I want to say that I am most appreciative, Mr. Chairman and members of the committee, of the opportunity afforded to present my support of the proposed legislation which would expand the social security program to provide medical care for the aged on a prepaid insurance basis to supplement medical assistance for the needy aged under provisions of Public Law 860-778. I would hope that the members of your committee, Mr. Chairman, might-the statement is not long-give special attention to the information which I have set forth in reference to the experience of the State of West Virginia with the public law to which I have made reference.

We were one of the first of the States to implement or provide the necessary legislation to participate in that law. I have attempted to be objective, and the experience in West Virginia and my own personal study of this problem convince me that that which has been done is not in itself sufficient to meet this need, and I therefore look forward to a sounder program of financing. I would not disparage the efforts which were culminated with passage of Public Law 86-778 in the 86th Congress, and the leadership given by Chairman Mills of this committee, and by members of the Senate Finance Committee, notably Senator Kerr of Oklahoma, and so I express my appreciation, Mr. Chairman, and I ask that I be allowed to proceed in this way to present the statement to the committee.

West Virginia was one of the first States to enact legislation enabling it to participate in the health care program for needy aged under Public Law 86-778. The initial action taken in our State was the enactment of necessary legislation by the West Virginia Legislature in an October 1960 extraordinary session called for that purpose.

Ours was perhaps not the only State which entered into the program on what was then believed to be a temporary expedient on the assumption that Congress would pass a more substantial and more meaningful measure under social security tax financing. In a sense, West Virginia now is being penalized for this early action in behalf of those of its aged citizens who qualify under the Federal-State program authorized by Public Law 86-778 and our State law which implemented it.

The failure of Congress to move ahead with and provide social security coverage for medical care purposes has already necessitated in West Virginia the development of plans for a cutback in the existing program of medical services for the needy aged.

And if the proposals for social security expansion are delayed beyond this year it is estimated that West Virginia's share of the cost of the limited needy aged care plan will advance to between $10 million and $12 million.

In a recent cogent article on the medical care for the aged problem in West Virginia, a well-informed writer for the Charleston Gazette

wrote:

Without passage of the administration proposal for expanded social security coverage to include medical care for the aged, which would shift financing to social security from general revenue, this State will be hard pressed to meet its aged-care obligations in the year ahead. *** Medical care for the aged cannot long be supported by direct taxation. Social security, under which the individual would pay for his care in unproductive years while he is still productive, is the only solution for financing on a permanent baris.

When the present program of medical assistance for the needy aged was passed last October (1960), the financing plan adopted was a temporary expedient. The Governor recommended a shift of funds from other purposes to carry the program until March of this year, and the legislature acquiesced.

The 6-month plan was calculated to coincide with action in Washington on the social security proposal. It was anticipated that the shift from general taxation to social security would be made within 2 months after Congress convened in January.

When it was realized early this year that the social security measure was in trouble, the West Virginia Legislature decided to continue the program in the old form until January of next year. Aged care as a public service had been so slow getting off the ground that much of what was appropriated in October 1961 was still available when the legislature faced the problem anew in February. With this backlog of funds, plus an additional appropriation of $1,325,256, it was believed that West Virginia would have enough money for its needy aged medical care program to last through December, with the Federal Government paying 70 percent of the program's costs.

But the situation has changed radically since the legislature went home in March. Medical care costs have skyrocketed. Where they were running at $153,867 when the legislative decision on anticipated needs was made in February they were running at $391,859 last month (June).

State Welfare Director W. Bernard Smith is indeed worried. There is no longer any cushion to carry the program past December 31, as there was last March. As conditions stand, Smith either has the choice of stopping the program before the legislature returns again to appropriate more money or of curtailing services. * * Chances are he will order a cutback in services very soon. He and his staff are now studying ways to reduce services without wrecking the program.

And what does the future hold after next January? In event the social security program is again sidetracked, it is believed that West Virginia's share of the cost of needy aged care will run to $10 million or $12 million annually.

This is a shocking prospect when one realizes that the next legislature has nowhere to look for so much money without going through the painful process of revamping the entire tax structure after having already done so during the last regular session before adjourning in March * * *.

That is the picture confronting the officials and the citizens of West Virginia.

