We look at television and color television and we have direct distance dialing, where we can call somebody in California on our telephone at home, and we say this is marvelous and it is. What we haven't been doing is telling the American people that while this has been going on in these other fields, we have equally stirring, equally challenging, equally marvelous advances in the field of medicine so that this country today has the finest quality of medical care ever made available to the people in the history of the world. We are proud of it, but we know it is costly, just as a jet costs money.

We know in the cost of the hospital 70 percent of the cost is labor. Across the Nation, the average is from 65 to 75 percent. Who is going to recommend that we lower the cost of medical care by lowering the prices we pay for those who work in our hospitals? If anything, we should contribute to upgrade them.

We can all talk about the cost of drugs. Yes, that is true. I know they have drugs today that save human life that we did not have when I started practicing medicine. I signed many a death certifi cate for people who could be cured with $5 or $10 or $50, only part of their worth.

Only 2 or 3 months ago, I had a case of a little girl with a ruptured appendix. We must have used $30 or $40 worth of drugs. So she went home. They cost $30 or $40. How much were they worth?

Mr. Chairman, I can particularly appreciate this true illustration. You see, my father died of a ruptured appendix, before the days of miracle drugs.

We did not call them miracle drugs. The drug industry did not call them miracle drugs. It was the American people. They saw people live where they used to die. They see people now who can live and enjoy life when they used to die.

So we say, yes, it is true that these things are costly, but the Ameri can people, if we tell them the story, if we let them know the real truth, know that it is not just how much something costs, but how much is it worth? This is what is important, and the quality of medi cine which is made available to the American people today is worth something.

What about the majority of the American people who buy their own homes, their own automobiles, buy their food, their clothes, their hunting and fishing equipment, and the rest? For the vast majority of these people we feel that there are some who need no insurance or anything else. They can write a check. Admittedly, there is prob ably a small percentage of our population. For the great majority of the population, however, the medium of insurance has proven to be an excellent way whereby we have taken care of and can provide for our own needs.

I read the testimony presented before this committee 2 days ago by Mr. Rietz of the insurance companies. There, he outlined the tremendous growth of their insurance industry. No branch of the insurace industry has grown as rapidly, has developed as many new plans to meet the needs as these needs have been met and understood, as has the health insurance industry. Mr. Rietz pointed out that some 134 million Americans are presently covered by some type of hospital insurance. The record shows that some 115 million are covered for some type of surgical insurance; another 85 to 90 million are covered

for some kind of medical insurance; and at the present time over 30 million Americans are covered by major medical.

Many of them have their basic coverage like Blue Cross, Blue Shield, or others, plus major medical for the expenses over $500. In my practice, as a surgeon, I would say that today 65 to 75 percent of all of our insurance, of all of our patients on whom we perform major surgery, are covered by some type of insurance.

Has it done the job completely? No. But it is growing rapidly. It is meeting remarkably this advance in the cost of medicine. When I came into the practice of medicine one did not need this kind of insurance because medicine did not cost so much, but people died from diseases that today they do not. We do operations today we could not do even 10 or 12 years ago, because of the advances in these fields of science.

We do chest surgery, and abdominal surgery, and intestinal surgery that was impossible because of infection 15 years ago. These people would die of peritonities and other infections that we control today very simply by the use of few drugs. These are the things that those of us in the practice of medicine see every day. We know it is costly. We urge our patients to cover themselves and their families with insurance. As physicians, we have worked in the development of Blue Cross-Blue Shield programs. As physicians, many of us have assisted the private insurance companies in the development of their programs. We have sat down around tables such as this to tell them of the problems faced by our patients that we learn in our own offices. We think for the vast majority of the American people insurance is the answer. If we will just give them an opportunity and continue to work with them insurance would be the answer. But we have to educate our patients; we have to educate insurance companies; we have to educate doctors, not to abuse insurance.

