Mr. KING. Would you tell us something about the position of the American Medical Association regarding provisions of cash benefits to the permanently and totally disabled under the old age and survivors disability insurance program?

According to the official proceedings of the house of delegates your organization declared in June 1956, that the extension of social security benefits to the disabled

constitutes a serious threat to American medicine. It is obviously one important step on the road to a system of complete Federal medical care.

In the same resolution, your organization stated that this program would involve "an incalculable cost to the public."

Now, in view of the fact that American medicine was not destroyed by the passage of this legislation in 1956, in view of the fact that the incalculable cost to the public which the AMA then foresaw has been so moderate that the Congress in 1960 found it possible to eliminate the age limitation without any increase in social security taxes, eliminate the age requirement altogether, do you think it would be justified in taking some of your cries of alarm about H.R. 4222 less seriously than you would want us to?

Dr. LARSON. Mr. King, I would like to have Dr. Howard answer that to clarify our position on that.

Dr. HOWARD. AMA took the position which you have quoted, that the addition of cash benefits for totally and permanently disabled persons would be followed by enormous pressure to liberalize that provision, to liberalize the definition of total, and permanent disability, to lower the age, to add other persons to the beneficiary structure, and eventually over a long period of time, to place the Federal Government in the position of considering seriously paying for the medical and other related services for these disabled persons.

It was the projection of possible Federal interventions beginning with a simple cash benefit to persons over 50 defined as totally and permanently disabled that the American Medical Association predicted. As a matter of fact, many of these predictions have already come true. The total and permanent disability cash benefit program under title II has already been significantly liberalized. It is also true, as you know, that many bills have been introduced, although not adopted, which would greatly liberalize the definition of disability, making it, in effect, a temporary disability program. Other bills have been introduced, again not, at this time, acted on favorably, that would add additional benefits by providing for the payment by the Social Security Administration of rehabilitation and related medical benefits for these disabled persons.

I think it can be shown rather easily in the history of social insurance programs in other countries that there are two roads to a compulsory total Federal medical care program for beneficiaries. One is the road of the King bill, which we are discussing this morning, and the other road is the road through the addition to the system of cash benefits for disabled persons. It is this long-term projection which we outlined in 1956 and which we still strongly believe.

Mr. KING. In spite of the facts to the contrary with respect to disability insurance, you still believe it was bad?

Dr. HOWARD. We do not believe that in 4 years it has sufficient experience on which to base this projection and this belief.

Mr. KING. Dr. Annis, you are a native of the State of Florida, are you not?

Dr. ANNIS. I am a native of the State of Michigan. I have lived in Florida, however, for 23 years.

Mr. KING. I understand a subcommittee of the Florida Legislature convened for the purpose of investigation of private health insurance plans. Do you know the motivation behind the creation of that com→mittee?

Dr. ANNIS. I know of no such committee, Mr. King.

Mr. KING. I am judging from a clipping I have. Apparently it is from the Tallahassee Herald.

Dr. ANNIS. The Tallahassee Democrat would be the newspaper there.

Mr. KING. And it states that the committee has been created for the purpose of investigating the inadequacy of private insurance, and it states that certain practices have been so flagrant and widespread that this committee was created for the purpose of investigating. I am going to insert that article in the record and it will be available to you, if you wish to comment on it later. (Article referred to follows:)

[From the Miami Herald, Feb. 21, 1961]

BITTER MOMENT-HIS HOSPITAL POLICY FAILED

A woman learns she has insurance in a company that has folded. A man discovers his hospitalization policy doesn't cover his operation. Why? What protection does the State offer to Floridians who buy their insurance in good faith? This is the third in a series.

(By Rick Tuttle, Herald staff writer)

TALLAHASSEE.-Stanley B. Wade went to the hospital convinced that his hospitalization policy would cover the cost of an operation.

But Wade was in for a bitter awakening. His insurance company rejected the claim.

The same shock that hit Wade has struck so many other Floridians that a legislative subcommittee is now investigating hospitalization insurance in Florida.

The subcommittee wants to know whether the laws should be changed to justify the confidence of people like Wade. And it especially wants to know whether insurance companies are canceling policies after the first claim is filed.

The subcommittee is headed by Representative Wilbur Boyd, of Manatee, who charges:

"A man and his wife can pay on a policy for years and the first time one of them has to go to a hospital, the company will cancel the policy."

