The CHAIRMAN. Doctor, we thank you, sir, for your patience in staying with us so long to deliver this statement to us.

We know you have had some unusual experiences in the State of Colorado, that is, unusual in that all States have not had the same experiences with the use of Blue Cross and Blue Shield.

To the extent that you have interest in some of the welfare programs that have been in existence for a long time, is it planned, or is the State now utilizing this same arrangement through Blue Cross

and Blue Shield with respect to those that may be assisted under the legislation of last year?

Dr. HENDRYSON. It can work that way; yes, sir.

The CHAIRMAN. Is it the thought to make it work that way in Colorado?

Dr. HENDRYSON. That would be our hope.

The CHAIRMAN. It has not yet been implemented?

Dr. HENDRYSON. It has not yet been accomplished.

The CHAIRMAN. Has it ever been attempted to be implemented in Colorado?

Dr. HENDRYSON. The State legislature did not take action. Nothing was done to implement it. The State society has prepared and filed a brief before the State attorney general asking that the moneys that are now coming into the State be assigned to our old-age pension health and medical care program. And he has still not rendered a decision in that regard.

The CHAIRMAN. Actually, the program, as I understand it, in Colorado, works now, for OAA, through Blue Cross and Blue Shield. Dr. HENDRYSON. Essentially that is true; yes, sir.

The CHAIRMAN. And is a premium paid by the State with Federal funds being used?

Dr. HENDRYSON. The premium is paid by the State from this $10 million fund that was originally created by the legislature.

The CHAIRMAN. Was that just State money?

Dr. HENDRYSON. That was purely State money.

The CHAIRMAN. I see. Does it work satisfactorily in your State, in your opinion? This arrangement?

Dr. HENDRYSON. Yes, sir. I think it does. Now, it is a matter of course that special contracts had to be written. In the first place, the Blue Cross portion of the program had to be enlarged. There had to be more benefits added. And the actual figure that was arrived at for the cost of the Blue Cross insurance turned out to be a figure of cost plus a given formula.

From the standpoint of the Blue Shield side, the physicians were willing to write a service contract that was much less than the preferred plan under the existing Blue Shield setup in Colorado. Something like, I think, less than 40 percent of the average billings through the Blue Shield mechanism.

There have also been some other additional benefits that have been incorporated into the plan in the past 3 to 4 years. Most recent was the inclusion of physicians' services in nursing homes at a minimum fee.

Now, this fee can go from $2 to $5 a call, depending upon the need, the hour, the night, and how many calls a physician should happen to make in one particular nursing home. In other words, if he sees three people in this nursing home, he gets $2 for each visit.

Transportation is vital in our area, as you know. We are a mountainous State, and geographically many of our people live long miles away from the medical centers where they go for care. This is provided through the mechanism of the State welfare department paying the bill.

Nursing-home costs are paid, with the State welfare department acting as a vendor.

The class of patients has been divided roughly into four categories, depending upon the amount of nursing care that is actually needed. Now, they receive from the State, under the old-age pension, $108 a month. And when they go into the nursing homes for care, they contribute $100 toward the cost of their nursing-home care.

Depending upon whether they are a class 1, 2, 3, or 4 pensioner from the point of view of their nursing need, the State then supplements the total cost of what it costs that patient to remain in the nursing home. The maximum supplemental cost can be as high as $95 a month.

The CHAIRMAN. But in Blue Cross, in Colorado, contact is not even by the State with the hospital; it is by Blue Cross, is it not?

Dr. HENDRYSON. It is through Blue Cross, and Blue Cross is paid an administrative fee.

The CHAIRMAN. Can the person in the hospital tell the difference between a person who has Blue Cross through the department of public welfare and who might have it on their own?

Dr. HENDRYSON. No, sir. And the interesting thing to me is, in caring for a lot of these people, that I am never too sure of which patients of mine are coming under this program and which patients are carrying their own Blue Cross-Blue Shield. And the patients like this. The pensioners themselves like it. And it is true that there is a means test involved, but this certainly has been no problem in Colorado, and I think that the recipients themselves certainly have no feeling of pauperism or as though they were being looked down on.

The CHAIRMAN. I have always had the hope that more States would utilize the arrangement that you have in Colorado, if it is working satisfactorily, as I understand it is, with respect to these people; so that when they went to the hospital, they might have the same feeling about it as you or I would going there under the Blue Cross arrangement that we pay for.

I think your State is to be congratulated on the use of Blue Cross and Blue Shield in this area, and it could be used with respect to the AMA program as well, I would think.

Dr. HENDRYSON. Yes, that would complement and run in conjunction with the existing program, and we feel honestly that would take care of our need.

The CHAIRMAN. Nobody in the hospital would know whether a person had been subjected to a means test or not.

Dr. HENDRYSON. That is the point.

The CHAIRMAN. Thank you again, Doctor.
Any questions?

Mr. Alger?

