This is about $9 million a year more than Missouri is spending from State funds for current higher education needs and $10 million a year more than the State is spending for mental health operations. The administration estimates that the tax increases in H.R. 4222 would yield about $1.5 billion each year. The social security tax rate paid by employees and employers would be increased by one-half of 1 percent (one-fourth of 1 percent each), and that of the self-employed by three-eighths of of 1 percent. In addition, the first $5,000 earned would be taxed, rather than the first $4,800, as at present.1 The foregoing tax increases would be in addition to those previously scheduled in the social security law as well as the increases already voted by the current session of Congress. By 1968, rates are scheduled to be 4% percent each for employees and employers, or a total of 94 percent, and 610 percent for the self-employed. Adoption of H.R. 4222 would raise these 1968 social security tax rates to 4% percent each for employees and employers, or a total of 93⁄4 percent, and about 74 percent for self-employed. If the tax increases proposed in the bill prove to be insufficient, these rates may be forced even higher. And experience has shown that the long-range cost of publicly financed medical care programs increases greatly over initial estimates. This has been demonstrated at the State level of government. An example of how rapidly costs increase under a publicly financed medical care program is found in the State of Washington, which was one of the first States to undertake a medical care program for public assistance recipients. Costs in the 1947-49 biennium were $16.4 million. This increased to $51.7 million in the 1957-59 biennium. Despite the present high rate of expenditure in Washington, the demand for State medical services continues to increase. Increases in the cost of medical care programs above expectations result primarily from two factors: 1. When publicly supplied medical care is available, many persons avail themselves of it to the extent it is available with little regard to their need for medical services. That has been the experience of the States which have entered into State-administered medical care programs. States entering such programs expecting to spend a few million dollars often find the costs of their programs increasing by several hundred percent in a few years." 2. A public medical care program finds itself forced to absorb much of the burden of medical care expenditures previously met by relatives, private groups, and free or reduced-cost care by doctors and other professional persons. That also has been the experience in States which have undertaken medical care programs.3 NEED NOT DEMONSTRATED The need for a Federal compulsory medical care program has not been demonstrated. Resources available and the financial condition of most aged belie the need for such a program. Two main points to be considered in this connection are: 1. Increasing participation in private medical insurance plans indicate that these plans can provide nearly universal coverage. The Health Insurance Association of America estimates that 90 percent of the aged will be covered by private medical insurance by 1970. Participation in private medical insurance plans has grown from less than 25 million persons in 1943 to 123 million persons by 1959. Those over 65 years of age are now obtaining coverage at a faster rate than the population as a whole, although they started more slowly. Private plan coverage for the aged has increased from 25 percent of that group in 1952 to more than 49 percent today, and participation is growing. 7 2. Publicized statistics concerning the financial condition of older people often give an incorrect impression. Studies show that most older persons have re 1 In the current hearings, the Secretary of Health, Education, and Welfare has recommended that earnings taxed be raised to $5,200. This was the finding of an extensive survey of States by Texas Research League in preparing the study, "Indigent Medical Care Services for Texas Public Assistance Recipients" (Austin, Tex., February 1961), p. 4. a Ibid. 4 E. J. Faulkner, "Statement of the American Life Convention Health Insurance Association of America and Life Insurance Association of America on H.R. 4700" (Washington, D.C.. July 16, 1959), p. 8. Rita Campbell and W. Glenn Campbell, "Voluntary Health Insurance in the United States" (Washington, D.C., American Enterprise Association, May 1960), p. 8. & Faulkner, op. cit., p. 10. 7 Leonard Larson, "Helping Thomes Who Need Help" (Washington, D.C., A.M.A., June 30, 1960), p. 19. 