There is talk of passing a law that would force health and accident companies to issue only noncancelable policies, a suggestion that has been repeatedly killed by State legislators all across the country for years.

Wade's case is one of 19 now being checked by Boyd's subcommittee.

His leg ached last February after he got lost on a hunting trip. It was the same pain he noticed while on long marches in the Army.

Wade, of New Port Richey, thought nothing more about it. In April he purchased a hospitalization policy.

Then in August the leg bothered him again and he went to his doctor. "Hardening of the arteries," said the physician, and Wade went to the hospital. "Wade had a preexisting condition," said his insurance company when the claim was filed. "His doctor said Wade first noticed the pain in February, before the policy was issued. We won't pay."

Wade's argument: "What if I had a headache in February and then it went away. In August I discover I have a brain tumor. Do you call that a preexisting condition, too?"

Another case under investigation:

Grover C. Luther of Everglades paid $500 in premiums on his loss-of-time accident policy in the past dozen years. His claims totaled less than $50.

But when Luther neared 65 the policy was canceled.

And he was even angrier when the company offered to sell him another policy at a higher rate.

The company knew that the older Luther became the more likely he was to use his policy. Its only alternative to cancellation was reinsuring him at a higher rate, his company said.

Let's take the case of Joe Doe, who signed up in a hospitalization program and 1 year later had a heart attack.

He never had heart trouble before but his doctor determines that Doe's heart was ailing for years, perhaps since birth. Can his insurance company reject the claim?

"Legally it can," said Frank Alexander, head of the health and accident division of the State insurance department. "But most companies would go ahead and pay it if their investigation proved Doe didn't know about the heart condition."

If Doe's policy is the kind most people have-renewable only if the company wants to-it might be canceled after the claim is paid. If it's not canceled, the company might ask Doe to accept a waiver of heart ailments in order to keep the policy for other illness.

Most persons have the cancelable policy because in theory it gives the most protection for the least money. The question under study is whether the protection is as real.

The other basic kind of policy-noncancelable-is high priced because the company can't drop the insured when he becomes a poor risk.

"It's a serious problem," Alexander said. "But here is what's at the bottom of it all: This is a social problem mixed with business. Everyone feels the old folks are entitled to health insurance. But at the same time you can't force a company to insure what it knows is a bad risk.

"If noncancelable policies were forced by law, these same old folks-and young and middle aged, too-couldn't afford the rates. The people we want to help would be denied protection."

Next: How the insurance department checks on a complaint and what surveys contend the cancelation rate is on hospitalization.

Dr. ANNIS. Thank you, Mr. King. I, too, shall look into the details behind it. I happen to be the chairman of the Legislative Committee of the Florida Medical Association and have considerable rapport with the members of the health committee of the senate and house of our legislature.

Last month I represented the Governor of Florida at the Little White House Conference. It is true that our insurance commissioner, Mr. Larson, is constantly on the alert in all fields of insurance for insurance coverage that is promised and then not delivered. On that basis, there is more or less a continuing investigation of insurance. It has been done in other fields, all insurance and the rest.

I will look into the matter also so that we can have factual material so that we also can be informed and participate. Usually, however, where it involves any broad segment of the population, we certainly would have some information.

Mr. KING. Very well; some questions have been suggested to me as being a pertinent line of inquiry. They are not necessarily of my creation because I do not have a background of training in medicine. It has been suggested that it is pertinent here to indicate that life expectancy in this and other countries reflects medical care. I think other factors may also enter in. Do you agree with that?

Dr. ANNIS. I would agree with that, Mr. King. Our life expectancy at 65 averages a little better than 15 more years.

Mr. KING. I have this information before me:

The life expectancy of persons 60 and over in the United States is less than that same age group in Canada, Ireland, Denmark, West Germany, Iceland, Israel, Japan, the Netherlands, Norway, and Sweden.

It also goes on to state:

Our infant mortality rate, considered by public health experts to be one of the key indexes to a nation's health status, is higher than that of Denmark, Finland, Norway, the Netherlands, Sweden, Switzerland, Australia, and New Zealand, England, and Wales. Sweden has a lower proportion of maternal deaths also than does the United States.

I do not know that that can be easily commented on. I felt that these facts were interesting.

Dr. ANNIS. Mr. King, may I comment?

