Thank you very much, Mr. Carroll.

Mr. ALGER. Mr. Chairman, I have no questions. I did want to comment on two things.

I appreciate your statement on page 4, where you express some concern about the unfunded obligations in the actuarial department of social security which has me very troubled. I believe some are afraid to question the program because we are so dependent on it for our older people.

I appreciate your mentioning that because I think some day we are going to have to study it more than we have.

Secondly, you mentioned, Mr. Carroll, on page 8 of your statement, an article from Nation's Business.

Do you have a copy of that article?

Mr. CARROLL. I don't have it with me, but we can produce it and put it in the record of this committee, if you would like to have it. Mr. ALGER. Would you please?

Mr. CARROLL. If perhaps my associate here has one with him, I will see that it is delivered this very hour.

Mr. ALGER. Thank you.

(The above-mentioned article is on p. 535.)

Mr. ALGER. Mr. Chairman, I ask unanimous consent with respect to the gentlemen to appear later on our list here today, Mr. Eldred Thomas, that I may be permitted to submit his statement in lieu of his appearing. He had to return.

The CHAIRMAN. Without objection that statement will appear in the record at the point in the record that we would otherwise have called him and since that matter has been raised, let me ask unanimous consent to place in the record at the point where Mr. Adams would have been called, a letter that I received from Mr. Adams with a table that he has submitted in lieu of his appearance.

Is there objection?

The Chairman hears none.

(The above-mentioned letter is on p. 1826.)

Mr. MACHROWICZ. In compliance with a telephone message I received today, I ask unanimous consent that Governor Swainson of Michigan, be permitted to put a statement in the record at the conclusion of the witnesses appearing today.

The CHAIRMAN. Without objection, your request is agreed to. (The statement referred to follows:)

STATEMENT IN SUPPORT OF H.R. 4222, SUBMITTED TO HOUSE COMMITTEE ON WAYS AND MEANS BY GOV. JOHN B. SWAINSON, OF MICHIGAN, IN BEHALF OF HIMSELF AND GOV. MICHAEL V. DISALLE, OF OHIO, Gov. OTTO KERNER, OF ILLINOIS, Gov. GAYLORD A. NELSON, OF WISCONSIN, AND GOV. MATTHEW E. WELSH, OF INDIANA This statement in support of H.R. 4222 is presented in behalf of the Governors of the five Great Lakes States-Illinois, Indiana, Michigan, Ohio, and Wisconsin. In these five States represented by the Governors who join in this statement live one-fifth of the Nation's citizens aged 65 and over. In these States, approximately one out of every six adults is a senior citizen, facing the hazardous risks of greater incidence of need for health care, at greater and greater costs to them, at a time when their retirement income is inadequate to meet such costs on a continuing basis.

We repeat the urgent request in the resolution passed by the majority of the 1960 Governors' conference for congressional passage of the necessary machinery to provide for the rational and dignified payment of basic health care for the aged through the social security system. Existing efforts to meet this growing

problem of senior citizens and their families such as old-age assistance programs, medical assistance for the aged, and private health insurance simply do not provide the answer.

While some sincere advocates of these three piecemeal approaches argue that we should be patient and give them a chance, we are forced to proclaim that medical care delayed is medical care denied. Moreover, such programs are not and cannot be adequately financed, through already near exhausted State tax sources or through premium payments by aged individuals.

Instead, we firmly believe in the system of meeting the hazards of old age through systematic contributions by employee and employer while the employee is in the labor force-not after he is retired. This is the workable and efficient machinery accepted by American society over the past quarter of a century. We deplore the destructive attacks on the social security system, by some powerful groups in their irrational opposition to utilizing the system for the purpose of financing adequate health care for the growing population of older men and

women.

There are three alternatives to dealing with the problem of medical aid to the aged. One is to establish an aid program through social security. The second is for a Federal-State program under old-age assistance and medical aid to the aged (Kerr-Mills). The third is for government to do nothing under the assumption that private insurance will solve the problems.

To determine which alternative is the most appropriate, four factors must be considered: the special health problems of the aged, their income maintenance problems, the fiscal problems of the States, and the role of private health insurance.

SPECIAL HEALTH PROBLEMS OF THE AGED

Aged people go to the hospital more often and stay longer than those at younger ages. At the same time these aged people have substantially less income to meet these increased costs.

