senior citizens in the United States, is estimated to have numbered about 4 million persons as of mid-1961.12 It is of interest to compare the total of 44 million aged persons covered as of July 1961 with data obtained in a previous survey by the association. Although the statistics are not entirely comparable, since there were several different companies responding in each survey, the trend depicted is noteworthy. In the prior survey, data indicated 2.3 million aged covered at the end of 1958. In a space of 21⁄2 years, therefore, the number of aged persons covered by insurance company respondents to the association's survey is estimated to have more than doubled. Among the aged persons insured as of July 1961, 47 percent were covered by group insurance and 53 percent by individual and family policies (see table 1, app. A). Of those with hospital expense protection, 88 percent also had surgical expense protection and 30 percent had additional protection for regular medical expenses. A fifth of the aged with insurance company coverage, 730,000, had major medical expense policies. Among the 730,000 persons with major medical expense coverage, 81 percent are protected under group policies and 19 percent have individual and family policies. Of those with group major medical expense coverage, 70 percent have such coverage superimposed upon a basic hospital-surgical policy and 30 percent have comprehensive plans which usually have deductibles of $25 or $50. The pertinent numbers are presented below. Total.. Number of aged persons with major medical insurance, July 1961 Individual.. Supplementary. The above noted aged persons with major medical expense policies have coverage in amounts up to $15,000 subject to deductibles and coinsurance. Benefits are paid for all the usual, customary, and necessary medical care expenditures both in and out of hospital, subject to deductible, coinsurance, and maximum amounts. Benefits include the costs of surgery, physicians services, prescribed drugs, nursing care, and appliances. It is of interest to compare the proportions of the aged with hospital expense protection who also have surgical and regular medical with comparable data for the total population at all ages. Of persons covered by insurance companies for hospital expenses as of January 1961 (79 million), 75 million or 95 percent had protection for surgical expenses-a proportion only slightly higher than that among the aged. Although the proportion who also have regular medical expense coverage among the total population (52 percent) is considerably higher than the 30 percent among the aged, the latter proportion is significantly high in view of the fairly recent development of health insurance coverage for the aged. Ten years ago only 23 percent of the total population covered by insurance companies for hospital expenses also had coverage for regular medical expenses. Additional data with respect to the extent and type of coverage of aged persons, as between group and individual insurance, may be found in table 1. (B) Quality of coverage (1) Hospital expenses As indicated in table 2 (app. A), about one-third (29 percent) of the aged persons with hospital expense insurance had policies which provide daily hospital room and board benefits of $15 a day or more. About a fifth (18 percent) had benefits of $11 to $14 per day. The remainder, slightly over half (53 percent), were covered for $10 a day or less. 1 In testimony before the Committee on Ways and Means, House of Representatives, in July 1961, the association estimated that 9 million aged were covered-4 to 44 million by insurance companies, 41⁄2 million by the Blue Cross, and one-half to three-fourths million by other plans. In light of the current study, these estimates were probably understated. 2 Data with respect to the extent of duplicate coverage among the aged were not obtained in this survey. The factors used to eliminate such duplicate coverage, therefore, were similar to those for the total population. These are shown in the regular annual survey of the Health Insurance Council, "The Extent of Voluntary Health Insurance Coverage in the United States." 3 These data are based on reported statistics projected to a total. This was accomplished in a similar manner as the data for mid-1961, i.e., reported premium against total U.S. premium. Two points are worthy of note with respect to these findings: (1) The average daily room and board charge in non-Federal short-term hospitals in the United States in 1960 was $17. In terms of this nationwide average, 29 percent of the aged insureds would have their daily room and board charges covered in full or practically in full; 18 percent would have between 65 to 82 percent of the bill covered; and the remainder would have, on the average, slightly over half the bill covered. (2) The nationwide average hospital room and board charge varies significantly by geographical area in the United States. Thus, in States like Mississippi and Arkansas, as examples, where the average daily bed charges are $10 and $11' respectively, a daily hospital room and board insurance benefit of $10 a day would about cover the entire cost. In addition to the daily room and board benefit, the aged insureds