insurance daily room and board allowance of $10 remains the same even though the actual cost of that care rises from $15 to $20 a day. Blue Cross, on the other hand, under the service concept of payment must increase its payout by another $5 to meet the rise. Thus, the increasing cost of care plus the fact that Blue Cross enrolls peoplesuch as the elderly-who use above-average quantities of hospital services, means that Blue Cross rates rise more rapidly and sharply than commercial health insurance. These facts undoubtedly scare off many prospective Blue Cross group accounts.

But appreciation of the competitive situation confronting some Blue Cross plans does not solve the problem of providing reasonably priced adequate protection to older people. And, as Professor van Dyke put it, there are important questions as to whether Blue Cross should mold itself into a shape resembling that of the commercial health insurer so that it may compete on similar terms. Professor van Dyke commented:

I would like to discuss, however, the question of competition from a somewhat different point of view than a series of companies with a series of salesmen taking business away from each other in a saturated market. Competition to be meaningful to the public, should offer a choice. It is painful to a Blue Cross board to lose a large account when it is clear that it could be retained through experience rating. But if Blue Cross abandons community rating, the public is deprived of the choice between a community-rated and experience-rated plans. Anyone who wants an experiencerated hospital plan can buy it from an insurance company. Blue Cross is the only plan offering community rating. Looking at it from the public viewpoint, what advantage is it to the public to establish a tax exempt Blue Cross corporation for the purpose of competing with insurance companies on their own terms? Who gains from such an arrangement? [Emphasis supplied.]

As we have stated and indicated Blue Cross and its older subscribers are in very serious trouble. Blue Cross is faced with an impossible dilemma under present circumstances. To continue as it has, means frequent rate increases which will make Blue Cross virtually noncompetitive with the commercial health insurers. The route of experience rating and abandonment of service benefits is nothing less than a complete denial of the basic reasons for the existence of Blue Cross. There is, however, an alternative-enactment of a program of hospital insurance benefits for the elderly financed through the social security mechanism.

A social-security-financed hospital insurance program would relieve Blue Cross of the virtually intolerable pressure upon premium rates generated by the millions of its over-65 subscribers who have, heretofore, paid substantially less than the actual cost of their protection. (A Blue Cross spokesman estimated in 1961 that it then cost Blue Cross $375 million a year to provide benefits to older subscribers but that the plans received only $200 million in premiums from the elderly.) Blue Cross would, obviously, then be in a more competitive position.

Without a social-security-financed, hospital insurance program for the elderly, older Blue Cross subscribers will find it progressively more difficult to cope with the rapidly rising premium costs. The elderly will, in effect, be priced out of Blue Cross. Without Blue Cross protection, millions of older Americans may have no recourse other than the public assistance rolls when illness strikes.

MINORITY VIEWS OF SENATOR EVERETT MCKINLEY DIRKSEN, SENATOR BARRY GOLDWATER, AND SENATOR FRANK CARLSON

Progress in financing health care for older Americans during the past 10 years, 5 years and, indeed, the past 2 years, has been swift and far reaching.

The dynamic character of the recent record, attested by statistical evidence from all sources, clearly promises continuing growth of effective health protection for older persons in the months ahead.

These advances are products of individual action, private corporate initiative, both profit and nonprofit, and governmental programs at Federal and State levels.

Future progress calls for aggressive extension of voluntary health insurance, which is the method of choice for most Americans, and for more effective use of Federal-State programs for persons in need of help.

Abandonment of the national philosophy through which the current vigorous movement has been created would be regrettable. Appropriate changes in governmental programs within the concepts of established policies, on the other hand, should be considered most carefully.

Any evaluation of progress, past and anticipated, must be based on the record. In health care for older Americans, the facts, including those revealed during the April 27-29, 1964, hearings of the subcommittee, speak for themselves.

Appraisal of progress calls for answers to several key questions.

Have recent increases in health insurance coverage of older persons kept pace with the needs of most in this age group?

Does the evidence show that effective health insurance is available to more and more people?

Does the record show increases in access to and purchase of guaranteed renewable insurance?

Does the variety of insurance policies and plans permit selection of coverages most suited to the varying needs of individuals?

Are benefits being paid through voluntary health insurance to older people commensurate with rising cost of services?

Are Blue Cross, Blue Shield, and the health insurance industry making vigorous efforts to expand and improve coverage for persons past 65?

Is progress of voluntary health insurance sufficient to warrant confidence in its ability to meet the needs of most older persons?

The answer to each of these questions, as clearly revealed in the April 27-29, 1964, hearings by the subcommittee, is a resounding "Yes".

