I am proud of having had the privilege of being a member of the section which prepared and adopted the above statement. The size of the majority vote was helped in no small measure by the strong backing given to the social security approach at the conference by two former members of the Eisenhower administration, Marion Folsom, former Secretary of Health, Education, and Welfare, and Arthur Larson, former Under Secretary of Labor. Numerous other objective appraisers have also endorsed this approach, including Walter Lippmann, the American Nurses Association, the American Public Welfare Association, and an editorial in Business Week, an editorial in Life magazine, the New York Times, the Washington Post, the St. Louis Post-Dispatch, and many others.

The King bill (H.R. 4222) as now pending in the Congress is the administration's version of the best way to use social security for the financing of medical care for the aged. In brief, it contains the following provisions:

(a) Those eligible for benefits would be persons aged 65 or older who are eligible for benefits under OASDI or the railroad retirement system (estimate 14.25 million covered).

(b) Benefits would include: (1) inpatient hospital service, up to 90 days per period of illness, subject to a deductible amount of $10 per day for up to 9 days with a minimum deductible payment by the patient of $20; (2) skilled nursing home services, after hospitalization, of up to 180 days per period of illness; (3) outpatient hospital diagnostic services, as required, subject to a $20 deductible payment for each diagnostic study; and (4) up to 240 visits per year during a calendar year for home health services, such as intermittent nursing care, therapy, and part-time homemaker services. (c) The program would be financed by an additional one-quarter of 1 percent tax paid to the social security system by both employers and employees. In addition the annual wage base would be raised from $4,800 to $5,000.

In view of the many contradicting statements being made about the use of social security for this purpose, on what basis does the present wage-earning taxpayer, who will in time be the aged-person consumer, make up his mind as to supporting or rejecting this approach? The following statements are offered for his critical analysis:

(a) A program financed jointly by the employee and employer on a prepaid basis permits each individual to help pay for the cost of his own medical care which may be needed after retirement. This would seem to be far more in keeping with the American way of doing things, as compared to the necessity of millions of persons having to apply for relief or charity in order to receive medical care.

(b) The necessary funds would be collected during the working years, when income is highest. In contrast, higher taxes for general revenue purposes would have to be paid by all taxpayers, including aged persons after retirement, if public assistance and the Kerr-Mills bill are the only programs.

(c) Coverage would be almost universal. In time almost every retired person will be one who is eligible to receive social security.

(d) With the major addition of compulsory collection of taxes, the social security plan would operate in behalf of the Nation's retired aged persons in much the same manner as Blue Cross has so successfully operated in behalf of a large group of the Nation's employed persons and their dependents.

(e) Medical care would be available after retirement without requiring the person to deplete his usually limited resources or savings, or become a serious financial liability to the younger generation. (The small group of wealthy aged to which this would not have any meaning could elect, if they so chose, not to apply for their OASI benefits).

(f) The benefits would be available to each retired person as a matter of right. Just as is the case in OASI retirement benefits, this is something which the person has helped to pay for. There would not be the soulsearching agony through which any self-respecting and previously selfsupporting person goes before asking for free care from any source. The Kerr-Mills program is based on the means test, which is far more complicated than filing an application for credit or submitting an income tax report; the county welfare office would undoubtedly be required to make a thorough financial investigation of all income and resources.

(g) The knowledge that this protection was available when needed would lift one of the greatest of all burdens from the mind of millions of aged persons in this country.

(h) The benefits would be uniform on a nationwide basis, and the retired person would suffer no loss by moving from one State to another, as is now the case under the public assistance and the Kerr-Mills programs

(i) The increased tax on the employed person is small, the cost being about $1.50 per month. For this all workers will have what amounts to a paid-up hospital insurance policy when they retire; not just a favored few working in certain industries.

An example of what I mean here is given by a retired gentleman who worked many years as a salesman for a meatpacking company. When he retired, one of the retirement benefits given by his company was a $12,000 paid-up hospital insurance policy, covering both the retired employee and his wife. This is a wonderful thing. You can see his great feeling of security in knowing that medical bills for both of them will be paid if they become sick. I wish I had the same protection to look forward to, but most of us are not lucky enough to work for a company which estab lishes such a plan. When you examine such plans more closely, is there really a difference between the principle used by the meatpacking company, as compared to the use of social security for the same purpose? The money with which to pay for the insurance was not manufactured in a backroom by the packing company. It had to be taken out of their earnings, and reduced the net profit by that amount. And every time you and I buy a stick of that company's sausage we are most certainly helping to finance the retirement security of their employees. It definitely is a compulsory plan of fund collection-I have no choice but to contribute to it if I wish to eat that brand of sausage. Is this any different in principle than a plan which deducts a portion of the wages of all wage earners each month so they all may have a paid-up hospital insurance policy when they retire?

(j) It would help ease the present real financial problems of hospitals. public assistance programs, and private philanthropy, and would relieve voluntary insurance programs of much of the burden of carrying this highrisk group.

(k) It would in time greatly reduce the need for funds from the general revenues of the Federal and State governments now used in financing the old-age assistance and the medical assistance for the aged program.