(1) In 1957, nearly 8 out of 10 noninstitutionalized aged persons, over 11 million, had one or more chronic ailments. A large part of such ailments consisted of heart trouble, arthritis, diabetes, and kidney disease.

(2) While only 3 percent of the total population have limitations in mobility, 18 percent of the aged have trouble getting around alone, cannot get around alone, or are confined to the house.

(3) The aged suffer mostly from long-term chronic conditions, not from short-term acute ones (to which most health insurance programs are geared). They stay in hospitals two to three times longer than the younger age groups, and use physician services more frequently. But the aged with lowest incomes use such services less often.

Many of the handicaps developed by these older people could have been prevented if the disease or injury had been treated properly from the beginning. That is, if they had had preventive health care.

Neither the Kerr-Mills approach nor private insurance emphasize preventive health care for our older citizens.

INCOME MAINTENANCE PROBLEMS OF THE AGED

Income is the overwhelming determinant of the ability to get needed medical care and income is inversely correlated with age. The older the person, the less his income.

(1) Census Bureau data for 1959 shows that 55 percent of those over 65 had annual incomes of less than $1,000 and 23 percent had between $1,000 and $2,000.

(2) Of the nearly 17 millions persons over 65, more than three-fifths receive social security benefits.

(3) At least 7.6 million elderly persons have liquid assets of less than $500. (4) Per capita, private expenditures for health needs for persons 65 or over in 1957-58 were a total of $177, of which $55 was for physicians, $49 for hospitals, $42 for drugs, $10 for dentists, and $21 for other medical costs. The 1960 costs have been estimated at $265 per aged person.

(5) For half of the OASDI couples with a hospitalized illness the total medical bills incurred amounted to over $700, as of 1957. Some 28 percent had bills over $1,000.

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THE ROLE OF PRIVATE HEALTH INSURANCE

Voluntary group prepayment plans are not geared to the special needs of older people because their illnesses are characteristically chronic and their income is usually marginal.

(1) Only 14 percent of all social security beneficiary couples had some of their medical costs covered by insurance in 1957.

(2) And among hospitalized insured couples, 73 percent had zero to one-half of their medical costs met by insurance, while only 27 percent had more than one-half of their costs met by insurance.

(3) As of 1958-59, only 46 percent of all aged Americans had hospital insurance, nearly all of the policies providing inadequate benefits.

(4) The Department of Health, Education, and Welfare has projected increased coverage by all voluntary insurance plans to include 56 percent of the aged by 1965. Therefore, as of 1965, at least 8 million would not have any insurance coverage whatever.

Relieving current private health insurance programs from the burden of trying to insure the aged would contribute greatly to their stability and even expansion, and to their ability to insure the rest of the population at a more reasonable cost. The history of private pension progress, built on the floor of social security benefits, is a sound parallel.

THE FISCAL PROBLEMS OF THE STATES

Because of the special health needs of the aged, their income problems, and the inability of private insurance to cover adequately the high costs of medical service, either State welfare programs, Federal-State programs, or Federal programs must be utilized to aid the aged.

In terms of numbers, this is what the five Great Lakes States face:

Under the proposed social security approach, the older citizens in the five States would receive the following in medical benefit payments (based on benefits as provided under the King-Anderson bill endorsed by President Kennedy):

To provide the same amount of medical care for the same number of individuals who would receive aid through the social security approach using KerrMills, the States would have to appropriate:

Even if the States limit the number of eligibles under an MAA program, it will be just a matter of time until this number of eligibles soars to a much greater number of older persons in a State. This is true because as the ineligible exhaust their own resources and income in making medical payments, they will be reduced to the income level of eligibility for benefits under MAA.

Under the Kerr-Mills program (including OAA and MAA recipients), about 50 percent of the aged are ostensibly eligible in the States now with a program or proposed programs. But few States are able to afford a comprehensive program. Therefore we urge that Congress take immediate action to pass the King-Anderson proposal, which has been endorsed by the President and which would provide needed health care on a dignified and orderly basis for our Nation's senior citizens.

The CHAIRMAN. Mr. Swire, will you identify yourself for the record, by giving us your name, address, and the capacity in which you appear?

