limited to $25. Allowances for surgery are made pursuant to a schedule with a $150 maximum.

Under this plan 22,648 aged retired rail workers subscribed for this protection and of this number, 11,486 included their dependents in the coverage. There are 10,796 additional wives and/or widows covered on a dependent only basis. This coverage for aged retired employees and their aged dependents or survivors totals only 56,415.

The number participating in relation to the total eligible group is too small to achieve results that can be regarded as real solution to the problem. Perhaps there is a very high degree of adverse selection. Perhaps the nonparticipating eligibles feel that their income is not sufficient to afford any insurance premium payments and that they must therefore run the risk of incurring expenses and hope that this does not happen. Or perhaps they consider the benefits available relative to the premium rates inadequate to give them their money's worth. Whatever the reason, it is apparent that our intensive efforts under these circumstances have not succeeded in developing needed hospital, surgical and medical insurance benefits for retired employees and their dependents. Accordingly, we believe that it is readily apparent from an examination of these premium rates and benefit limitations that some better method of providing hospital, surgical and medical benefits for retired employees must be found.

WHAT TITLE III OF BILL H.R. 4222 WOULD PROVIDE IN THE WAY OF NEEDED HOSPITAL AND RELATED BENEFITS FOR RAILROAD EMPLOYEES AND THEIR DEPENDENTS, AGE 65 AND OVER

Title III of bill H.R. 4222 would, by amendments to the Railroad Retirement Act, extend to aged railroad employees and certain of their dependents the same rights (subject to the same conditions and qualifications) to health insurance benefits as are provided by title I of the bill to eligible social security beneficiaries.

More specifically, the benefits of the bill would be extended to every individual, age 65 or over, who, as an "employee" as defined in the Railroad Retirement Act, or as the spouse of such an "employee," or the survivor of such an employee, is eligible to receive an annuity (or "pension") under the Railroad Retirement Act. Also covered would be any person, age 65 or over, whose relationship to a railroad employee is such that it has been or would be taken into account in calculating a minimum annuity under section 3(e) of the Railroad Retirement Act (which is in the nature of an overall family minimum provision). This latter provision would in general mean coverage of a deceased employee's parents in some cases.

Under title III of the bill these persons would have precisely the same rights to health insurance benefits as eligible social security beneficiaries would have under title I, except that in addition to health services furnished in the United States, services furnished in Canada would also be covered under title III.

As you may know, employment of certain Canadian citizens by U.S. railroads is employment subject to the Railroad Retirement Act and these Canadians become eligible under our system to all benefits available to other railroad employees. The amount of payments for health services furnished in Canada, however, would be reduced under this bill by the amount payable for like services furnished pur

suant to law in effect in the place in Canada where such services are provided.

The Railroad Retirement Board would administer the health benefits program for the railroad people and in so doing would be subject to the same provisions of title I of this bill under which the Secretary of Health, Education, and Welfare could act, and would, in general, have the same authority to determine the rights of railroad employees, annuitants, and their specified dependents, to the health benefits provided for by the bill, that the Secretary would have with respect to the social security beneficiaries. However, the direction to the Secretary to consult with the Health Insurance Benefits Advisory Council respecting the determination by the Secretary of eligibility requirements and standards for hospitals and other providers of service, and other provisions with respect to the Health Insurance Benefits Advisory Council, would not apply with respect to the Board.

Payments under the bill with respect to railroad people would be made from the railroad retirement account. The bill would make it the duty of the Railroad Retirement Board and of the Secretary to arrange their respective administrative procedures so as to avoid duplication and prevent any individual from being paid for the same health service under both the railroad retirement and social security systems. Maximums prescribed by the bill-90 days of inpatient hospital services, 180 days of skilled nursing home services, 150 units (1 day of hospital inpatient care or 2 days of skilled nursing home care); and no more than 240 home health care visits-would be applicable to services under either or both acts for any benefit period.

The financial interchange provisions of section 5(k) (2) of the Railroad Retirement Act would be amended to provide for their application to the new health insurance programs. These are the provisions under which the railroad retirement system is, in effect, reinsured under the social security system, in the sense that financial adjustments are regularly made between the two systems to place the social security system funds in the same position they would be if service under the Railroad Retirement Act were included in the term "employment" as defined in the Social Security Act and in the Federal Insurance Contributions Act.

