Committee. It represents a modified version of the Foran bill that the previous Congress rejected. The medical profession, allied health and business groups, and others have lined up against the social security plan, and urged instead rapid implementation of the Kerr-Mills law providing Federal and State grants to aid those aged who need assistance in meeting health care costs. The purpose of this report is to present the major arguments advanced in favor of the social security approach, some answers to these arguments, and some other objections to its use. 1. The most common argument is that the majority of the aged are in need of medical care and are financially unable to meet the cost. This attitude is indicated by the wide publication of a statement to the effect that in 1957 "threefifths of the people 65 and over had less than $1,000 in money income." This statement was contained in a report to the House Committee on Ways and Means by the Secretary of Health, Education, and Welfare in 1959. In effect, this statement means that 9 million of our 15 million people over 65 have incomes of less than $1,000. Yet, there are only 2.5 million people on the old-age assistance rolls. Obviously, in computing this statistic, nonworking wives and parents were included. Suppose we took a statistical sample of 100 executives who earn $30,000 a year and their wives who had no income. The results of such a survey would reveal that half the people studied had incomes of less than $1,000. The secretary's report points out that the median total income of couples receiving social security benefits was $183 a month. It also points out that the average retired couple had a net worth of $9,620 and that 75 percent of OASDI beneficiary couples own their own homes, with a median equity of $8,360. It is reported that 87 percent of these homes are mortgage free. These figures are 4 years old and the economic status of the aged has improved and will continue to improve. Another statement used to indicate the supposedly poor economic state of the aged is that the current average payment under social security is $74. This overlooks several facts: (a) One and a half million of our aged are now receiving cash benefits from corporate pension plans. In the future, the 19 million now covered by such plans will receive benefits. (b) One million persons over 65 receive veterans' pensions as well as social security benefits. This number will undoubtedly increase in the future. (c) In January 1961, almost 5 million of our aged were still employed or were the wives of workers. Their income is relatively the same as other workers. Some of these are receiving social security benefits. 2. In his health message, President Kennedy stated that "one out of five aged couples drawing social security benefits must go to the hospital each year. Half of those going to hospitals incur bills in excess of $700 a year.” Let's look closely at this. In 1960 there were 11 million individuals over 65 receiving social security benefits. This means that 1.1 million of them had bills over $700. No mention is made of how these bills were paid. No mention is made of what charges are included in the bills. Would the services be covered by the President's proposal? Obviously, the physicians' services would not. It may be remembered that during the campaign Mr. Kennedy used a 5-minute tape on television portraying a retired social security beneficiary who had broken his hip. This accident resulted in medical bills of approximately $620, apparently paid by the beneficiary. Subsequently, it was revealed that Blue Cross and Blue Shield paid all but about $150 of the cost. It would have paid a larger percentage, but the patient had requested more elaborate accommodations than those authorized in the contract. No mention of this insurance was made in the tape. The point to be remembered is that approximately 8 million of our aged have health insurance. In any event, does the fact that one-tenth of our aged beneficiaries may be having difficulty justify the establishment of a program for all of our aged beneficiaries? A more logical approach would be to care for those who need help. This is precisely what the Kerr-Mills law will do. 3. A frequently mentioned objection to the Kerr-Mills law is that it contains a "degrading means test." This is pure propaganda. There is nothing degrading about it. The applicant sees only one social worker, and Federal law provides criminal penalties for the publication of any information about applicants. Any person who is down on his luck or in times of stress should have the right to expect help from his community. The purpose of the "means test" is to protect the taxpayers' money by assuring that it will be spent only for those who need help. It is used in most Federal-State programs, including the public housing programs. 4. A further argument against the Kerr-Mills system is that States have not accepted the plan. This charge was first raised when most of the legislatures were not in session. As of June 1961, 21 States and territories have passed laws or have the plan in operation. Eighteen States have legislation in process. Of the remaining States, the legislatures of 2 will not meet until 1962, 7 have adjourned without taking action, and 4 have the program under consideration. If medicine and its allies will rise to the challenge, a majority of those who need care will be getting it long before the proposed effective date of the Kennedy bill. THE BASIC OBJECTION 5. The medical profession's basic objection to the social security approach is that it will lead to controlled medicine with its accompanying loss of freedoms and deterioration of medical care. But how will the Kennedy bill lead to controlled medicine, since it applies only to the aged, and the President has stated that it is not socialized medicine? Mr. Kennedy may intend it to apply only to the aged, but the major proponent does not. Nelson Cruikshank, head of the AFL-CIO's social security department, informed the House Ways and Means Committee that his organization still endorses compulsory health insurance for all. Even if the President does not intend to expand the program, how long will it be before the Congress decides all social security beneficiaries should be entitled to benefits? How long will it take Congress to accept the logic of providing the care for those who are paying for the program? At such a time, this country will have true socialized medicine. This may seem remote, but as the President has said, his bill is "just a beginning." 