However, there are no automatic 
adjustments in the Social Security program for changes in 
demographic parameters.
    The drop in the United States birth rate that started in 
the 1960's will increase the aged dependency ratio, shown in 
chart 7, between 2010 and 2030. Continued increase in this 
ratio after 2030 reflects the more subtle but steady effects of 
increasing longevity.
    Increases in this ratio of aged population to working age 
population translate directly to increases in the number of 
Social Security beneficiaries per worker covered under the 
system, shown in chart 8, and the program costs expressed as a 
percentage of the taxable payroll, shown in chart 9.
    Continued increases in human longevity will require change 
for the Social Security program. We have known this truth for 
many decades. It was even evident in the projections developed 
and presented in the 1983 Trustees' Report to Congress that was 
produced right after enactment of the last major Social 
Security reform legislation.
    How quickly longevity will increase is a subject we will 
continue to debate and observe. The trustees' track record over 
the last 20 years has been pretty good. We believe that the 
current assumption of a return to the remarkable rate of 
longevity increase experienced during the 20th century as a 
whole for aged Americans provides a sound basis for assessing 
the actuarial status of the Social Security program.
    Thank you again for the opportunity to come today and I 
look forward to your comments and questions.
    [The prepared statement of Mr. Goss follows:]

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    The Chairman. Steve, thank you. It is Goss, is that 
correct?
    Mr. Goss. That is correct.
    The Chairman. I apologize.
    Doctor, welcome.

    STATEMENT OF JAMES VAUPEL, Ph.D., DIRECTOR, MAX PLANCK 
      INSTITUTE FOR DEMOGRAPHIC RESEARCH, ROSTOCK, GERMANY

    Dr. Vaupel. Mr. Chairman, is life expectancy approaching 
its limits? Many believe it is, but the evidence suggests 
otherwise.
    Consider an astonishing fact: life expectancy in the record 
holding country has risen for 160 years at a steady pace of 
three months per year. In 1840 the record was held by Swedish 
women, who lived 45 years on average. Today, along nations, the 
longest expectation of life, just over 85 years, is enjoyed by 
Japanese women. There is no evidence of any slowing of this 
long-term rise in best practice life expectancy.
    From 1900 to 1950, life expectancy increased rapidly in the 
United States, as Steve Goss mentioned. At mid-century, U.S. 
life expectancy was only a few months less than the highest 
life expectancy anywhere in the world. As recently as 1979, the 
U.S. disadvantage was only two years. Among people 80 years old 
and older, survival was better in the United States than 
anywhere else, a lead the United States held until 1992.
    But health progress in the United States has slowed, 
especially over the past decade or two. Other countries have 
caught up and surpassed us. Today, U.S. life expectancy at 
birth almost is 6 years behind the record. In many countries, 
including Japan and France, people of all ages, from the very 
young to the very old, enjoy better survival chances than in 
the United States. The United States is the world's leader in 
so many things that it is surprising and disturbing that the 
U.S. has fallen so far behind in the matter of life itself.
    The Social Security Administration forecasts that 
improvements in U.S. life expectancy will continue to be very 
slow. This implies that the life expectancy gap between the 
United States and Japan, between the United States and France, 
between the United States and almost all other advanced 
countries in the world will continue to widen by one or two 
months per year.
    Consider the situation in 2050. A half-century may sound 
distant, but a majority of the people currently living in the 
United States will still be alive then. The Social Security 
Administration's latest forecast, the 2003 forecast, is that 
female life expectancy in the United States will gradually rise 
from 79.5 years today to 83.4 years in 2050. This level, half a 
century from today, is less than current female life expectancy 
in Japan and in France and in many other countries. It is 13 or 
14 years less than likely Japanese and French female life 
expectancy in 2050.
    The prediction for France and Japan and other countries is 
uncertain, but most of the uncertainty is on the upside. 
Breakthroughs in biomedical research could lead to even higher 
life expectancies, as the speakers on the previous panel 
emphasized. There is an enormous contrast between the optimism 
of the previous panel and the pessimism of the Social Security 
Administration.