had benefits for ancillary hospital expenses in amounts up to $500 or more. Of the total, 27 percent had benefits for $500 or more; 21 percent had benefits of between $200 and $499; and 52 percent were covered for amounts up to $200. (See table 2.) With respect to the foregoing, it is of interest to note that a $200 ancillary expense benefit will provide full reimbursement of all hospital extras in at least 80 percent of hospital confinement.5 More than two-fifths of the insureds (41 percent) had hospital expense coverage for more than 70 days per year. An additional 25 percent had benefits providing coverage for 32 to 70 days per year. The remaining third (34 percent) had policies which provided benefits for 31 days, and in a few instances, for less than 31 days. An evaluation of the relative effectiveness of these findings may be obtained from a review of U.S. National Health Survey data. According to this material, 41 percent of persons 65 and over are discharged from hospitals after stays of a week or less. An additional 31 percent are discharged after 1 to 2 weeks and about 19 percent spend from 15 to 30 days in hospital. Less than 10 percent of the aged stay in hospital for more than 31 days. Based on these data, all but small proportion of the aged insured would have sufficient benefit days to provide coverage for their entire hospital stay. (2) Surgical expenses A distribution of the aged persons with surgical expense insurance, by level of the coverage, is presented in table 3, appendix A. Of the total, 10 percent had maximum surgical benefits of $300 or more and 43 percent had benefits of between $201 and $300. The remaining 47 percent had benefit maximums of $200. (3) Regular medical expenses As indicated in table 4 (app. A), two-thirds of the insured aged with coverage for regular medical expenses had such coverage in hospital only. The remaining third had coverage for physicians visits in home, office, and hospital. The foregoing distribution is not too dissimilar from that which exists for the total insured population. Thus, a recent analysis by the Health Insurance Institute 7 among a sample group insured cases indicated that of those with regular medical expense coverage, 77 percent had coverage for in-hospital physicians visits and 23 percent for visits in home, office, and hospital. (4) Nursing home expenses The current survey did not measure the extent of insurance company coverage with respect to nursing home care. It is known, however, that as of mid-1961, several large insurance companies were making available coverages which specifically include the cost of skilled nursing home care. The predominant of such coverages is for $7.50 per day for the first 31 days in a nursing home and $5 per day for the next 90 days. Additional data on the level of coverage among aged persons by type of coverage, as between group and individual insurance, may be found in tables 2–4. 4 "Daily Service Charges in Hospital, 1960," American Hospital Association. "A Reinvestigation of Group Hospital Expense Insurance," Transactions of the Society of Actuaries, vol. XII, 1960. "Hospitalization, Patients Discharged from Short Stay Hospitals, United States, July 1957-June 1958," series B-7, Department of Health, Education, and Welfare. 7 "Source Book of Health Insurance Data, 1961," Health Insurance Institute. (C) Continuance of coverage (1) Individual and family policies As indicated in table 5 (app. A), over a fourth of the aged covered under individual and family policies for hospital and surgical expenses (27 and 28 percent respectively) had policies which are guaranteed renewable. An additional 54 percent of the aged covered for these two categories of expense had policies subject to nonrenewal under which the companies have voluntarily relinquished their right to nonrenew the policy because of any change in the physical condition of the insured. In less than a fifth of the individual policies for hospital and surgical expense (19 and 18 percent respectively) had there been no such voluntary action. Of the aged insured under individual policies for regular medical expenses, 8 percent had guaranteed renewable policies and 92 percent had policies subject to nonrenewal. For a third of the latter, however, companies have voluntarily relinquished their right to nonrenew the policy because of any change in the physical condition of the insured. Practically all aged persons covered for individual and family major medical insurance were covered by policies under which the company might refuse renewal. For more than three-quarters of these (77 percent), however, companies have voluntarily relinquished their right to nonrenew because of any change in the physical condition of the insured. (2) Group policies Table 6 (app. A) provides a distribution of the actively employed aged currently insured under group policies with an indication of the extent to which such coverage would continue after retirement. More than one out of every two had the right to continued coverage either as part of the group or by means of individual conversion. V. CERTAIN DEVELOPMENTS SINCE JULY 1961 There have been several significant developments during the past few months which should further affect both