Local programs, locally administered, are tremendously flexible; they can take into account topography, nearby general facilities and statewide specialized resources. They can consider local standards of income, local availability of professional personnel, travel patterns of residents, the character of the population--all those factors, extraneous to the science of medicine itself, which help determine the pattern of medical care best suited to the community.

The

This, no purely Federal program can possibly accomplish. bill in question notably demonstrates this by fixing a master-pattern of health services for the aged throughout the entire nation. How can this master-pattern take account of what facilities are actually available; or make allowance for local determination; or allow local appeal from Federal rulings? It cannot.

Far too little consideration has been given, in our opinion, to the damaging effect this bill will have on existing aid programs. It would be much more effective, much more economical, and far better for the health of the nation if, instead of enacting an experimental Federal medical program which cuts across, and is in conflict with, operating programs across the nation, the energy expended in promoting this bill were spent, instead, on improving those programs and mitigating those flaws which are offered as reasons for short-circuiting the whole complex of state and local programs.

The Medical Assistance for the Aged program inaugurated last year (PL 86-778), is, for example, one of these natural developments of state and local programs--a way of extending community assistance to those who have no permanent necessity for help, but who do need aid when confronted with a medical problem beyond their ability to finance.

SECTION XI

ADVANCEMENTS OF PRIVATE INSURANCE AND PREPAYMENT MECHANISMS

Earlier in this testimony I have pointed out the vital role played by private health insurance and prepayment plans in helping the aged cushion the financial shock of illness. Half the aged are now covered. And in the years ahead, an increasing percentage of older people will reach retirement age with health insurance coverage if-and I stress the word "if"--measures like H.R. 4222 are not enacted into law.

The passage of such legislation would unquestionably undermine private health insurance. It would substitute a compulsory system of health care financing for a voluntary system that has proved its ability to do the job that needs doing beyond any measure of doubt. It is realistic, in our opinion, to predict the decline, if not the demise, of private health insurance if H.R. 4222 were passed, for those compelled by law to carry the cost of a national compulsory "health" plan would be neither able nor anxious to carry private health policies as well.

The American Medical Association is convinced that private health insurance and prepayment plans constitute the most effective device available to the elderly for the financing of health care. Yet the proponents of compulsory national health plans are fond of claiming that persons over 65 can get private health insurance or that if they can, the insurance is inadequate. "Voluntary health insurance will never do the job for the elderly," they affirm.

This is a different statement than they were making on this subject at the time of the Murray-Wagner-Dingell legislation controversy. At that time, the same people were saying that private health insurance could never do the job for the population as a whole. The record disproves this, as some of the proponents of a compulsory national health plan for the elderly now admit. They now assert that, although private health insurance is doing the job of providing coverage for the vast majority of Americans of all ages, it does not and will not provide effective protection for the elderly.

A look at the record will again prove enlightening.

It is no overstatement to say that the growth of private health insurance since World War II has been phenomenal.

As of December 31, 1940, fewer than 13 million civilians were covered by some form of private health insurance. By 1950 the figure was six times as large--or more than 76 million. In the next nine years-through 1959--the number of persons covered grew to 127,896,000. In other words, by 1959 seventy-two per cent of the civilian U.S. population was covered by some form of private health insurance.

As of December 31, 1960, the figure stood at a record 132 million Americans--73 per cent of the civilian population.

And the Health Insurance Council reports that early trends this year indicate that as of June 1, 1961, some 134 million persons--or 74 per cent of the population--had health insurance coverage.

HIC also said that as of the same date an estimated 31 million persons carried major medical expense coverage, a type of insurance only in the early experimental stage ten years ago. This is an increase of nearly ten million persons since the end of 1959.

Perhaps the pertinent fact here is that the amount of health insurance owned by the aged is growing at a faster rate than that owned by the population as a whole.

In March of 1952, only 26 per cent of persons 65 and older had health insurance coverage of any kind. But by the middle of 1961 more than 50 per cent owned some kind of coverage, according to estimates of the Health Insurance Association of America. By contrast, 59 per cent of persons of all ages were covered as of 1952, while an estimated 73 per cent are now covered.

This means, then, that while coverage for the number of persons of all ages rose 14 per cent from 1952 to 1961, coverage for our aged citizens showed an amazing jump of more than 50 per cent.

It should also be remembered that our aged population increased significantly during that period. Thus, the 26 per cent covered in 1952 represented 3.4 million persons, while the current figure of more than 50 per cent represents over eight million persons.