    Is it realistic to assume that the United States will fail 
to catch up in half a century with expectations of life already 
exceeded in Japan and France? Is it realistic to assume that 
the United States will fall more than a decade behind Japan and 
France?
    Market economies around the world are tightly 
interconnected. Research ideas and innovations quickly spring 
across national boundaries by the Internet, as was discussed 
earlier. The United States will, I am confident, reduce the 
health disparities, implement the health care and health 
promoting innovations, and make the research investments needed 
to halt the widening life expectancy gap and then to reduce it.
    A crucial first step is to figure out why the United States 
is falling further and further behind. There are guesses and 
there are assertions, but there are no persuasive findings. 
This is something that the Social Security Administration 
should be worrying about. This is something that the National 
Institute on Aging should be funding more research on. A larger 
concerted, and more focused effort is needed on why the United 
States is falling further and further behind other countries in 
life expectancy.
    Many people believe that little or nothing can be done 
about health at older ages. This is nonsense. Mortality and 
many kinds of morbidity at older ages have declined remarkably 
over the past half-century.
    East Germany, where I now live, offers a dramatic example 
of how much can be done to improve the health of the elderly. 
Under Communist rule, older East Germans suffered poor health 
and short lives. Today, a mere decade after the fall of 
communism, older East Germans enjoy the same high level of 
health and longevity as West Germans. In one decade. The number 
of centenarians over this decade has tripled. These people were 
around 90 years old when communism fell. But even at their 
advanced age, they were able to benefit from a Western economy 
and health care system.
    In sum, given intelligent economic and social policy and 
continued investment in research, longevity and healthy 
longevity will increase in the coming decades. This is not a 
problem; it is a great achievement. But it will result in 
challenges for policymakers, especially concerning Social 
Security.
    Thank you.
    [The prepared statement of Mr. Vaupel follows:]

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    The Chairman. Thank you, Doctor. Gentlemen, thank you.
    What do I say? Maybe I say it this way, both of you have 
two substantially different points of view as it relates to 
projection of U.S. longevity. So at the risk of starting a 
gentlemanly argument, let me ask each of you to identify the 
limitations of your colleague's evaluations. Steve?
    Mr. Goss. Thank you, very much.
    First of all, I would like to characterize the difference 
in our views as not being one of optimistic versus pessimistic, 
but of being optimistic and more optimistic.
    The Chairman. That is another way of putting it, yes.
    Mr. Goss. A continuation of the rate of improvement in 
mortality at age 65 and over into the next century at rates 
that were experienced on average during the past century, is 
optimistic, and perhaps even bold. It is dramatic.
    The Chairman. I am fairly optimistic about those rates, on 
behalf of myself. I do not want to move to Japan or change 
gender.
    Mr. Goss. But I think it is important to keep in mind the 
kinds of changes that occurred during the past century, the 
pure positive effects that they had.
    The optimism that we had on the prior panel about some of 
the science and technological changes that we will have in the 
future is real. The question on those changes is the rapidity 
with which those will be realized, they will be developed, and 
they will be able to be brought to the population as a whole, 
and to the extent to which they will be pure positive effects 
on our population and its longevity versus effects that will 
have some good points and some bad points.
    Improved nutrition, improved public safety, better drinking 
water, better sanitary conditions have no downsides. Many 
technological breakthroughs may have some downsides, and it may 
take us decades to bring them to the population as a whole.
    But what I would like to do in answer to your question is 
address a couple of technical points about Jim's very, very 
creative and very insightful description of the chart included 
in his handout.
    This idea of looking at the best nations' practice over 
about the last 150 years is very intriguing. However, there are 
a couple of technical points that are worthy of consideration. 
During a fairly substantial portion of this period, between 
1880 and just short of 1940, the points on the curve which are 
shown in Jim's more expanded technical article were the result 
of data from one particular area of the world which, in fact, 
was not even really a complete national population. It was a 
portion of New Zealand, if I recall correctly. There is a very 
long period of almost 60 years in which maintaining this linear 
pattern is dependent upon the data from that area.