(1) Social security by itself will not be sufficient to do the entire job: all the presently used methods of financing will continue to be needed. However, if the social security approach is adopted as the basic method of financing, as recommended by the White House Conference on Aging, it will provide minimum basic protection which can be used by any person as the foundation upon which to build a more nearly adequate program. The positive statements as given above appear to summarize the argument in favor of social security. It is, however, necessary to make some additional comments about some of the charges which have been made in opposition to the use of social security:

(a) Social security is not socialized medicine. Socialized medicine, when accurately defined, means a system where the Government owns the hospitals and employs the physicians. That system is followed in several European countries and in Russia, but I have seen no indication of any desire for a similar system in this country. The social security system of financing medical care has not the slightest resemblance to socialized medicine. I, for one, believe it would be far superior to the European system. It is quite possible that the use of social security might be the surest way to insure that socialized medicine does not become effective in this country. (b) Social security is not compulsory medicine. No one would be required to accept the benefits, and no hospital would be required to participate. The free choice of physicians and hospital is guaranteed in the proposed law.

(c) There would be no reason for impairment of the patient-physician relationship, and certainly no control over the practice of medicine or the administration of a hospital. If this is a valid complaint against social security, then Blue Cross, the commercial insurance companies, and the ! Kerr-Mills type of medical assistance plans must stand convicted of the same charge-the "third party" policies and methods would be almost identical.

(d) The word "compulsory" is properly used when applied to social security taxation. However, the word "compulsory" applies in exactly the same

manner to the collection of the State and Federal taxes necessary to operate the two programs contained in the Kerr-Mills law. The only difference is in the method of collection-in neither case is there any option on the part of the taxpayer.

(e) Opponents of the social security approach have stated that the KerrMills provisions are sufficient to do the entire job, and that each State should adopt and place into effect these provisions. Unless the person recommending that action also states at the same time that he is willing for his property or sales or income taxes to be increased substantially to pay for such a program, the first recommendation cannot be really persuasive.

(f) Social security will not supplant or replace the voluntary health insurance programs. While it is true that some voluntary insurance now being carried would be dropped if H.R. 4222 became law, it would appear that by relinquishing the high-risk high-cost group of aged, the insurance companies could offer either lower costs or greater benefits or both to the younger employed groups. Should this happen it is more likely that more voluntary insurance rather than less would be sold, corresponding to the increase in the amount of retirement insurance sold after the social security retirement benefit plan was started.

Several weeks ago on a train ride from St. Louis to Jefferson City I found myself sitting next to a friendly insurance agent. This offered an opportunity to test my theory, because he had sold hospital insurance for several different companies. I asked him whether his company broke even on their policyholders over 65 did the premiums paid in by the aged equal the cost of the benefits given to the same group? His very quick answer was "definitely not." That, of course, means that part of the premiums collected from the younger policyholders must be used to pay the benefits for the aged policyholders. My next question was "If the company suddenly dropped all past and future sales of hospital insurance to persons over 65, could they lower the premium costs for the rest of the policyholders?" His answer was a very positive "yes." He likened the principle to what would happen to auto insurance rates if the companies suddenly found that they would no longer insure the male auto driver between the ages of 16 and 25. In both cases he thought there would be a definite drop in premium rates.

Another question which needs to be faced in connection with voluntary insurance is one on which I have not study to quote from. Out of our total population, 67.1 percent have some form of health insurance, as reported by the U.S. national health survey. If you exclude from consideration those persons who work in an industry where the union contract calls for paid-up health insurance to cover them from the time of retirement to death, how many of us are now voluntarily buying health protection for the present and are also buying health protection which will be effective during our retirement? Even those in the middle and upper income brackets are involved here I have yet to find such a person among my own acquaintances. What really are the chances that many of us will do this type of farsighted planning without being forced to it? More important, how many of those at the lower income levels will take this step--perhaps at the expense of present necessities?

(g) Surely most laymen would want to agree with a statement made by the minority group of the Health and Medical Care Section of the White House Conference on Aging: "It is distressing to be told by organized medicine that the quality of care that the individual physicians renders will be influenced by the source of payments. We do not believe this is so."

(h) The use of social security as a method for financing medical care will not bankrupt the social security trust fund. It is true that payments out of the trust fund have exceeded the income during the last several years, and, in fact, this is also expected through 1962. However, all forecasts after that date are to the effect that income will exceed outgo. The tax schedule which was revised by Congress in 1958 took into full account the long-range actuarial status of the program. The Eisenhower administration appointed a distinguished group of experts as the Advisory Council on Social Security Financing, including representatives from the fields of economics, business, and labor. Their report, which covered a yearlong study of long-term program commitments, was issued in January 1959, and contained this most important finding: "The Council is pleased to report that according to the best cost estimates available the contribution schedule now in the law makes adequate provision for meeting the cost of the benefits provided. We have found that the method of financing is sound and that no fundamental

changes are required or desirable." With the large number of persons having a vital interest in this fund keeping the sharpest kind of watch on it, I believe we can be assured that any measures passed by the Congress will not endanger the status of the fund.

