of prepayment through Blue Shield has been phenomenal. In 1941 there were only 370,000 members of Blue Shield plans throughout the country. Today, just 20 years later, membership has grown to more than 45 million people, about one-fourth of the total population. Furthermore, five out of every seven practicing physicians sponsor and participate in the Blue Shield plans.

Along with Blue Shield's rapid growth in membership there has been an improvement in the scope of benefits offered and the trend is to a continuing reform and extension of all types of benefits. This accelerating growth both as to numbers included and extent of benefits shows that the voluntary approach can do the job.

The present size of Blue Shield is impressive in an absolute sense but its significance is further enhanced by the fact that in the process of our growth and expansion we have concerned ourselves with the health care problems of the aged. The extent to which Blue Shield plans are already covering persons over 65 years of age is due largely to the universal practice of all plans which permits continuation of coverage by Blue Shield subscribers who have attained retirement age. In 1951, 5 percent of Blue Shield membership, or nearly 1 million persons, were 65 years of age or older. By 1959, this number had increased to more than 22 million persons and represented 6.4 percent of all Blue Shield membership. Our most recent study, completed in June 1961, shows that persons age 65 and over now account for 7.2 percent of our total members and number in excess of 34 million persons. Of particular interest in this regard is the fact that while total Blue Shield membership during the past 18 months increased about 7 percent (from 42,250,000 to 45,200,000), the number of persons over age 65 covered by Blue Shield increased 20 percentnearly 3 times the growth rate of all age groups combined.

Three years ago I reported to this committee on the beginning efforts of Blue Shield and their local medical societies to accelerate their efforts in this important area of coverage. At that time only four plans offered nongroup membership without age limit. Today, 51 of our 69 Blue Shield plans, with over 94 percent of the total U.S. Blue Shield membership, have undertaken nongroup coverage of persons over 65. In addition, there are 11 plans with approximately 5 percent of total Blue Shield membership that have programs in various stages of development. Only seven of our smallest plans with less than 2 percent of our total membership do not now have programs for the aged.

In addition to this progress in offering health coverage on an individual basis to those 65 and over, an even more significant development has been the increasing practice on the part of both local and national labor and management groups to negotiate into their health and welfare programs a provision for the continued coverage of retired employees under the same arrangements and conditions-that is, rates and benefits-established for active employees. This pattern has, as you know, been adopted by the Federal Government for its retiring employees. By this arrangement, the retired individual and the Federal Government each contribute to the cost of the most advanced medical care in history, using Blue Shield or other qualified prepayment mechanisms to level out the cost of individual experience. Just as the States and the Federal Government may match funds to provide medical care for the aged who are medically indigent, the

solvent individual and the employer, by matching funds in this manner, make possible the continuation of medical progress under the voluntary system.

I would like to insert at this point as an example several specific rates from the Federal employee program as the biggest prepayment health program at this time in existence to indicate what we mean by this matching of funds. For example, in the Government-wide indemnity program, an individual may pay $3.94 a month and have added to that $2.82 a month from the Federal Government for a total of $6.76. This individual after retirement pays the same rate for the same benefit. On the other hand, if he is already retired under the program recently provided for current retirees, which has to be for this single group as an isolated body, the Government gives $3 a month toward that individual's health care cost and he puts $9.50 a month with it for a total of $12.50 and the resulting program is less valuable to that employee because of the thing that Mr. Colman referred to and the point I would like to emphasize at this time, that as long as the aged are included in the total group their benefits are notably greater for the rate that they are charged. Most of these three and a quarter million that I spoke of in Blue Shield are at the regular rates in the regular program.

Our experience with those past 65 indicates that a significant portion of this segment of the population can and will provide for their medical needs through programs of their own choice. This fact coupled with the trend in industry and Government to continue retired employees as a part of the covered group leads us to the conclusion that the problem of providing health care for the aged is a diminishing one. I hasten to add that there are and always will be people of all ages who cannot provide the medical care they need. As to these it is obvious that their care must be a public charge. It seems illogical to us, however, to provide for the relatively few whose need is real by the costly and duplicative device proposed by H.R. 4222. Whatever action the Government may see fit to take in this respect should, in our judgment, take advantage of the very real contributions already made to the solution of the problem by the voluntary organizations. It should not, as the enactment of H.R. 4222 would surely do, inhibit the further growth and development of the voluntary plans. The trend by industry to provide health care coverage for retired employees could be stopped dead in its tracks if employers and employees are required to pay a tax to support a mandatory health program for those same retired employees.

I might insert here that we in Blue Shield agree completely with those leaders of labor who have for years supported the idea of a community rate for those of poor health prospects as well as for the better ones and that this has been the form of operation basically included in Blue Cross and Blue Shield to give us this position of having provided the service we have to the aged."