    Some demographers we have talked to have suggested that if 
you did not have that portion of New Zealand supporting the 
linear trend during that fairly long period, and you had some 
lower numbers for some of the other countries, you would, in 
fact, uncover a trend that showed relatively slower improvement 
in best nation mortality in the latter portion of the last 
century and the early portion of this century. Then we would 
see the sudden explosion in the rate of improvement in 
mortality during the first portion to the middle portion of 
this century.
    It would also suggest that this curve, rather than being a 
line that might extend indefinitely, would be a line that had a 
more gradual slope for a while, then went up very rapidly in 
the middle portion of this century, and may be moving toward 
the shape of an s-curve with a little bit of a flattening 
toward the end of the last century.
    I think this is a very possible scenario and many 
demographers believe that that may be really where we are 
headed.
    The other technical aspect that I would suggest on this is 
a different possible interpretation, which I think has just as 
much chance of being valid. That is that there is 
differentiation amongst nations on the basis of lifestyle, 
diet, the nature of populations, in terms of the potential 
longevity that they might have, given access to what is 
currently available in medical technology and other 
technologies. I think this is fairly evident.
    Right now the United States, many European countries, and 
Japan have reasonably well accessed most of what is available 
in terms of technologies, and yet we have quite a large 
difference in longevity. So there really are some differences 
that are not immutable, but some fairly strong differences 
amongst nations based on lifestyle and diet and other aspects 
of the population.
    That being the case, when we look at this progression of 
best nation achievement of mortality, the sequencing through 
time of which nations have availed themselves of the current 
state of technology is really critical.
    Japan, it might be argued--and people from Japan believe 
that this is perhaps the case because of the nature of their 
lifestyle, multigenerational families instead of people going 
to nursing homes, for example--believe that there are probably 
some inherent advantages that Japan has over some of the other 
countries listed in this progression. The fact that Japan, 
post-World War II, only in that timeframe began to avail itself 
of many of the technologies that other countries had availed 
themselves of earlier may explain why Japan has risen to the 
level it is at only recently.
    The data we have seen suggest that in the last 10 or 20 
years--and I think Jim would concur with this--there has been 
some deceleration in Japan, and likely there will be some more 
in the future.
    So my suggestion is that we should be cautious in over 
interpreting this progression of a sequence of nations. This is 
not a single population or a single nation we are looking at, a 
trajectory, but really just a growth rate that has occurred by 
piecing together a number of nations which have very different 
characteristics.
    The Chairman. Doctor?
    Dr. Vaupel. Let me respond to that.
    First of all, let me say that I have the highest respect 
for Steve Goss, who is a really excellent actuary, but I 
disagree with him and I think some of his facts are incorrect.
    First of all, matching the accomplishments of the last 
century is not what the previous panel talked about. The 
previous panel talked about the accomplishments of the last 
century being matched in 20 to 25 years. I think that is much 
more realistic.
    Second, matching the accomplishments of the past century is 
not a very high aspiration when it comes to reducing death 
rates for elderly people. Mortality fell in the first part of 
the last century because of reduction in infant and child 
mortality. Only in the last part of the less century, in fact 
only in the last 30 years, have death rates started to fall 
rapidly for older people, in part because of the research that 
is being done on aging.
    So matching the accomplishments of the last century in 
terms of older people is not a high aspiration. It is certainly 
not a high aspiration compared with the 20 to 25 years of the 
last panel.
    Second, Steve is factually incorrect about the straight 
line that I show of life expectancy increase. In the Science 
Magazine article we point out, and have in the appendix, a 
diagram saying that if you look at the second best country you 
would have the same pattern. If you look at the third best 
country you would have the same pattern. If New Zealand never 
existed, you have the same pattern. In fact, if Japan never 
existed you would have a very similar pattern in recent years. 
This is not some outlier that is driving the whole curve. This 
is the rate of improvement in the countries that are doing 
best.
    Third, we do not have to make any forecasts to be 
concerned. We can look at historical facts. The historical 
facts are the United States is falling behind. There is no 
arguing about that.
    In 1979, the U.S. life expectancy----
    The Chairman. Do you both agree on that point?
    Dr. Vaupel. Right, there is no argument. The United States 
is falling behind.