SUBCOMMITTEE HEARINGS, APRIL 27-29, 1964

Approximately 5 million persons past 65 now hold Blue Cross plan membership, including many who have had such coverage throughout

their lives. A comparable number of older persons are protected through private insurance companies and other prepayment plans. These totals approximated 54 to 60 percent of the present population over 65 at the end of 1962.

In these minority views, we are concerned chiefly with the voluntary health insurance record and its relationship to older people. Secondarily, recognition must be given to progress made in Federal-State medical assistance programs. The majority report, however, highlights a diversion which demands special immediate comment.

The majority statement, employing language at once strong and emotionally charged, impugns the integrity of a reputable organization representing a highly important segment of our economy. It is both implied and openly stated that the Health Insurance Association of America, a respected association of insurance companies, has deliberately engaged in falsification of its statistics.

In the development of this thesis, the majority statement contains incorrect statements and false assumptions which will be specified in an appropriate place.

It is recognized by statisticians, including those in Government agencies, that data on any subject can differ. A major reason is difference in methodology. Regardless of methodology, however, errors will occur. The evidence does not show that the data gathering process of the Health Insurance Association of America was other than scientifically conceived and honestly reported.

Dr. Forrest E. Linder, Director, National Center for Health Statistics, Public Health Service, was asked by Senator Dirksen during the April 27-29 subcommittee hearings:

Would you explain the difference [between National Center for Health Statistics and HIAA estimates of persons over 65 holding health insurance] as a result of difference in methodology?

Dr. Linder, responding to this lone question voiced on this matter during the hearings, said:

Well, the two figures are collected by entirely different methods and both methods are subject to technical variation and technical error. As a matter of fact, we regard the correspondence between our figure and the insurance figure as very satisfactorily close, with one factor of the difference being this still undetermined knowledge about the extent of multiple coverage.

I think it is pertinent to say that if the insurance figure is 60 percent and if that is based on the multiple-coverage estimate of 13.5, then if the true multiple-coverage figure was as much as 22, the insurance figure would correspond exactly with ours.

So, I think we can say with some degree of confidence * * * that the amount of coverage is someplace between 54 and 60 and on the amount of duplication, multiple coverage is someplace between 13 and 22.

There is a real possibility, however, that the smokescreen raised in the majority report may obscure the private health insurance record of progress developed at the April 27-29 subcommittee hearings.

In testimony presented to the subcommittee, there was much information on availability of private health insurance for persons over 65, the types of coverage, and the trends with respect to (1) growth in the number of persons covered and (2) expansion of benefits under various plans. None of this positive testimony appears in the majority report.

The minority has no intent to impugn the motives of the majority report. We would caution, however, against uncalled for discrediting of private enterprise and initiative which in so many instances, particularly as related to interests of the elderly, have greatly lessened what might become unnecessary burdens on Government.

It is almost inconceivable that a statement purporting to report on the status of private health insurance for older citizens should be void of reference to progress over the past decade. Regardless of which source of data is used, a tremendous growth pattern is revealed. A report which gives no recognition to this fact can only raise questions as to its credibility.

Neither space nor time available to the minority permits complete response to every specific in the majority's unrestrained criticism of voluntary insurance. Its statement appears to be aimed at discrediting and undermining public confidence in Blue Cross and the health insurance industry.

Nor is such response necessary.

The facts are in the published record of the April 27-29 hearings held by the subcommittee.

At the April hearings the principals involved presented their records and responded to interrogation. Judgment of the majority statement can only be valid when it is related to and compared with those direct confrontations.

NEW DEVELOPMENTS, 1957-62

A chronological review of selected events in the 5 years between 1957 and 1962 provides a dramatic picture of recent developments in financing medical care and the manner in which the Nation is responding to special health needs of older persons:

1957-First over-65 mass enrollment health insurance offering by an individual company (Continental Casualty Co.). 1958-First offering of association group health insurance through an organization with membership generally open to all older persons (American Association of Retired Persons).

1958-First over-65 mass enrollment health insurance offering by an individual company on a national basis (Mutual of Omaha). 1960-Enactment of Kerr-Mills Act by Congress and inauguration under it of first State medical assistance for the aged programs (Massachusetts, Michigan, Oklahoma, Washington, West Virginia). 1961-First offering of statewide mass enrollment plans by a voluntary association of health insurance companies (Connecticut 65). 1962-First offering of over-65 major medical coverage through mass enrollment by an individual insurance company (Continental Casualty Co.).

1962-Fiftieth State extended vendor payment medical services (under Kerr-Mills Act and previous Federal authorization) to old-age assistance recipients (Delaware).