Furthermore, it is inevitable that if this bill is enacted it will be but the first step toward a comprehensive program of Federal health insurance. It will not be long before the Congress will be asked to round out the program by making provision for the payment of surgical-medical care for the aged. Then will come the argument that the program must be expanded to include those needy persons who,

by reason of age or otherwise, would not qualify under the provisions of this bill. All of these proposals will have some validity since, unfortunately, the poor and needy will always be with us. But the force of the arguments to support the proposal will be the greater by whatever degree the vitality of the voluntary system is sapped by ill-conceived Government intervention in the provision of health care.

I would like to emphasize at this point that we are not afraid of Government relations in themselves. The history of Blue Cross and Blue Shield is well known as one of cooperation in the efforts that have been well taken by Government and I refer again especially to the Federal employee-health-benefits program as a sharing type of operation that was worked out among all of the voluntary organizations for prepayment in cooperation with the Federal Government. The question in our mind is on the form of the operation that is proposed by which the Government assumes its proper responsibilities. We respect fully suggest that this committee direct its attention to how health care can be provided for those whose need is real in such a way that the voluntary system will be supported and advanced, not retarded. Some arrangement whereby voluntary organizations can be utilized by Government to provide health care for the needy might well be the answer. In our view some such arrangement would provide better health care for the needy and would do it more economically and efficiently than the present proposal.

You will notice I have not attempted to define the term "needy." Obviously need varies from complete need to no need at all and there is a point somewhere along this line at which the Government will draw the line unless it is to assume the full responsibility.

In drawing this line, the point of our whole argument is that the assistance can be graded-it is shown by the record it has been graded in other instances and we can preserve for any of those that we seek to serve in these matters the three proper sources of funds for their health care under prepayment: that provided by the patient himself to a reasonable extent; that provided by the mechanism of prepayment which under a community rating system is advantageous as shown; and that provided by public funds, government at any level to the proper extent.

Thank you, Mr. Chairman, for the opportunity to appear and express our views on this important subject.

The CHAIRMAN. Dr. Stubbs, we appreciate very much your bringing to us the views of the National Association of Blue Shield Plans. I apologize for having to leave the hearing room to take a telephone call.

Dr. STUBBS. I hope it was from a supporter.

The CHAIRMAN. It was from Arkansas. I hope so, myself.
Dr. STUBBS. I will have to go back and vote again.

The CHAIRMAN. Any questions of Dr. Stubbs?

Dr. Mulvey?

Dr. Mulvey, we are pleased to have you before the committee today representing the Governor of Rhode Island. If you will, for the purposes of our record, identify yourself by giving us your name and your address and the capacity in which you appear, we will be glad to recognize you.

STATEMENT OF DR. MARY C. MULVEY, ADMINISTRATOR, DIVISION ON AGING, EXECUTIVE DEPARTMENT, STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS

Dr. MULVEY. Thank you, Mr. Chairman.

I am Mary C. Mulvey, administrator, Division on Aging, Executive Department, State of Rhode Island.

The CHAIRMAN. Dr. Mulvey, we want to hear your statement, but, if you will pardon us, we will go to the House chamber and cast a vote on a bill that is pending over there. We will be back in about 15 minutes.

Just relax, and we will be back.

(Short recess.)

Mr. BURKE (presiding). You may proceed.

Dr. MULVEY. It gives me great pleasure to appear in support of H.R. 4222. I state the official position of His Excellency, John A. Notte, Jr., Governor of the State of Rhode Island, when I say that the Kennedy proposal represents a logical approach to financing special types of medical care for the elderly and deserves prompt

passage.

In the interests of time, I shall attempt to summarize my written statement. I ask respectfully that my full written statement be included in the written record.

Mr. BURKE. Without objection.

(Dr. Mulvey's prepared statement follows:)

STATEMENT IN SUPPORT OF HEALTH INSURANCE BENEFITS ACT OF 1961, BY DR. MARY C. MULVEY, ADMINISTRATOR. DIVISION ON AGING, EXECUTIVE DEPARTMENT, STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS

STATEMENT IN SUPPORT OF H.R. 4222

I am Mary C. Mulvey, administrator of the Division on Aging, Executive Department, State of Rhode Island. I was chairman of the Governor's committee on aging from my appointment in 1953 and worked on a voluntary basis in that capacity until March 1961 when I became administrator of the division on aging. This is an agency which my committee on aging was instrumental in having established through legislation. I was a member of the National Advisory Committee for the White House Conference on Aging, which was held in January 1961. I am a fellow of the National Gerontological Society and member of the council of that organization, immediate past president of the New England Gerontological Association, and member of the National Council on Aging. I hold a doctor of education degree from Harvard University and am an educator by profession. I have affiliations with many professional and other groups and organizations.