You know people have a different attitude toward health insurance than most other kinds of insurance. Down our way, we have winds that are sometimes called hurricanes, so we have hurricane insurance and fire insurance. I do not know of anybody who complains because he has not had to collect on his insurance because a hurricane did not tear off the roof of his house. Year after year, we pay those premiums. We carry automobile insurance and in our State-I do not know how it is in some of the others--the premium is pretty high and when you have a couple of teenagers. I have four teenagers and four that are not teenagers. When you have a couple of teenagers that drive, your rates go up. For me to cover one Chevrolet station wagon, the premium runs around $260 or $270 a year because two teenagers drive with my wife and me. Do you know this is much more than I pay for all of my medical coverage on Blue Cross-Blue Shield, plus major medical-I think it is with Continental Casualty-put together. Yet at the end of every year when I pay this premium, I do not complain because we have had no accidents. I am not unhappy because I have not hit anybody and not been sued in court and have not used the insurance.

Year after year, I pay this premium, like most Americans pay their automobile insurance premiums, hoping I will never use it. If a car gets sick, if it needs oiling and greasing, if it needs a new tire or battery, if the horn conks out or they bump a fender, and they get it fixed, it is taken care of by the individual who buys the insurance.

He does not expect to have the insurance company to cover it. He knows that there could be an insurance policy written that would cover everything, including a nick on the fenders and replacement of tires and batteries, but the premium would be fantastic.

However, the attitude of our American people in the use of health insurance is quite different from their attitude and their use of these other types of insurance. People will come into the office with a little mole-and what I am saying I have heard from doctors in many sections of this country-with a little mole that might need removal in the office for $5, $10, or $15, they will say, "Doctor, if you put me in the hospital my insurance will cover it." They go into the hospital for this type of thing, a minor problem which can be taken care of on the outside. The hospital bills combined with the cost of the operating room and the rest might easily cost $40, $50. Who pays it? The people who buy the insurance; and so it is when we abuse insurance, when we demand of health insurance things that we cannot demand of other kinds of insurance, when we abuse it in trying to have it cover every type of minor cold or cough or minor diagnostic procedure, or minor surgical procedure. This is not the real purpose of insurance. Can we write policies of that kind? Yes, but it will continue to put the premiums higher and higher and higher as will the increased utilization. If we can go in and if we can encourage insurance companies to write policies for the major needs, they can write them on an actuarially sound basis and cover the demands of people just as we cover insurance on our automobiles. So we feel that for the great majority of the American people, the record indicates that they are well able to provide for themselves.

What about those who cannot? What about those not on old-age assistance, and we know we have some 2.25 million people on old-age assistance who are over 65. These people, of course, are provided with their food, shelter, and clothing, and medical care. Between their States and the cooperation of the Members of the Congress, we have a law, to cover them. This committee together with the Senate Finance Committee last year recommended, and it was approved by the Congress, the Mills-Kerr law. It is designed to take care of those people not in a position to take care of the excessive demands for medical care when they are faced with a major problem of health. It does not those who are covered by old-age assistance, but those of the medically indigent. We call them the needy sick.

We feel this is a good law. We know that to the extent that it has been made understandable to members of our various legislatures, we have had increasing cooperation in the carrying out of the principles of the Kerr-Mills law.

We have supported it in principle because we think it is sound. We think it is sound first because the medical need is determined by the doctor, the family doctor, the patient's own physician. The financial need is determined by the local community that knows best the financial needs of the people who live in that community and the demands upon their finances. The role of Federal Government is limited to that of a grant-in-aid type of dollar support for those who need assistance. This we think is good. This, we think is sound.

Oh, we are criticized. They say the Mills-Kerr bill has not gone into effect, and yet, gentlemen, you know in the interest of honesty and fairness this bill only became law early in October of last year. The representatives of HEW in the social security division at the Little White House Conference last month agreed that the implementation has already proceeded at a much more rapid rate than the earlier implementation of old-age assistance grants and of a similar type of grant-in-aid.

It has been a relatively short time. Even the new bill, as proposed, would not go into effect until October of 1962 for the basic provisions of hospitalization and for the nursing home provisions in July of 1963. Time is important and it takes time to educate our county commissioners and our legislatures as to what can be accomplished under a bill that we think is good. It is sound in purpose. It is designed to take care of those people in this country who need help and cannot afford it.