The tax rates on employers and employees would be increased under the Railroad Retirement Tax Act by the number of percentage points that the rates of taxes imposed with respect to employers and employees under the Social Security Act are increased with respect to wages for purposes of title I of the bill. (The tax rates on employee representatives would be increased under the Railroad Retirement Tax Act similarly but by double the number of such percentage points, since employee representatives pay taxes at double the rates that are imposed on employees.) These tax increases under the Railroad Retirement Tax Act would be limited, however, to compensate for services rendered before January 1, 1965, since that tax act now provides for automatic railroad retirement tax increases on compensation for services after December 31, 1964, related to social security tax increases after 1956, so as automatically to include the increases required to support the benefits provided for by this bill after that date. However, although the bill would increase the wage base under the social security system from $4,800 to $5,000, both for purposes of taxes and benefit computation, no change would be made in the com

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pensation base under the railroad retirement system which would remain at $400 per month as at present. It is believed on the basis of cost studies that an increase in the base under the railroad retirement system would not be required by passage of this bill at the present time.

In the light of the foregoing, the railway employees and their unions are strongly convinced of the need for the program the bill would provide. We believe the program offers the best practical method of providing the aged and their dependents with protection against the calamities of ill health. We therefore urge the enactment of H.R. 4222 with the inclusion of title III to cover railroad employes.

Mr. Chairman and members of the committee, many thanks for your courtesy and the opportunity to come and appear before this committee.

On my way down here I was reminiscing a little and I was here before this honorable committee the last time in 1934, so I have not troubled you very much in that long span of time and that is when we got the railroad retirement system.

The CHAIRMAN. Mr. Harrison, I apologize for not being able to be here when you opened your statement so I could then have welcomed you to the committee.

We have known each other for a number of years and I know that you are very highly respected by all of us, and you certainly are one of the most respected men in your field of endeavor. It is always a pleasure to have you visit us.

We hope your next appearance before this committee will not be as long as your last.

Mr. HARRISON. That is very kind of you, Mr. Chairman. I appreciate those remarks, and again many thanks.

The CHAIRMAN. We might say for the record the fact that you have not made an appearance before this committee should not be taken to mean that you have not been diligently keeping up with what the committee has been doing, as an effective railroadman of the country. You have followed the activity of this committee even though you have not been here personally.

Mr. ULLMAN. I would like to point out that Mr. Harrison presented some very valuable statistics, in my opinion, with respect to the private insurance plan for the retired railroad workers and their families.

As I understand it you gave, of course, the premium costs, and so on, and you said you have coverage and you were able to get coverage on 56,415 out of the approximately 672,000; is that correct?

Mr. HARRISON. Retired employees and their aged dependents. We were able to get 56,000 after 5 or 6 years of effort to subscribe on an individual premium payment basis for limited private insurance benefits.

Mr. ULLMAN. And the cost for both employees and dependents was a little over $9 a month or for individual employees $4.40 a month? Mr. HARRISON. That is correct.

Mr. ULLMAN. And with benefits up to $8 a day with a maximum of $800 with some slight additional costs?

Mr. HARRISON. That is correct.

Mr. ULLMAN. Your conclusion was that hard as you have tried and as good as this policy was, and I assume it was the best the private industry could turn out, it still does not do the job and you do not see how it can do the job.

Mr. HARRISON. It is our considered judgment after many years in this field of social insurance that the aged railroad worker and his aged dependents are in no position to individually protect against the calamities of illness during that period of life, and they do not have the resources personally to buy adequate insurance for the simple reason that many of them have very meager means except their monthly annuity that they get out of the railroad retirement system, and we have to find a better way of spreading the cost and making at least reasonably adequate services in this particular area of hospital, nursing home, and home nursing services available to these elderly citizens.

Mr. ULLMAN. You have concluded also that the best way to manage this is through paid up policies whereby the workers can pay the premiums as they are working?

