This document contains testimony and prepared statements from the Congressional hearing examining the impact on the elderly of the federal health care cost containment measure. Correspondence between the Select Committee on Aging and the Department of Health and Human Services, concerning the government restrictions' harmful effects on the elderly's access to nursing home, home health, and community services, is given. Statements from 10 committee members are followed by testimony from representatives of several state and local agencies including: the U.S. Conference of Mayors, the state of Florida, the Jefferson Area Board for Aging (Charlottesville, Virginia), and the Philadelphia Geriatric Center. Two witnesses give testimony on behalf of the American Association of Homes for the Aging and the American Health Care Association, and one professor of medicine offers a systems approach to cost containment. The witnesses testify that although hospital Diagnose Related Groups have been effective in controlling distortions and the funding bias of adult care, they have not addressed the need for long-term care, and have jeopardized health care accessibility and quality of care. The appendices include the text of the Quality Assurance Reform Act of 1985, a proposed bill to ensure quality assurance under cost containment, and prepared statements from other interested organizations. (ABB)