STATEMENT OF JOE SWIRE, DIRECTOR, PENSION, HEALTH, AND WELFARE DEPARTMENT, INTERNATIONAL UNION OF ELECTRICAL WORKERS, AFL-CIO

Mr. SWIRE. Yes, sir. My name is Joe Swire. I am director of the Pension, Health, and Welfare Department of the IUE, AFL-CIO, appearing here for James B. Carey, president of the IUE.

Jim is sorry he could not be here.

The CHAIRMAN. We are sorry he could not be here in person.
You are recognized.

Mr. SWIRE. This statement was prepared for James B. Carey.

The IUE is deeply proud of the many pioneering pension plans it has negotiated, which have increased substantially the income, economic security, and dignity of more than 30,000 of our members who have retired in the past 10 years.

We are also proud of the IUE's determined efforts, not totally successful as yet, to induce the employers in our industry to improve health coverage for our older members and pensioners. They are entitled, we contend, to far more consideration than the usual banal eulogies for their years of devoted service and for creating their employer's wealth.

It may be heresy, but we feel they are entitled to more even than the traditional gold watch.

Over the past 3 years we have found increasing resistance by management, especially large industrial management, to any attempt by unions, including ours, to negotiate contractual health insurance cov erage for older workers and retirees.

I am here to testify in support of the King-Anderson bill, which has the endorsement of virtually the entire labor movement.

Nevertheless, the bill is not entirely adequate to meet the needs of the Nation's 16 million retired workers over 65, but, I believe, that it is a solid and necessary step in the right direction.

As a labor leader, I am acutely aware of the needs in this area. Never in my nearly 30 years in the labor movement have I received. as many letters, telegrams, and postcards as I have on this issue from pensioners and older persons. At union meetings this is the constant and pressingly important topic.

It is a sad commentary that the United States, the richest and most resourceful nation of Western civilization, and the country leading the free world in its fight to protect individual liberties, must defer to European and even to many ancient civilizations in its humanitarian concern for the aged.

In other civilizations, there is and has been an abiding respect for the aged, and the aged are accorded status and esteem in the social organization.

One hundred years ago in the United States, when our economy was more agricultural and rural, there was always an extra bed or enough food for the older folks at the farm home of their elder son, or of one of the many children, or relatives. This is not true in today's America with its urban population and less cohesive family structure. Today the number of farm families has declined to fewer than 4 million.

The vast majority of persons 65 and over live in urban communities. The modern industrial worker lives in anything but stable economic circumstances. Unemployment repeatedly reaches levels of 5 and 7 percent, thus forcing even high seniority workers to face the specter of plant migration and joblessness generated by automation.

In a society where problems are evaluated on a rational basis rather than on an emotional basis, and on grounds of humanitarianism rather than political and economic expediency, the solution to providing medical care for the aged should be comparatively simple.

A nationwide insurance system would be the permanent solution. Since the aged still comprise a comparatively small, although increasing proportion of the population, the cost would be small if spread among all those currently working.

This is the essence of any equitable and effective insurance system, spreading the risk. This is the basis on which we have founded our pension plans.

Persons now 65 and over who desire to retire may do so and their retirement benefits are provided by current contributions.

We already have in the United States, as everyone knows, a nationwide insurance system in the form of old-age and insurance benefits. This is the ideal mechanism for providing for the health needs of the aged.

Our social security mechanism is sufficiently flexible and experienced for the task. Social security actuaries have estimated the probable cost and the tax modification required to make the plan a reality. Western civilization has created some outstanding examples of health coverage on a far broader basis than the coverage we are suggesting today, and I am confident that our social security technicians can draw on the extensive experience and thinking of the British, Swedish, Danish, German, and other experts.

American unionism has always been interested in the English system of national health insurance. The British, as you know, provide comprehensive national health coverage from the cradle to the grave. We, here in America, are merely recommending a modified, incomplete form of health care for the aged. We do not even include surgical coverage, nor drugs at home.

One reason for our interest in the British experience is that the British, by and large, are somewhat more conservative, as a people, than we. The British experiment is the result of the Beveridge Report prepared in 1942 by Sir William Beveridge, a member of the Liberal Party which, of course, is not to be confused with the liberal wing of the New Deal or the New Frontier. The British Liberal Party is much closer in its thinking to the Tories.

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