Mr. Chairman, those of us who support the social security concept of medical care for the aged do not deny the value of Public Law 86-778. But many of us have acknowledged its value as a supplement to, rather than a substitute for, social security financing.

As a general measure, Public Law 86-778 fails to provide the soundest financing, it adds an inordinate load to the already overburdened States, and it falls far short of offering adequate medical care for the needy aged, let alone the great majority of elderly persons who are unable to finance their health care under the impact of constantly mounting costs.

The inadequacy of the present law and its heavy impact on States through matching requirements are attested to by the small number of States which have programs in effect and the few which have elected to participate in its benefits this year. This record of achievement is inadequate to the needs of one of the most urgent social and humanitarian problems of our day.

Neither logic nor experience, neither social justice nor economic prudence can justify the resistance to social security financing of aged health care, which would allow men and women to pay for their later medical needs during the most productive years of their working lives. This program is opposed on the grounds of dogma rather than experience, and it is attacked by scare slogans rather than reason.

We are informed, too, that during the 6 months after Public Law 86-778 went into effect on October 1, 1960, Federal matching payments to the States for old-age assistance and medical care increased by $44.5 million. This has enabled some States to decrease their spending for old-age assistance, to be sure, but when the number of States fully participating in Public Law 86-778 increases materially, I am certain the result will be that both Federal participation and State expenditures will mount rapidly.

This situation, developing at a time when the demands upon general revenues at both the Federal and State levels are on the increase, must be rectified-and this can best be done by turning to the social security method of financing medical care for the aged and by increasing the social security tax for this purpose.

Thank you Mr. Chairman, and members of the committee.

The CHAIRMAN. We understand the circumstances that require that you leave the room at this time and you are excused, if you desire, and we thank you very much for coming to the committee, Senator. Senator RANDOLPII. Thank you very much.

The CHAIRMAN. Mr. Gilbert, we are pleased to have you with us today, our colleague from the State of New York. You are recognized. STATEMENT BY HON. JACOB H. GILBERT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK

Mr. GILBERT. Mr. Chairman and members of the Committee on Ways and Means, I am heartily in favor of President Kennedy's proposals for health care for the aged under the social security program, as incorporated in H.R. 4222, now before you for consideration. I am pleased to have this opportunity to express my interest in this important legislation.

The forecast, that Congress will not have the opportunity to vote on this bill this year, and that final action will be postponed until next year, is a disappointment to me. I know that adequate medical care for our older citizens is one of the most critical social and humanitarian problems confronting us and one which demands necessary, effective, Federal legislation. It is the responsibility of the Congress of the United States to discharge its duty in this regard, just as soon as possible, and to pass the required legislation.

In my opinion, the best assurance we can have that special medical needs of the aged would be met, is to provide for a practicable plan under our social security system. I introduced legislation so providing, in the 86th Congress when I became a Member of the House of Representatives, and again this year.

Hundreds of letters and numerous petitions have been sent me by my constituents, urging Federal action and the social security ap proach. They contain pitiful statements as to suffering and hardships and inability to provide themselves with the medical care they desperately need. I shall not allow their pleas to go unheeded.

A recent report disclosed that the aged now comprise about 9 percent of the total population of the country and they make up more than 55 percent of all persons afflicted with chronic illness. Elderly persons not only get sick more frequently, but remain in the hospital over twice as long as do persons under 65. Private health insurance

programs are not meeting the special needs of aging. Our older citizens need adequate protection against medical costs, but are denied the protection by many private health insurance plans, which require them to pay higher premiums and offer them lower benefits. We know it is a fact that most people over 65 have very meager retirement incomes and limited personal savings, and they simply cannot afford the medical care services they should have. The report showed that of those families headed by persons 65 and over, half had less than $2,830 annual income, and one-fourth had less than $1,620. It is obvious that after paying for the barest necessities such as clothing, food, and shelter, there is practically nothing left for medical costs, and they cannot afford the expensive private health insurance programs. The report also showed that among the aged, those in relatively poor health are less likely to have hospital insurance than healthier groups.

You have already heard much testimony concerning the Kerr-Mills Act adopted last year. I agree that this is not a substitute for a Federal health insurance program as contemplated by H.R. 4222; that it is a supplement to such program. I join with those who have stated their objections to a health program for the aged based entirely on old-age assistance-or a "means test." When we tell an elderly, sick person that he can get the medical care he needs if he becomes a public charge-meaning he must become a pauper-than we take away his dignity, his self-respect, and we lower his standing in his community.