We are opposed to H.R. 4222. We feel, first of all, that it is wrong in principle. We feel it is an assumption on the part of the Federal Government of responsibility which is essentially a local problem. We feel that the responsibility for health care rests, first of all, upon the individual; secondly, upon the members of his family. Thirdly, in our counties across the Nation, this type of responsibility has been assumed by churches, civic groups, by local organizations, community health organizations. Next it goes to the county level and then the State level. For some, by virtue of the fact that they need assistance in the States, there is certainly room for the participation on the Federal level. But to reverse that process and make the responsibility first a Federal responsibility merely because a person reaches the age of 65-irrespective of need-is taking away from the individual, from his family, and his community the responsibility which has formed the backbone as well as the background for the growth and development of our representative type of government.

We feel that when the Government provides for people and it is not the legitimate responsibility, irrespective of need, this is socialism. To the extent that the Government provides medical care for those not its legitimate responsibility, to rich and poor alike, that is socialized medicine for that segment of our population.

We feel that H.R. 4222 is not an extention of social security. There, are those who say this is merely an extension of the social security system, but in providing for social security you gentlemen provide cash dollars to the aged during their period of lowered and lessened income so that they would have money to buy the things they want or need, so they can buy food and clothing and shelter. A provision for medical care to be an extension of social security would give additional dollars with which they could buy their own insurance, pay their hospital, or drug, or doctor bills. But this bill is using the social security financing mechanism to raise money for an entirely different program-whereby the Government would provide medical care which it had purchased under contracts.

We feel it would be unfair and it is an unfair burden to the workers. I feel, as a father of eight children, it is an unfair burden to my

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children, who are coming along, because, in the first place, on the financing principle, as was pointed out by Members of the House and Senate, 40 percent of the Nation's income is not subject to social security. Income from stocks and bonds, and rents, and investments, is not subject to social security. Yet from this fund which is raised from payroll taxes everyone will benefit-irrespective of need-merely by virtue of the fact that they have reached the age of 65.

When the Secretary of HEW presented his program before this committee in the early part of last week, he made additional recom mendations to increase the amount of the tax base from $5,000 to $5,200. If we look at this, we realize that this is an increase of $600 at 3 percent-which is the present rate-which is $12. It is an increase of one-fourth of 1 percent of the total $5,200, which is $13. This is a $25 increase. Those presently at a $5,200 wage level paying on $4,800 pay $144. This proposal would increase this payment to $169. If you take the $25 increase percentagewise against the $144 they are now taxed, it represents a 17-percent increase in the present social security tax-a 17-percent increase. This increase is not only retroac tive to that which is already present; it is also going to be incorporated and carried on for the built-in increases already scheduled by law to go into effect in 1963, 1966, and 1968.

These are some of the reasons that we feel that this is unfair and it is unjust in its basic financing. We are taxing those who work to take care of many who are well able to take care of themselves.

As Dr. Blasingame, our executive vice president, pointed out some time ago, it also embodies a cruel hoax to many of those who are really the needy sick, in that it would expect them to pay $10 a day for the first 9 days of hospital care with a minimum of $20, plus $20 for their diagnostic services.

It was testified by Mr. Rietz of the insurance industry that today of the nearly 17 million people over 65 the insurance coverage is almost 9 million. Under the provisions of this bill, the needy sick. the person who is medically indigent-the person whose income is adequate for his every day needs, but when faced with health needs, he just does not have enough-this person, who we want to help the most, would have a hard time coming up with $90. But the 9 million people over 65 who carry insurance could drop their insurance contracts, and when they become ill write a check for the $90 and have the taxpayers pay the difference. This, too, we think is unfair.

In conclusion, Mr. Chairman and gentlemen, it is a pleasure for me to be here. I am not an official of the American Medical Association now, nor have I ever been. I have been practicing medicine in the State of Florida for 23 years. During that period of time, at no time have I not had some activity, either with the local civic groups like the Junior Chamber of Commerce, local health councils, the Kiwanis Club, church organizations, and later with our county and State societies, in trying to carry out the main purpose of American medicine