6. The Kennedy bill will not provide care for one quarter of our aged, approximately 4 million people. Further, it will not provide, in most instances, care where the care is needed: namely, among the indigent and the near-indigent. Of the 22 million persons receiving old-age assistance, only 600,000 would receive medical benefits under the social security approach-and in some cases not as extensive medical care benefits as they currently receive under FederalState programs. On the other hand, persons receiving social security retirement benefits who are in need could receive benefits under the Kerr-Mills law. 7. The social security approach will become more expensive as the number of the aged increases, even though the proportion of needy aged will be decreasing. It is estimated that there will be 20 million people over 65 in 1970, 90 percent of whom will be covered by social security. The percentage of persons over 65 receiving old-age assistance (22 percent in 1950) dropped to 15 percent in 1959. By 1970, it is expected that this percentage will be 11. 8. The social security approach is unnecessary. Currently, about 50 percent of those over 65, approximately 8 million persons, have some form of health insurance. The insurance industry estimates that 90 percent of the aged wanting coverage will have it by 1970. Until that time, those who are in need and who cannot afford private health insurance can receive care under the KerrMills law, through veterans' medical care programs, or medical care programs for retired military personnel and their dependents. 9. The social security approach is unfair in that it places the burden of meeting the cost of the program only on low-income workers and with payments based on gross income. The tax increase will not only take money from these workers but will cause an equivalent increase in the cost of the goods he must purchase. Senator Kerr has estimated that 40 percent of taxable income in the United States is not subject to the social security tax. If medical care for the aged is a national problem, it should be financed from general revenues as provided under Kerr-Mills. 10. The social security approach to medical care for the aged would lead to overcrowding of existing facilities. A 1957 report by the Blue Cross commission indicated that utilization of hospitals by Americans over 65 under Blue Cross plans was 2.5 days per year. On the other hand, in Saskatchewan, Canada, which has "free" medical care, utilization by the same age group averages more than twice as much, or 7 days per year. The reason ascribed is that the Saskatche wan plan is oriented toward institutional care. The Kennedy proposal also is oriented toward institutional care. Neither usual physician services nor out-of-hospital drugs are authorized. On the other hand, the Kerr-Mills law authorizes financing of complete medical care without limitation. 12. The social security approach would call for new Federal administrative machinery through which agreements to provide services would have to be made with 6,000 hospitals, 25,000 nursing homes, 900 visiting nurses' associations, and, if physicians' services are later included, 208,000 practicing physicians. The Kerr-Mills law, on the other hand, utilizes the already existing State public assistance mechanisms. WOULD THE GENERAL TREASURY BE OPENED UP? 13. The taxes imposed by the Kennedy bill would not be adequate to meet the cost of the program. The tax-rate increase imposed by this bill can be expected to bring in a billion dollars annually. According to a 1958 estimate of the Health Insurance Association of America, a program of 60 days of hospitalization alone for retired beneficiaries would have cost $1,320 million in 1959. Nursing-home benefits would have cost $514 million. The inadequacy of the tax-rate increase would become more apparent as the number of social security beneficiaries increases. In an effort to protect the social security trust fund, the bill recommends the establishment of a special account for medical care under social security. If, as indicated previously, the tax receipts to support this program are inadequate, what will happen to the health benefits program? Would benefits be reduced, or would the trust fund or the General Treasury be opened up to meet the additional future costs? Mr. ULLMAN. I would ask permission, Mr. Chairman, to extend the analysis of some of the figures that were used following the insertion of the article. The CHAIRMAN. That will be done. Mr. Alger will inquire. Mr. ALGER. Mr. Chairman, with regard to the remarks just made, I have in my hand here statistics given us yesterday by Mr. William O. LaMotte, Jr., and are you acquainted with those statistics? Would you agree with those statistics as being generally accurate as you see the figures? Dr. LARSON. They were the figures from Delaware? I believe they were. Mr. ALGER. Yes. Dr. LARSON. Yes, I have seen them, and I have every reason to believe that they are accurate. Mr. ALGER. Then I submit those to my colleague, and he might want to see those statistics. I do have several questions and one or two observations. First of all, I am impressed, no matter what our differing viewpoints are, that what we are really fighting today is ignorance. I feel statistics like these, or Mr. LaMotte's are important. I happen to agree with your opening statement and I simply want you to know it and I think Mr. King's statement was inaccurate and I have had the opportunity of reading through your statement and I think I can demonstrate Mr. King did not read it as thoroughly as he thought he did. Finally, I know your interest, like mine and everyone else's, is for the