    Mr. Goss. That is true, but I would suggest that, the 
United States is not alone in that regard. It may be a question 
not so much of----
    The Chairman. I will let you pursue that when he completes 
his thought.
    Dr. Vaupel. The United States is falling behind. We were 
two years behind the record in 1979. We were close to the 
record in 1950, two years behind in 1979. We are six years 
behind today.
    This is not because--I mean, the life expectancy in the 
United States is partly due to mortality at younger ages. But 
our falling behind is largely due to the fact that we are 
making very little progress at older ages.
    In fact, I will give you an amazing fact. Native-born white 
females, you do not ordinarily think of them as a disadvantaged 
group, but for native-born white females, there has been no 
improvement in mortality for this group in 20 years, at older 
ages. Life expectancy at age 80, for example, for this group is 
identical to what it was in 1982, 20 years ago.
    So the United States is falling behind at older ages. The 
Social Security Administration assumes the United States is not 
going to catch up, the gap is going to continue. I do not see 
any logic behind that.
    Mr. Goss. I would like to suggest that one way of looking 
at this is the United States has been falling behind, and it 
certainly has. But another way of looking at this is that many 
other nations, for instance Japan, that may have certain 
advantages in terms of the lifestyle and diet, have simply been 
asserting themselves and moving ahead to positions in terms of 
life expectancy which perhaps are appropriate and should be 
expected. I do not think that we can expect homogeneity across 
all nations, in terms of life expectancy.
    I could not agree more with Jim that the last 20 years have 
been very, very bad. In fact, shown right on our charts, which 
are not up there now but which you have in the handout, on our 
chart number 5, you will see exactly what Jim was talking 
about. Mortality improvement for females over the last 18 years 
has been zero. This is why we have, in fact, rejected the rate 
of improvement in mortality over the last 20 years and have 
looked at much longer periods, as has been suggested by a 
number of other demographers like Ron Lee.
    Is it possible that we will, in fact, have much faster 
rates of improvement than suggested in the trustees' 
intermediate assumptions? Absolutely. We have alternative 
assumptions that incorporate this.
    But I would suggest one other point, that the prior panel 
was talking about having, perhaps in the next 25 years, the 
possibility of technological and medical advances that would 
rival what we had for the entire past century. That certainly 
is possible. It is also possible that we will not have the 
ability to bring these breakthroughs fully to the whole 
population or to afford bringing them to the whole population.
    The other point we have to keep very much in mind is that 
technological breakthroughs and medicine are not the whole 
story of the last century. Even if we do achieve the impact of 
medical technology breakthroughs that we had in the last 
century entirely in the next 25 years, there are so many other 
things like the improvement in nutrition and sanitary 
conditions that had major impacts in the last century, 
especially in the first half of the last century for the United 
States that would also need to be duplicated in order to even 
match the rate of improvement during the next century.
    We are optimistic. Some are more optimistic, obviously. But 
I think the numbers that the trustees have, which have actually 
been increased fairly substantially in the last five years in 
their projections, are reasonable. I am not sure Jim would 
contend that.
    I would also not contend with him that there is a very 
distinct possibility that improvement might be substantially 
faster.
    The Chairman. Well, Dr. Vaupel suggests that officials 
responsible for health and social policies believe that life 
expectancy is approaching its limits. Do the folks over at the 
Social Security agree? Do the trustees, are they one of those 
institutions that agrees with that figure?
    Mr. Goss. Absolutely not and fortunately, Jim clarified 
that point for me when we were talking before the hearing 
started. I think he was referring perhaps to officials in some 
other countries.
    As Jim is well aware, and a lot of people are in this room, 
the trustees have now for decades been projecting continued 
mortality improvement indefinitely into the future. We have 
never, ever assumed or projected that there is a limit to the 
maximum life expectancy that we would be approaching.
    The Chairman. Did I misstate your comment in relation to 
that question? Would you like to clarify that?
    Dr. Vaupel. Steve Goss is absolutely correct, that many 
countries and many agencies that do forecasting, including the 
United Nations, assume some limit. But the Social Security 
Administration does not. The Social Security Administration 
assumes a very slow increase. No limit, but a slow increase.