In closing, let me say again that these comments represent only one person's opinions and evaluations. They are offered in the hope that they may be of some help in arriving at a decision on this momentous question. We all want to make it possible for every aged person to rest assured that costly medical care will be paid for whenever it is needed. Let us use the most logical method, and let us make the decision on the basis of reason.

NATIONAL GERIATRICAL SOCIETY & SENIORS OF THE GOLDEN GATE,
San Francisco, Calif., August 2, 1961.

Re public hearings on H.R. 4222 and S.B. 909.

HOUSE OF REPRESENTATIVES,

Committee on Ways and Means, 1102 New House Office Building, Washington, D.C.

(Attention: Leo H. Irvin, Chief Counsel)

GENTLEMEN: It is our deep regret that our president, Mr. Harry L. Stuver, was out of the city when your notice of public hearings on subject bills was received in San Francisco and did not return until too late to qualify for a personal appearance at your hearing, so, for this reason we send this letter, which we would like to have printed in the record.

Comments and suggestions: None.

You ask for comments upon the bills and request suggestions as to changes that may benefit, but, as we have not been furnished copies of the bills you are considering, we are not in a position to analyze the details.

However, the President's plan is favored and a similar plan was proposed 10 years ago in 1951.

The President's plan is a step in the right direction, irrespective of inequities, if any do appear, and we have reason to believe that about 75 percent of the voters of San Francisco are in favor of it, and those who are opposed seem to have a personal financial interest in their opposition because of fear of taxation, or loss of salary, or for some other hidden reason which they alone can know about.

The National Geriatrical Society has been in favor of: "A civilian branch attached to the Social Security Administration" ever since the National Geriatrical Society was incorporated in 1951, when the plan was first proposed by its president, Harry L. Stuver.

His plan was and is somewhat similar to yours, differing only in the method of payment.

He proposed that the method of payment should be direct from the U.S. Treasury to the party or parties-hospitals and such-who rendered service, on a plan similar to the way social security checks are now mailed out and income tax collected, thereby bypassing States and eliminating all possible duplication of records of accounts which can only add to the cost of operation.

SELF-PROTECTION

As to its self-protection-against padding of payrolls and such-The State of Oregon has a method in its indigent automobile accident fund which can be almost foolproof. In this plan, the responsibility of collection is placed upon the hospital or other person or persons who render service, to collect their bill with the added specification that: "If the doctor, nurse, ambulance driver, or others, could not collect their bill because of indigency within 90 days after service was rendered, the bill could be certified to the State and the bill is paid from the State's auto indigent accident fund which is built up and maintained by a tax of 50 cents, more or less, upon each recipient of an automobile drivers license.

FUNDS

As to your source of funds, Congress alone is permitted to raise or lower taxes.

INJUSTICE OF SOCIAL SECURITY TAX UPON WAGE EARNER ONLY

In your case, there are some who believe that: "Saddling all the cost of aid o the aged who did not contribute to the additional cost of such a plan upon hose who receive a wage is an imposition upon those who work, from the simple act that those who receive their income from investments-stocks, bonds, rents, te.—and others not included in the social security program are exempted from contribution while those who earn a daily wage are taxed, not only for their ontribution to this medical plan but are assessed and compelled to contribute all other welfare plans regardless of their qualifications.

GRANT HIGHER INCOME TAX EXEMPTION

One person said he thought a better plan would be to "grant a higher income ax exemption to heads of households who support aged parents." (Communication enclosed.)

STATES DO NOT HAVE INDIVIDUAL RIGHTS

"One Nation, Indivisible," is the slogan now, as it always has been. But its tatement has a wider range of meaning. In days when travel was so slow and ifficult, home government was sufficient because "Over the fence was out," but day, when people travel across State lines as birds when flying south, there ust be

ONE LAW FOR ALL CITIZENS AND THIS LAW MUST BE NATIONAL

The legislative body of any one State should not have authority to deny to its esidents (NOTE.-A resident of a State is a citizen of the United States and ot a citizen of the State.) privileges granted or services required by the Naional Government for the good of the entire country, because citizens are an ntegrated part of the entire unit of one government, subject to call to duty tohe United States, and must be capable at all times to perform that duty.

No State can deny a man his citizenship nor refuse his support to the National overnment, therefore, each State should be required to furnish everything ecessary, to each person residing therein, to suit his needs in his struggle to xercise his right to become President.

STATES RIGHTS CANNOT SUPERSEDE THE NATIONAL NEED

So, where States demand to exercise their sovereignty, then States should be eld to pay the bill when its residents go over into another State and do damage > the people there.

Hoping that the foregoing will be of sufficient importance to qualify for a rinting in your record, I am, we are,

Very respectfully yours,

HARRY L. STUVER, President and Officer of Publicity.

Below is an exact copy of the communication mentioned above.

"GRANT HIGHER INCOME TAX EXEMPTION

"JULY 27, 1961.

"DEAR SIR: I have just heard your most enlightening conversation on KCBS's: Viewpoint' and I have a criticism, but more importantly, I think I have what I hink is an alternate plan which might be an improvement on the present proosal by the President.

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