Mr. ALGER. Dr. Hendryson, I do not want to let the opportunity pass in complimenting you on your statement. The five points of experience you feel Colorado would demonstrate for our consideration are these: First, you can hardly anticipate the cost for the future, because it is ever increasing. Second, this might very well jeopardize the very solvency of the present social security system. Third, that the means test or eligibility requirements, as you have said, are not particularly approved of by the people themselves. Fourth, you must keep strong local control, rather than Federal regulations. And fifth, you do believe that there has not got to be free choice of hospitals in potential.

Then you point out criticisms of 4222 as not providing care for the groups that need them. The expense is staggering, and almost open end, without knowing how much it would be, and finally, this will lead to Federal control, because of the contractual arrangements.

Am I generally correct?

Dr. HENDRYSON. Yes, sir.

Mr. ALGER. Then this is my one question. What has been the use of facilities since the program has been placed into effect, as compared with the hospital use and other facilities prior to that? Has it jumped up tremendously?

Dr. HENDRYSON. Yes, sir. It has jumped by quite a good bit.

Mr. ALGER. Have you any figures to show? Unless I do not read your chart properly, do you have such figures? Or could you get them for this record?

Dr. HENDRYSON. Yes, we do have such figures, and I could provide them for the record.

Mr. ALGER. You see what I am getting at? And I would like your comment, too, as to whether you think the increased use of facilities. is because the people were not getting the medical care, or whether they excessively used it when it was available, because of whatever reason you care to recite, loneliness or what-have-you.

Dr. HENDRYSON. Well, I know that there are a certain percentage of the cases of overutilization, or so-called overutilization, that can be assigned to loneliness, to wanting to be in the hospital, and all the rest of it. The charge has also been made that this is a very convenient way for physicians to practice medicine; just put them in the hospital and you do not have to make a house call.

But actually, in analyzing this thing-and we have been looking at it very carefully in this past 6 months-the overutilization has come about for several reasons. One is that at the inception of the program there were great numbers of our older people who needed medical care, and there were no specifics set down as to what the nature of their illness should have to be before they were hospitalized.

Now, I do not want to keep you, but I think this is a typical example. When I was a resident and an interne, some 25 to 30 years ago in Colorado, it was not uncommon for us to see at the Colorado General Hospital an old mountaineer who would come into the hospital carrying a catheter in his pocket, because he could not void, and he had been catheterizing himself for a long period of time.

Now, with the inception of this program, I think there was much utilization of the program initially to take care of just this sort of

case.

Now, to be sure, that is not a medical emergency. And yet, on the other hand, from a humanitarian point of view, from the standpoint of the practice of good medicine, this old mountaineer should have had his prostate operated on.

There are many areas in our State where the older people cannot get the specialized type of treatment that they can in the medical centers. For example, I saw an old woman before coming on here who lives high in the mountain country, who had had a fractured hip. Now, she was walking on crutches. There was no facility available in her area for physiotherapy.

Now, again, this is not a medical emergency; but at the same time, by putting her into the hospital and treating her regularly with

physiotherapy, we can rehabilitate her so that she will be off crutches, will not be in a wheelchair, and can go back and live in her own community.

Now, these are some of the things that have actually increased this utilization rate, which is very, very high.

There is one other factor in the utilization, which I am sure you gentlemen recognize, and that is the fact that there is a growing tendency on the part of families to not accept their responsibility in the care of their aged family members. And one of the great difficulties that we have in the program is not so much trying to decide who needs the care, as it is the frequency with which we are faced with the problem of trying to get some poor old soul out of the hospital into some place where he can be adequately looked out for, because his family has just refused to accept the responsibility of taking him back into the home. Now, this has increased utilization in terms of total hospital days.

However, we still think the program is good. We think it is workable. But we recognize that with ever-increasing costs and hospital costs have risen about 10 percent a year during the whole operation of this program-60 to 70 percent of the cost of this hospital dollar is due to the increasing cost of labor. We are not against that, but it is a fact.

So that we feel that the initial mistake was one that was honestly made. We were dealing with unknowns. Everybody thought $10 million would buy so much medical care. Well, it does not in this market.

That is about the size of it.

The CHAIRMAN. Thank you very much for your interesting discussion of the Colorado situation.

That completes the calendar for today.

Mr. King?

Mr. KING. In the course of testimony from the AMA, Dr. Ernest B. Howard cited Dr. Howard Rusk as an expert on rehabilitation. Dr. Howard failed to mention that Dr. Rusk had endorsed the principle of financing health benefits for the aged through social security. I should like to insert for the record Dr. Rusk's statement on this subject.

The CHAIRMAN. Without objection, it will be included at this point in the record.

(The statement referred to follows:)

[From the New York Times, Feb. 12, 1961]

ISSUES ON HEALTH-I-MEDICAL CARE PLAN FOR THE AGED STIRS DISAGREEMENT ON WAY TO FINANCE IT

(By Howard A. Rusk, M.D.)

In his special message to Congress on Thursday on health and hospital care, President Kennedy summarized in the first sentence his philosophy on the Government's role in health.

He said, "The health of our Nation is a key to its future-to its economic vitality, to the morale and efficiency of its citizens, to our success in achieving our own goals, and demonstrating to others the benefits of a free society."

Under six major headings, the President made a series of specific recommendations, all of which would carry out pledges he made directly or indirectly during his campaign.