Mr. KING. You may.

also be true and equally interesting to point out that Sweden and DenDr. ANNIS. I agree with you that is very interesting. It would mark have among the highest suicide rates in the world. What it means, we do not know, but it is true. One reason that life expectancy at 65 in this country is less than in those other countries is because so many of our people who live to be 65 would have died in their 40's and 50's in those countries, so that proportionately the total number of people we have who live to be 65 and 70, in any other country in the world would have died before they ever reached that age. Those hardy characters from hardy stock, and it is important to have a good grandparent as well as parents, in any country would live for long years. We have a number in this country who live over a hundred. But the point is that because of modern medicine, because of our tremendous advances, we now have people living on into 65 and then they will still average another 15 more years, that is if they learn how to cross the streets, because we kill over a hundred people a day on our highways in this country. All of these are included in the longevity expectancy of people over 65, so their percentage might be true, but we say we have so many more people living who anyplace else in the world would never see that 60th or 65th birthday to become a later statistic.

Mr. KING. That is the reason, Dr. Annis, that I prefaced my remarks.

With my limited knowledge, I realized that perhaps different factors could enter it. Not to be facetious about other nations, a friend of mine stated:

Well, they do not have television such as we have. Their traffic is not such as ours. A number of factors would tend to bring about content and better health in many countries than some of the things the average man in the street has to put up with in this country.

I do not know whether the television and the traffic conditions irritate people to the point that they leave us sooner than usual, but that was his view.

Dr. LARSON. Mr. King, may I make a comment on that?

Mr. KING. You may.

Dr. LARSON. Some years ago, Dr. Dickinson, an economist, made a study of this very subject and one of his observations that amused me very much, because I happen to come from the State in question, was that he was sure from his studies that the Swedes live longer in Minnesota than they do in Sweden.

Mr. KING. Your statement on page 79 in the third paragraph quotes AMA policy. The statement is to the effect that

Medical assistance for the aged (should) not be limited to the group within some fixed income-and-resources level, but should be based on the individual applicant's medical needs and his ability to pay for care without compromising those resources essential to his retaining self-supporting status after completion of treatment.

In medical assistance for the aged, any type of treatment or facility, medically necessary for the individual's care (should) be included within the possible range of assistance, but that aid (should) be provided in meeting only the costs of those services which are beyond the individual's means, rather than all treatment costs for each case.

The information we have received from Secretary Ribicoff on State laws indicated that the prevailing pattern is to set fixed income and resources levels. The Secretary's report likewise shows very strict limitations in most cases on types of treatment. Do you consider any of the State laws for medical assistance to the aged to come close to meeting the goals set forth in these policy statements?

Mr. STETLER. This statement by our house was based on some considerable study by our council on medical services and represents our views on the Kerr-Mills law and what it can potentially do. There are very few limits in that law as to what the States can do in its full implementation. As Dr. Larson pointed out in his opening remarks here this morning, some of the States have proceeded slowly because of the lack of experience in this field. We think this is a wise policy. In many of the States that have already implemented the MillsKerr bill they have already made amendments to these laws and have extended the provisions to give greater benefits. We believe that it is not an unwise course of action for these States to proceed with some caution. We hope that ultimately where it is needed, and in the States where they need it, they will have fuller implementation of this legislation.

This statement by our house represents the ideal. Now, in setting income-and-resource criteria for determining medical indigency, I am sure this is administratively one of the easier ways to proceed. It is understandable that a State would adopt that policy initially. We think as they gain more experience they will liberalize their State laws. We are encouraged, though, with the progress to date by the States that have had vision enough and have been active enough to implement this legislation.

Mr. KING. Is it a matter of vision entirely, Doctor? Is it not matter in many States of inability financially to do the things that even you men recommend be done?

Mr. STETLER. I am sure that that is a part of it. Experience is a part and, of course, a State legislature must consider the resources of the State, if they are fiscally responsible, and mold a program, an implementation of Kerr-Mills, in accordance with what they have and can logically spend or tax their people to spend for this program.

Mr. KING. Because it seems to me in most States indigency and other unfortunate factors have been in existence a long time. It just would seem to me that capable men and women would have today sufficient knowledge and experience to go ahead, if all other things were in order that are necessary to go along with going ahead. Mr. STETLER. There has been indigency, and there has been old-age assistance, and county programs of various types, but in this type a program the term "medically indigent" and the various ways

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