76123-61-pt. 4 33 sources with which to meet medical needs as they arise either accumulated resources of their own, or funds available from other sources in case of needs. Actual annual income often is not as reliable a measure of ability to meet medical needs when applied to the aged as it is when applied to persons in their working year. Needs are less, mortgages and furniture loans are paid, daily expenses are generally lower, and often some money has been invested by the time many persons retire. And many older persons can rely in whole or in part upon relatives or religious, fraternal, civic, and other groups for resources they may need. A national survey of the medical needs of the aged by members of the staff of the Department of Sociology and Anthropology of Emory University reported that of those surveyed: 68 percent said they could pay for a medical emergency out of their own means; half had annual incomes in excess of $2,000; most reported net worth of over $10,000; 90 percent could think of no medical needs that were not being taken care of; and 60 percent were covered by private health insurance. The authors of the study reported that most of what has been cited in the past about the health and welfare of aged is based on inaccurate data derived from the experiences of a generation ago or from studies of the hospitalized or chronically dependent. The survey indicates that the great majority of people over 65 can finance their own medical care. PLAN WOULD NOT FULFILL PURPOSE The H.R. 4222 plan would not accomplish the purpose for which it is proposed-to provide medical care for the aged who need it most but cannot afford it. As has been pointed out, most older persons have resources with which to meet their medical needs. Among the minority of older persons having unmet medical needs, only a small proportion are recipients of social security benefits under the Federal old-age, survivors and disability insurance program. Yet the only ones who would receive medical care under H.R. 4222 are social security recipients under that program. For the most part, those who would be given medical care under the bill are not those with deficient resources or those who may have some unmet medical needs. PLAN HAS HARMFUL EFFECTS In addition to being a costly unneeded plan that would not fulfill its purpose. the plan provided by H.R. 4222 actually would have harmful effects. By opening the way for many persons to avail themselves of medical services with little regard to their need, this proposal would increase loads on already overtaxed doctors, nurses, and hospitals, resulting in impairment of the overall quality of care now available. Moreover, if adopted, the H.R. 4222 plan would be subjected to great pressures for further expansion. Experience under our social security system shows repeated broadening of its provisions, accompanied by rate increases. Demands could be expected to include larger and larger segments of the population under the medical care provisions, with each expansion accompanied by rate increases, until virtually the entire population would be included. Thus H.R. 4222 is a foot-in-the-door type of proposal. It inevitably would lead to much higher social security tax rates on employees, employers and the self-employed and disruption of the present system of medical care under which great advances have been and are being made. CONGRESS OF THE UNITED STATES, Hon. WILBUR M. MILLS, Chairman, House Committee on Ways and Means, Washington, D.C. DEAR MR. CHAIRMAN: The Mississippi Manufacturers Association has forwarded me the attached statement in opposition to H.R. 4222. I would appreciate your having this statement included in the record of hearings on this legislation. Thanking you, I am, Sincerely yours, JOHN BELL WILLIAMS. Dr. James Wiggins and Helmert Schoeck, "Profile of the Aging," paper presented to the fifth congress of the International Association of Gerontology, Aug. 11, 1960, 18 pp. Foundation for Voluntary Welfare, box 72, Burlingame, Calif. STATEMENT OF THE MISSISSIPPI MANUFACTURERS ASSOCIATION RE H.R. 4222 The Missississippi Manufacturers Association is a business association with over 600 members. Our association strives to better the business climate in Mississippi for the benefit of all our citizens. This statement pertains to H.R. 4222 and similar measures before the Congress to amend title II of the Social Security Act to provide for the payment of the costs of hospital care, nursing home care, diagnostic outpatient care, and home health care services for those 65 years of age and older. The purpose of this statement is to register our opposition to H.R. 4222 and similar measures and present our chief reasons for this opposition. They are as follows: 1. We believe this legislation wrongfully assumes that most persons over age 65 are unable to pay for medical care, whereas, factual data show that the 60 percent of the over age 65 group who would be eligible for medical care if this legislation was enacted have (1) the lowest indebtedness of any age group; (2) a median net worth of almost $10,000 each (an increase of 71 percent in 10 years); and (3) title to their own homes in 7 out of 10 cases. We see no merit in legislation which gives to this group regardless of need while taking from everyone regardless of obligations and comparative ability to pay their own health care costs. 2. We support the principle of the Kerr-Mills law, i.e., local and State determination of needed medical care and local and State administration of such care. We believe that, given time for consideration by the States, the Kerr-Mills law will accomplish the goal of providing medical care for the aged in those States where real individual need is determined to exist. We note that our own legislature has had no opportunity to consider the potentialities of the Kerr-Mills law. 3. We believe a Federal system of underwriting the risks of health care costs, whether on a limited or all-inclusive scale, would logistically become socialized medicine. To allow, as H.R. 4222 would, the Secretary of Health, Education, and Welfare to contract with hospitals and set "reasonable standards of care," and to make payments to pathologists, radiologists, anesthesiologists, and physiatrists and also set "reasonable standards of care" smacks of socialism despite unctuous disclaimers to the contrary in H.R. 4222. 