the extent and quality of coverage among the aged. Two are particularly worthy of note. In July 1961, retired employees of the Federal Government who retired prior to July 1, 1960, became eligible for health insurance coverage on a group basis written by insurance companies. Under the uniform Government program the benefits may be basic hospital and surgical expense coverage, major medical expense coverage (including hospital, surgeon, physicians, nursing home, drugs and nursing care) up to $5,000, or both. During the first month of this program, about 237,000 of an estimated 400,000 retirees acquired protection under this program.8 Federal employees who retired after July 1, 1960, are eligible for more liberal benefits under the Federal Employee Health Benefits Act of 1959. In October 1961, residents of Connecticut aged 65 and over (and spouse, if 55 or older) became eligible for enrollment in the Connecticut 65 extended health insurance program. This plan, which is available without physical examination, provides lifetime benefits to $10,000 after a $100 deductible. It covers all medical expenses in and out of hospital. By the end of the first month enrollment period under this program, about 22,000 senior citizens were enrolled. Of these, 14,000 chose the $10,000 major medical plan only; 5,000 selected the $5,000 major medical plan only; about 2,000 selected a combination of the $10,000 major medical with additional basic plan benefits; and about 1,000 selected the $5,000 plan plus basic coverage. Of additional interest is the fact that 30 percent of the newly covered senior citizens were enrolled by someone other than themselves, usually their son or daughter. Similar programs are under consideration in other States. In addition to the foregoing, companies continue to experiment with new forms of coverage for the aged. For example, in July 1961, a large insurance company introduced a new program of health insurance policies designed specifically for aged persons. Under these policies, major medical benefits are available up to $10,000 subject to a $50 deductible. These policies can be purchased by a relative of the senior citizen. U.S. Civil Service Commission. APPENDIX A STATISTICAL TABLES TABLE 1.-Extent of health insurance among persons 65 years of age and older by 90 insurance companies, 1 by type of coverage, July 1961 TABLE 2.-Extent of hospital expense insurance among persons 65 years of age and older by 90 insurance companies, 1 by quality of coverage, July 1961 TABLE 3.-Extent of surgical expense insurance among persons 65 years of age and older by 90 insurance companies, 1 by quality of coverage, July 1961 1 1 These companies write 3% of the U.S. health insurance premiums. TABLE 4.-Extent of regular medical expense insurance among persons 65 years of age and older by 90 insurance companies, 1 by quality of coverage, July 1961 TABLE 5.-Extent of health insurance under individual policies among persons 65 years of age and older by 70 insurance companies,1 by type of coverage and renewability provision, July 1961 1 These 70 companies write 43 percent of individual health insurance premiums. TABLE 6.-Extent of health insurance under group policies among actively employed persons and dependents 65 years of age and older by 63 insurance companies, by type of coverage and continuance provision, July 1961 1 These 63 companies write 60 percent of the group health insurance premiums. APPENDIX B QUESTIONNAIRE EXHIBIT 6 INSTRUCTIONS FOR PART I. INDIVIDUAL AND FAMILY POLICIES 1. Information reported is to be based on an actual analysis of individual policies in force in the United States on June 30, 1961, and which provide hospital, surgical, regular medical, or major medical expense coverage. Where an actual analysis is not possible, representative samples or other appropriately qualified estimates will be acceptable. Where samples are used, however, data should be expressed in terms of totals based on the samples utilized. 2. Exclude special-risk, limited accident, polio and other such policies not providing medical expense benefits for both accidents and illness. Franchise and blanket policies should be included in part I unless reported in part II. Kindly indicate by footnote the part in which you have included your franchise and blanket coverages. Coverage under mass enrollment plans and conversions from group policies should also be shown in part I. Please 3. The following instructions apply with respect to benefit classifications: (a) Hospital expense.-Include all coverage which provides or pays hospital benefits for confinement due to both sickness and accident. Indicate total number of persons 65 and over covered for hospital expenses opposite line 1. show distribution of this total, by amount of daily hospital room and board benefit, in appropriate lines a, b, and c. For example, if you insure 100 aged persons for hospital expenses, of whom 75 have policies which pay $10 a day or less in hospital, 20 pay $12 a day, and 5 pay $20 a day, insert 100 in line 1, 75 in line a, 20 in line b, and 5 in line c. Similarly, distribute total in line 1 by maximum duration of hospital benefits in lines d, e, and f and by maximum ancillary hospital expenses in g, h, and i. |