best possible medical care. I want to compliment you at the same time that I criticize vehemently Secretary Ribicoff's statement when he came before this committee, when he said it is a matter of 180,000 doctors versus 180 million people. I hate to dignify this remark but once an opponent, as that man obviously is of yours, makes that statement, you cannot wish away or pretend it wasn't made. Therefore, I think we have to carry the matter to him. I don't believe that is a correct statement. I believe that even those who believe the King bill is the answer would not own up to that kind of a statement. Doctors are not competing against our people. I think that is a shame and I am sorry it is in the record. I want to mention one other thing: I want to compliment you for the $657 million worth of physician free care extended to the people of this country last year. My question in that vein is, Do you have any way of computing what the local free care is beyond physicians' services in this country, and do you have any statistics in that field? Dr. LARSON. No. Mr. ALGER. This then brings me to the next observation: Neither does HEW. In my questions of them, and these are questions left unanswered, even though having these hearings for the second time, HEW cannot tell us nor can any one on this committee tell you or me what the total amount of care is available in the local communities that do not elect to have Federal aid. Now my State, the State of Texas and county of Dallas, in which I reside, does not have any Federal programs, so this is a great void in HEW's records. Since they do I suspect they then presume we don't have medical care for our needy. The fact is to the contrary, we do. So, I have to take issue with you and others on this committee who are for the Kerr-Mills bill. I still say what I said last year, and I am not asking you to join me, that I don't think that we need the Kerr-Mills bill. We did not then, because I think the local facilities and the existing law and private voluntary funds are sufficient and we are going to continue to improve. My State is not failing to act, nor is it failing to provide care just because HEW does not know about it. When I asked the Secretary of HEW for this information, to show you I cannot get the documentation I need, and you, too, are operating in ignorance for that same reason, he said "We don't have it." And I said "Can you get it?" And he said "We cannot unless we have some more staff." We did not want to add staff so we didn't get that information. Now, as to the language of the bill, I want to be sure that this committee knows, and that you know what is in the bill. I have read it a number of times, and I am sure every member of the committee has, but I want to ask you specifically and then ask you generally about it. What do you think about this prohibition against interference on page 5 of the bill, section 1601? Do you think it is contradictory to any other part of the bill? As we point out at some length in our statement, we think that is a good statement as far as it goes, but on line 23 of the same section that you are reading, there are some rather important words which say "except as otherwise specifically provided." Now, without delineating those exceptions, I would say that ther are at least 10 specific exceptions, which we believe would do th opposite of what this pronouncement says. Mr. ALGER. Would you care to list those now for the record? Mr. STETLER. I would be glad to list them in detail for the record and I mentioned some of them. Mr. ALGER. Could that be done? The CHAIRMAN. That will be done. (The data to be submitted follows:) Section 1601 under the heading "Prohibition Against Interference" pronounces that no Federal officer or employee shall exercise any supervision or control over the practice of medicine. However, throughout H.R. 4222, there can be found language which affects the practice of medicine and which indicates, in varying degrees, an immediate supervision and control of medical personnel and facilities. Examples follow: P. 6, lines 6–7--- P. 6, lines 22, 25; p. 7, line 6; p. 8, line 10; p. 9, line 21. Language indicating control; comment ** except as otherwise specifically provided, Comment: This section states a prohibition against Federal supervision or control over the practice of medicine. However, the "exception" above noted, can make available to the Secretary a means for supervising or controlling the administration of a hospital, facility or agency. * * from any provider of services with which an agreement is in effect under this title ***" Comment: This section is entitled "Free Choice by Patient." However, the patient's "free choice" is limited if, to avail himself of the benefits, he must choose a facility which has contracted with the Government. He further must choose a physician whose hospital has reached agreement with the Secretary. The direct effect of this provision is to control the patient's choice to freely select his doctor and his hospital. Where the patient's choice is regulated, the practice of medicine comes under the control of the regulator. "*** customarily furnished * * *" P. 7, line 4; p. 8, line 20; "*** By others under his arrangements with p. 9, lines 19, 22. P. 7, line 14.___. them ***" Comment: The items and services which may be provided are noted in section 1603. The providers of these services are similarly set forth, except that in the noted instances, the qualified list is extended to include those who may have an "arrangement" with the hospital or home health agency. While, seemingly only those specialties employed by the hospital (pathology, radiology, physiatry, and anesthesiology) are included under H.R. 4222, the control over these specialties could be extended since the way is open for other "arrangements" being made. These "arrangements" will of course be regulated by the Secretary. * under a teaching program approved by a recognized body approved for the purpose by the Secretary * Comment: It is apparent here that the ultimate control over hospital resident-teaching programs will rest with the Secretary. |