We know, moreover, that perhaps 25 to 30 per cent of the aged are not in the market for health insurance because their medical care is provided through Old Age Assistance Programs or other means. Therefore, we can safely conclude that 70 per cent of the aged who are in the market for voluntary health insurance now have it.

The rapid increase in coverage of those 65 and over can be expected to continue. HIAA estimates that by the end of 1965, 80 per cent of the aged needing and wanting protection will be insured.

is expected to climb to 90 per cent by 1970.

The figure

In short, private health insurance in this country is well on the way toward accomplishing near-universal coverage of the entire population. And that coverage is versatile enough, adequate enough, and available enough to meet the needs of this nation.

As the Committee is aware, Mr. Chairman, many factors enter into establishing fees for professional services. The ability of the patient to

pay is only one of them. Nonetheless, in December of 1958, the AMA House of Delegates adopted a report which reiterated this well-established principle and further encouraged the development of low-cost health insurance and prepayment programs for persons who were over 65 and in modest circumstances.

The response to this re-statement of policy was immediate from state medical societies and their Blue Shield plans.

Testifying before the Senate Finance Committee only last year, I gave the Committee a progress report of an impressive nature. I an happy to update that progress report for the benefit of this Committee.

At present, there are 51 plans in 41 states and the District of Columbia offering non-group coverage to persons over 65; and 11 additional plans under development in four states. This compares with 40 plans in 37 states last year.

Some 240 voluntary health-insuring organizations--including Blue Cross and Blue Shield--are now issuing hospital or surgical policies to the elderly.

Aware of the great potential market in insurance for those 65 and over, aggressive companies are continually driving premium costs down.

The Blue Cross Association reported recently that 1960 was its biggest year. Representing some 79 health and hospital plans across the nation, Blue Cross membership reached 56,063,215 in 1960--a gain of 1,041,382 over the previous year.

In reviewing the year, the Association's president James E. Stuart, had this to say:

"The quality and quantity of hospital care measures up to the standards required by medical progress: that constantly improving hospital care can be made accessible without hindrance to all who need it.

"

Benefits for the elderly are provided in a number of different ways. Without exception, older active workers are continued in group insurance plans. Most new group plans provide for the continuation of benefi to retiring workers; other group plans allow retiring workers to convert their insurance to individual policies; and paid-up-at-age 65 policies are now available.

The Health Insurance Institute reports that seven out of every ten workers covered under group health insurance policies issued during 1960 have the right to retain their protection when they retire. The greater availability of coverages that continue into retirement is shown by contrasting the 1960 data with findings at the end of 1959.

According to HII, in 1959 only 55 per cent--or about five out

of every ten workers--had the right either to continue or convert their coverage upon retirement.

By and large, the majority of insured individuals continue into their later years individual contracts issued at younger ages. As I have pointed out, this number is increasing rapidly. As to policies especially designed for older persons, many of them do not require evidence of good health as a condition of eligibility. After a short probationary period, these policies pay benefits for losses due to pre-existing conditions.

I should like to stress here that insurance companies are constantly bending their efforts to develop new ways of helping the aged obtain the protection they need.

For example, a number of insurers are now setting up group plans for such associations of older people as Golden Age Clubs.

As an instance of the fresh, creative thinking that is being done throughout the country in this field, insurance carriers from Connecticut are joining together in order to offer major medical and hospital insurance programs to senior citizens at the lowest possible premium. In its initial stages, the program will be experimental and confined to the state of Connecticut, but eventually this approach may well spread throughout the country,

Under the program approved by the Connecticut legislature, all insurance companies chartered or licensed in the state are eligible to participate, and any resident aged 65 or over may purchase either low option ($5,000 maximum benefit) or high option ($10,000 maximum benefit) major medical coverage.

Insurance industry spokesmen at Hartford, Connecticut, have hailed the plan as "a major breakthrough in the area of voluntary health insurance for senior citizens."

Efforts in Pennsylvania are also noteworthy--to cite just one

other state. The Pennsylvania Medical Society has provided the stimulus for a Blue Shield Senior Citizen program recently approved by the state insurance commissioner. The Senior Citizen Program is being offered to Pennsylvanians age 65 and older who are not already Blue Shield subscribers.

Under the plan, these older persons are permitted to buy prepaid medical care insurance regardless of age or the condition of their health.

In addition, there are opportunities for persons over 65 to obtain insurance protection through such plans as Continental Casuality's 65-Plus Plan, the Senior Security Plan of Mutual of Omaha, the 65/1 Plan of Firemen's Fund, and the like.

In view of this record, it is difficult to see the basis on which claims are made that privately purchased health insurance is of little or