4. We view with alarm the additional taxation on employee and employer provided in H.R. 4222 which if added to presently scheduled increases, requires an employee-employer social security tax of 9% percent on a wage base of $5,000 by 1969. We are concerned about the effect of this on our young employees who, compared to other more settled age groups, will be faced with paying a larger tax as a percentage of total income at the very time they seek to marry, raise families, and become a part of the adult community. 5. We believe the risk of health care costs is being met for the majority of Mississippians by voluntary health insurance. We note in particular such recent voluntary health insurance innovations as major medical health insurance; health insurance paid up at age 65; and a senior age policy offered in Mississippi by a national company which has no cancellation clause, no waivers, and is available regardless of past health. The phenomenal competitive growth of voluntary health insurance coverage since its inception approximately 20 years ago portends even greater growth for the future. The Mississippi Manufacturers Association, therefore, respectfully urges that the committee not give favorable consideration to H.R. 4222. POSITION OF COUNCIL OF LOUISIANA BUSINESS & TRADE ASSOCIATIONS WITH REGARD TO H.R. 4222 CONCERNING FEDERAL HEALTH INSURANCE AND BENEFITS BATON ROUGE, LA., July 24, 1961. To the Chairman, Hon. Wilbur D. Mills, and the Committee on Ways and Means, U.S. House of Representatives, New House Office Building, Washington, D.O. GENTLEMEN: We respectfully request your consideration of the position of Louisiana business, coordinated and endorsed by the trade and business associations named herein, with respect to Federal health insurance and benefits as embodied in H.R. 4222. At the outset Louisiana business wishes to commend your committee and the 86th Congress of the United States for its approach as detailed in Public Law 86-778 in making available to senior citizens (whether covered or not under social security), financial assistance in the payment of medical expenses which they cannot possibly meet or might have great difficulty in financing. May we call to your attention that Louisiana for many years has been disbursing medical vendor payments to old-age assistance recipients in addition to their regular benefits. Not all medical needs of the aged were provided for under this program. Some 42 other States prior to the 1960 enactment of Public Law 86-778 were also making similar payments in varying amounts. Since enactment of Public Law 86-778 some 18 States, including Louisiana, have considerably expanded the level of assistance with the additional Federal funds provided. Some 25 others are using such funds to offset increasing cost of their long established State programs. And the remaining States have either approved or they are preparing for Federal-State participation in financing medical care for their citizens whether or not they are covered under Federal social security. Before introducing and enacting enabling legislation to fully participate in the new Federal-State matching medical care program, Louisiana systematically and thoroughly conducted laboratories in one-third of its parishes to learn at the community level how it could best administer for its people without permitting the new system to be abused. Hospitals, nursing homes, and the medical association cooperated fully with the State in drafting procedures for financing medical assistance wherever necessary. Some of these procedures are in process of adjustment in view of the experience already obtained. Direct payments to participating hospitals are being made at a maximum of $35 per day for each patient for a period of 10 days. With the approval and certification of the individual's private doctor, the hospitals and the State are permitted to extend this to 30 days. In special cases, but on an individually approved basis the State, the doctors and the hospitals are cooperating to go beyond this whenever necessary. Direct payments to the patient's own doctor and to nursing homes on an agreed payment scale for multiple types of services have also begun. The system has quickly become one where the principle of "pay what you can and we will pay the rest" is being established. Hospitals, nursing homes, doctors, and patient shave found the new Louisiana system in participation with Federal public law 86-778 to be adequate. Louisiana business now requests your detailed and patient consideration of its position on the proposal in H.R. 4222 to add medical and hospital expenses to Federal social security benefits. I. Louisiana business requests that if the committee finds that it is advisable to extend more financial assistance to senior citizens in paying for their medical needs, that such additional help be embodied in an extension of Public Law 86778 on a Federal-State matching basis supported by general funds to which all taxpayers contribute. II. Louisiana business will summarize and later comment on a number of proposals appearing in H.R. 4222 under your