Mr. HARRISON. Yes. While the person is working he can contribute a small amount of his wages, as proposed under this bill one quarter, which would be $13 a year. He can pay for that while he is active making wages and then be insured when he reaches the age of 65 when his income is lost from wages, generally speaking, and he is then enjoying his annuity, as meager as it is.

Mr. ULLMAN. Are you satisfied that he is willing to make that payment for the benefits that will accrue in the future?

Mr. HARRISON. We have no question about it. I suppose railroad employees are rather an unusual group in this respect. We were pioneers in the industry and pension field. Our experience goes back almost 100 years in the industrial pension field and railroad workers by hereditary instinct, I suppose, one from the other over the century, have always striven for pensions and were willing to pay for them as they worked, and they have been very, very active in providing themselves while they have been at work and while they are at work with adequate hospital, surgical, and medical care insurance. Right now we have a nationwide insurance policy that covers substantially all of the railroad workers, and we pay $21.01 a month for every employee for those hospital, surgical, and medical care benefits. But when the employee retires, he cannot continue that insurance because that rate would not cover him to start with and the industry under collective bargaining absolutely refuses to extend those benefits to the retired employees. That is why we sought a separate policy for the retired employee, and he pays the premium for it.

Mr. ULLMAN. Thank you, Mr. Harrison. Your testimony has been very valuable.

The CHAIRMAN. Are there any further questions of Mr. Harrison? Again we thank you for bringing to this committee a discussion of your views.

Dr. Bates, our colleague on the committee, Mr. Harrison, hoped he could be here to introduce you to the committee but he has been unavoidably detained on other matters and asked that I express his regrets at his inability to be here.

Dr. BATES. I understand he is ill.

STATEMENT OF DR. HARRY C. BATES, JR., PAST PRESIDENT AND MEMBER COMMITTEE ON THE AGING AND CHRONICALLY ILL, MEDICAL SOCIETY OF VIRGINIA

Dr. BATES. Mr. Chairman, and members of the committee, I am Dr. Harry C. Bates, Jr., a practicing physician from Arlington, Va., and a member of the Committee on Aging and Chronically Ill of the Medical Society of Virginia.

The Medical Society of Virginia, which I had the honor of serving as president in 1957-58, is a professional organization dedicated to the promotion of the science and art of medicine, the protection of public health, and the betterment of the medical profession. Its membership numbers 3,030 physicians-approximately 85 percent of all doctors actively practicing medicine in the State. I am speaking for that organization.

For a long time the society has been intensely interested in the overall question of health care of the aged, and has sought to make sure that Virginia's elder citizens receive adequate medical care. I can appreciate the tremendous task confronting this committee and realize that time is a most important factor in these hearings. For this reason, I shall mention only a few of the society's activities having a direct bearing on the matter at hand.

The Medical Society of Virginia has, for many years, had a committee on the aging and chronically ill. This committee has taken a long look at matters concerning the health of Virginia's aged population, and has made its thoughts known to the State department of health and the Governor's committee on aging.

The society also has a special advisory committee to the department of public welfare, and Virginia's proposed plan to implement provisions of the Kerr-Mills legislation was drawn after a number of meetings between the committee and welfare department officials. Such action is typical of the cooperative approach we use in Virginia.

Although two technicalities in Virginia's law have prevented implementation of Kerr-Mills provisions until the general assembly can pass enabling legislation, Virginia has still been able to take care of its own. Fortunately, we already have a program which provides the mechanism for solving most of the medical care problems of our aged. In 1946, a far-sighted general assembly passed the State and local hospitalization program which was to encourage counties and cities to provide hospitalization for indigent and medically indigent persons. It is administered locally under minimum State supervision.

Each locality determines who is eligible for hospitalization under this program and thus keeps the important element of local control in effect. At the present time, some 115 general hospitals in Virginia and its bordering States participate in the program. The choice of the hospital rests with the localities, which negotiate agreements for care on the basis of flat, all-inclusive per diem cost within the maximum established by the State board of welfare.

During fiscal year 1939 60, 18,573 patients were hospitalized under this program. This represents a total number of 144.989 hospital days and a total cost of $2,342,096,

I should like to emphasize that this program is designed to take care of all who need care, and not just those over 65. Most physicians do not fool that those over 63 should be made a separate group. While