It gives me great pleasure to appear in support of H.R. 4222. I state the official position of the State of Rhode Island when I say that the Kennedy proposal represents a logical approach to financing special types of medical care for the elderly and deserves prompt passage.

THE OFFICIAL POSITION OF THE STATE OF RHODE ISLAND ON THE HEALTH INSURANCE BENEFITS ACT OF 1961

Rhode Island has a long and continued history of support of this kind of legislation. It began with the Honorable Aime J. Forand in 1938 when, as a member of the Rhode Island General Assembly, he introduced a resolution to memorialize Congress to extend social security benefits to include hospitalization for people 65 and over. Later as a U.S. Representative he carried the fight himself to Congress. The Forand bill quickly became a household term. We owe a debt

of gratitude to our retired Congressman for his courage in pursuing this course of action. We commend his successor, the junior Member of the House of Representatives, the Honorable Fernand St. Germain, for his loyalty to his predecessor by introducing legislation in the current session which is a facsimile of the original Forand bill (H.R. 4168). We thank our entire Rhode Island congressional delegation for their wholehearted support of the proposed legislation which would provide medical care for our older persons through the social security system.

Keen interest and activity by many others in Rhode Island has been evident for a long time with respect to legislation of the kind proposed in H.R. 4222. The Governor's Commission To Study Problems of the Aged, appointed in 1951 by the then Governor Dennis J. Roberts, made the recommendation that old-age and survivors insurance include automatic coverage of hospital expenses Old Age in Rhode Island, 1953). The permanent Governor's committee on aging, appointed by Governor Roberts in 1953, and established with statutory authorization, and of which I had the honor to be named chairman, caused resolutions to be passed periodically by the Rhode Island General Assembly to memorialize Congress to enact legislation which would extend social security benefits to cover hospital expenses. Again last year the Rhode Island report which was submitted to the Secretary of Health, Education, and Welfare in preparation for the White House Conference on Aging of January 1961 contained an endorsement of the principle of coverage of hospital expenses for the aged through the social security mechanism.

During the latter part of 1960, the Rhode Island Department of Social Welfare undertook to study the feasibility of implementing the provisions of the Medical Assistance Act, known as the Kerr-Mills bill, which makes possible joint FederalState medical assistance for so-called medically indigent elderly persons. The department concluded it was both administratively unfeasible as well as prohibitive costwise for the State and did not meet the basic need of all the aged for basic protection against the costs of medical care. The State Welfare Director, Mr. Albert P. Russo, therefore, endorsed wholeheartedly the AndersonKing bill as the most effective method of financing health care for the aged. He substantiates his position largely on the basis of the savings which the welfare department would realize.

His Excellency, John A. Notte, Jr., Governor of the State of Rhode Island and Providence Plantations, endorses the Health Insurance Benefits Act of 1961. "I believe", he states, "that passage of H.R. 4222 is of crucial importance not only because it is part of the President's proposed legislative program, but also because it will play a vital role in bringing the blessings of modern medical care within the reach of all our senior citizens, not only in Rhode Island but across the country. No longer is there any doubt about the fact that the medical needs of Americans in the over-65 bracket are two to three times as great as for the younger group, and that their health costs run considerably higher than for the general population. I have increasing concern about the special problems of our senior citizens, particularly about the double-headed problem of their higher than average health needs and their greatly reduced and, in most cases, fixed income with which to meet these health costs.

"I endorse the Anderson-King bill because it is administratively feasible, en titlement is a matter of right, and receipt of benefits requires neither the humiliation of the means test on the part of the individual, nor the cost involved in administering the means test program on the part of State government. It provides basic coverage for a balanced program of medical care, designed to provide all persons 65 and over who are beneficiaries of OASDI with basic pro@tection against the costs of inpatient hospital care and skilled nursing-home services. It also provides for the alternative of home health care and outpatient hospital diagnostic services, with prompt payment for all such services under the social security financing system. It is not socialized medicine. It does not interfere in any way with the patient's free choice of physicians, other health personnel, and/or facilities. It also is oriented toward preventive medicine.

"S. 909 and H.R. 4222, furthermore, incorporate a deductible feature which provides that the patient pay something for hospitalization and diagnostic, laboratory, and/or X-ray services. We feel that this is a 'middle of the road' approach, in that it still leaves some responsibility for payment for such care to the patient. It also tends to assure prudent fiscal policies and prudent use of entitlements by patients and their physicians."