consideration as follows: This bill (a) Proposes to furnish to those under the social security system : (2) Some skilled nursing home services. (3) Some hospital outpatient clinic diagnostic services. (4) Some community visiting nursing services. (b) Proposes to finance these services for persons 65 years of age or older. who have been or will be covered under the social security system, but not to those who never have been nor ever will be covered under that system. (c) Proposes to pool past, present, and future employer and employee payroll taxes (excluding for the time being employer payroll unemployment taxes), into a new trust fund to be known as Federal social insurance trast fund. (d) Proposes to maintain three separate accounts under this merged fund to be labeled: (1) Old-age and survivors insurance account. (2) Disability insurance account. (3) Health insurance account. (c) Proposes to take away from the 6.25 percent payroll social security tax for 1962 (which was imposed for the old-age and survivors insurance fund and the disability insurance fund) an amount equivalent to 0.6 percent of taxable payroll, leaving 5.65 percent to be credited to the accounts for which the 6.25 percent tax was imposed. The 0.6 percent thus taken away would start off the health insurance account. (f) Proposes a new tax to begin January 1, 1963, equivalent to 0.5 percent of taxable payroll for health insurance purposes but 0.1 percent of payroll would also thereafter be taken away from the 7.25 percent imposed under present law for other purposes in order to divert more money to health insurance. (g) Imposes no restriction on making payments from the "pooled" fund for any of the programs, even if one of the three accounts in the pooled or merged fund should happen to become and remain in the "red." III. Louisiana business recognizes the responsibility of the community to solve its medical care problems at any age with dignity to itself and to the recipient. Louisiana has for many years been among the foremost in the Nation in this field. No one in need in the State of Louisiana is denied assistance for medical and hospital expense. Louisiana's current annual operational budget for health and hospitals is $43 million and an additional $4.5 million annually goes for medical vendor payments. Louisiana is currently spending $210 million annually for all phases of assistance, hospitalization, and public welfare programs. (The $210 million annually is equivalent to approximately 10 percent of all annual covered wages paid in Louisiana.) Of this amount the Federal Government is currently bearing about $106 million under Federal-State assistance programs from Federal income tax revenue. Every citizen of Louisiana has an innate right to financial assistance under its own programs and its matching programs with the Federal Government because these programs have been and are financed by all taxpayers, including the recipient. IV. Louisiana business observes with considerable interest that the findings and declaration of purpose of section 2(b) of the bill state that H.R. 4222 would make the services availabie "in a manner consistent with the dignity and selfrespect of each individual." The much publicized inference of that phrase is that the services available would be rendered as a "right" to any covered individual 65 years of age or older regardless of need or of other health insurance coverage. Louisiana business respectfully submits that by merely labeling a service a “right” does not in itself or in fact add “dignity and self-respect" either to the giver or the receiver, nor does such labeling make such service an innate right of the individual. It certainly cannot be held that an individual has an innate right to services financed by a mandatory tax system to which he has never contributed and never will contribute as proposed in H.R. 4222. To state the contrary is tantamount to asserting that the Federal Government has the right to expropriate the earnings of one and give them to another as his right to be demanded with dignity and self-respect. One of the facts presented upon the introduction of this bill was: "Only 57 percent of the couples having a hospital stay were able to meet all of their medical bills by themselves." Would 57 percent of the Nation's senior citizens, aged 65 (or 62) and over, who were able to meet all of their medical bills by themselves have added to their dignity and self-respect had they been able to receive such services at the expense of others? Would the remaining 43 percent have lost any dignity or self-respect by applying for and obtaining financial assistance as provided for under Public Law 86-778 so that they could pay all of their bills under a system financed by general funds created by general taxation, a part of which they have borne and will continue to bear? Louisiana business again submits that the financial assistance method in no way lessens the dignity or self-respect of either the recipient or the governing system. It also submits that the argument of "dignity and self-respect" appearing in H.R. 4222 is not valid. V. Louisiana business requests your analysis of whether or not the health program proposed in H.R. 4222 is "insurance." At the same time has the present Federal old-age and survivor program left the insurance field and should it continue to be classified as "insurance"? |