You have heard testimony showing that many thousands of persons have refused to take advantage of the provisions of the bill passed last year, because they dislike to take the oath of a pauper and accept public assistance. Rather than do this, and cause unwarranted sacrifices by their relatives, as demanded by the States, they are going without the medical help they desperately need. It has been reported that less than half the States have made any real progress at all toward putting into effect a program under the Kerr-Mills terms. This means that in most of our States our older citizens are not receiving even the meager help provided by that bill.

I repeat, the clear-cut, sound, practicable plan is to provide social security financing of aged health care. This would permit men and women to pay for their later medical needs during their highly productive years of their working lives. This is the dignified way; this is the worker's insurance, for which he has paid; it is not charity or a handout. This is a medical-aid plan which the worker can afford. It will relieve our workers from that greatest of financial worries a long-drawn-out expensive illness, which can wipe out a man's savings in a very short time. The Federal assistance involved is due the workers of our Nation, who have, by their efforts, built our Nation to its present great strength.

The important fact to recognize, and it is an established fact, is that all our people need this bill. It helps young workers to provide for their medical care in their later years, and it helps give necessary medical aid to those who are so desperately in need of it now.

I urge your committee to take favorable action on H.R. 4222.
The CHAIRMAN. Dr. Larson, Dr. Annis, and Dr. Howard.

Dr. Larson, we remember your previous appearance before the committee on this and other subjects, but for purposes of this record, will you again identify yourself and those with you at the table?

STATEMENTS OF DR. LEONARD W. LARSON, PRESIDENT, AMERICAN MEDICAL ASSOCIATION; DR. EDWARD R. ANNIS, MIAMI, FLA.; DR. ERNEST B. HOWARD, ASSISTANT EXECUTIVE VICE PRESIDENT; AND C. JOSEPH STETLER, DIRECTOR, LEGAL AND SOCIOECONOMIC DIVISION

Dr. LARSON. Mr. Chairman, my name is Dr. Leonard W. Larson. I am president of the American Medical Association. I have with me Dr. Edward Annis of Miami; Dr. Ernest Howard to the right, who is assistant executive vice president of the association; and Mr. Joseph Stetler to my left, who is our legal counsel.

The CHAIRMAN. You gentlemen may have seats if you desire.

Dr. Larson, are you the one to present the statement for the AMA! Dr. LARSON. Yes.

The CHAIRMAN. I think it is divided, is it not?

Dr. LARSON. Yes, it is divided, sir.

The CHAIRMAN. You and Dr. Annis will speak. Is Dr. Howard also to speak?

Dr. LARSON. Only in the answering of questions.

The CHAIRMAN. All right. You desire to present your statement first, Dr. Larson?

Dr. LARSON. Yes, sir.

The CHAIRMAN. All right, sir. You are recognized, sir.

Dr. LARSON. Thank you.

Mr. Chairman and members of the committee, as I said before, I am Dr. Leonard W. Larson, president of the American Medical Association. I am grateful to the committee for this opportunity of appearing today on the association's behalf and presenting the views of the medical profession on H.R. 4222, 87th Congress.

As I said, with me are Dr. Edward R. Annis, who will also present a statement on behalf of the AMA; Dr. Ernest B. Howard, assistant executive vice president of the association; and Mr. C. Joseph Stetler, director of the AMA's legal and socioeconomic division.

The American Medical Association is a nonprofit, professional public service institution to which more than 180,000 members belong. Its membership, therefore, constitutes better than 70 percent of the total physician population of the United States.

The AMA has two main goals, Mr. Chairman, both of which are clearly set forth in its constitution. One of them is to promote the science and art of medicine; and the other is to work for the betterment of the public health.

These goals, upon which all association policy is based, are guideposts followed by our house of delegates, which meets twice a year: and by our board of trustees, the members of which are elected by the house of delegates and serve as the association's interim governing body.

Our organizational structure is designed to keep the association readily responsive to the collective will of its membership. Voting delegates are chosen by the State medical associations on the basis of 1 for each 1,000 physician members within the State. These representatives comprise our house of delegates, along with 20 others elected by the AMA's scientific assembly, and 5 delegates chosen by the Sur