    The Chairman. You talk about the United States falling 
behind based on your observations. There has been some comment 
about why this gap might exist. Are there any other conclusions 
drawn as to what attributes to the gap?
    Dr. Vaupel. Mr. Chairman, as a demographer, I am very 
embarrassed to tell you that I do not know what is causing this 
gap. I am actually deeply grateful to have been invited by you 
to testify today, because it started me to think about this.
    I previously had known about this but had not thought about 
it. I was afraid that you might ask me what is the cause of 
this increasing gap, so I tried to do some research to find out 
if anybody had done any persuasive fact-finding about this. 
There is really very little information.
    The fact that I gave you before just astonished me, that 
native-born white females have made no progress in 20 years, 
despite the fact that we have a very good medical care system 
in this country, a very expensive medical care system, as you 
mentioned before because of Medicare and Medicaid and other 
Federal programs and State programs. There is universal access.
    We should be doing very well. You might think of reasons 
why immigrants or males or minority groups might not be doing 
so well, but they are actually doing better than native-born 
white females. It is a real mystery.
    The National Institute on Aging, the Social Security 
Administration, the community of demographers should really 
start worrying about this. What is going on? What is happening 
when the United States is doing so well on so many fronts but 
it is falling further and further behind on this critically 
important--you know, life itself, it is falling further and 
further behind.
    The Chairman. Do you wish to make any comment on that?
    Mr. Goss. I agree with Jim completely, that we absolutely 
wish we knew more about this and had definitive answers. There 
have been suggestions of the possibility that female mortality 
has improved more slowly over the last 20 years, perhaps 
because women have increased the extent to which they are 
smoking, in absolute terms and relative to men, that women have 
been getting involved in behaviors in the workplace more to the 
extent that men have and perhaps have been exposing themselves 
to more risks and more stress.
    The Chairman. I have read articles on that, and that 
argument is placed.
    Mr. Goss. There may be validity to that and there may not. 
We really do not have definitive answers as of yet.
    The Chairman. Doctor, you made observation, living in East 
Germany, that East Germans had rapidly caught up with West 
Germans as it relates to longevity. This is a little outside 
where this committee is going, but I am curious because looking 
at the other panel and some of their work, and we look at 
market and marketplace and free market and wealth. You heard 
one of our first panelists talk about those relationships. The 
Soviet Union, moving into a more market-oriented economy, and 
yet it has not improved the longevity of its citizenry.
    I think the answer is obvious to me, but I would like to 
hear from you. Is it because the East Germans had the 
opportunity to immediately associate with the health care 
system from West Germany and incorporate that into a whole 
government, if you will, and a whole system and a whole health 
care delivery program? Whereas Russia has not?
    Dr. Vaupel. I think both factors have played a role. 
Following reunification, the West German health care system was 
extended to East Germany. Nursing homes were established. There 
had not been nursing homes before, there had been hospital 
wards for older people. This made a big difference. Modern 
medicine was available. A system whereby the government helped 
pay for medical care and medicine was implemented.
    But in addition, the older people in East Germany started 
to receive West German pensions. Older people in East Germany 
started to be able to buy fresh fruits and vegetables.
    The Chairman. So it was a matter of income.
    Dr. Vaupel. There was a higher income. There was a market 
economy that was established that let older people buy the 
things that they wanted and needed that made life better for 
them, that let them eat better, let them live better, let them 
heat their houses better, and so on.
    So I think it is a mixture of both economic progress and a 
better medical system.
    The Chairman. Thank you Gentlemen, thank you very much for 
your testimony this morning. I think it is extremely valuable 
for the record and for what we are attempting to build here in 
this committee for Congress to look at.
    We do appreciate it. It is a fascinating topic that we 
better understand reasonably well, based on how we are trying 
to shape public policy and public programs at this moment. 
Failure to recognize it or misjudge it can be either expensive 
or certainly troublesome and a problem for our country.
    We thank you very much and the committee will stand 
adjourned [Whereupon, at 11:40 p.m., the committee was 
adjourned.]

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