The elderly who now hold private health insurance are having great difficulty keeping even an inadequate level of protection. They find themselves squeezed between higher premiums and shrinking benefits, as hospital and medical costs continue to climb.

As a result, increasing numbers of our older people are confronted with financial catastrophe brought on by illness.

It is quite clear that the Congress has the responsibility and the obligation to act, and act quickly.

It is equally apparent that enactment of a program of hospital insurance financed through social security is the logical course for us to follow.

CHAPTER I

THE NUMBER OF OLDER PEOPLE COVERED BY HEALTH INSURANCE

Slightly more than 9 million of the 18 million older Americans hold hospital insurance policies.

The health insurance industry has claimed at least 1 million more aged are insured than is indicated by the total we have cited above. The Health Insurance Association of America says that "10,300,000 aged were insured at the end of 1962-60 percent of the noninstitutional aged population."

The dispute over this 1 million difference goes to the core of the controversy over the most suitable methods of financing hospital insurance for the elderly. Conceivably, the disparity could be the result of honest differences of methodology. But, extensive data developed by this subcommittee leads to the firm conclusion that the inflated coverage figures of the health insurance industry were concocted to create the impression that commercial health insurance coverage is expanding so rapidly that Congress need consider no further action on the problem. To create an illusion of tremendous strides by private health insurance in covering the aged would undoubtedly have an effect upon congressional consideration of health care measures such as the King-Anderson proposal. In reality, however, the "stride" was no more than a "limp."

This "numbers game" has most serious implications for the wellbeing of our older people. It is one thing to present a point of view in the most favorable light possible. It is quite another thing to substitute fancy for fact.

A clear-cut example of our concern over the accuracy of the claims of the Health Insurance Association of America occurred last November. On November 22, 1963, the association (a registered lobbyist) appeared before the Ways and Means Committee of the House of Representatives to testify in opposition to H.R. 3920, the King-Anderson bill. During the course of their testimony, spokesmen for the Health Insurance Association said:

Today the aged have available coverage through (1) individual company mass enrollment programs, first introduced about 5 years ago and affording coverage irrespective of condition of health, which have already enrolled over 2 million senior citizens. [Emphasis supplied.]

A footnote to that statement cited as the source of the claim a publication of the Health Insurance Association of America, "An Estimate of the Extent of Private Health Insurance Coverage of the Aged as of December 31, 1962, Health Insurance Association of America, July 1963." This subcommittee examined the source document which says:

Through a development of the last 4 years, a mass enrollment approach whereby all persons 65 years of age and older

in a given State can be insured regardless of present or past
condition of health, well over 1 million aged persons have
become insured. [Emphasis supplied.]

The statement "well over 1 million" is not quite the same thing as "more than 2 million." But, there is more to this story.

In November of 1963, only three insurance companies wrote the mass enrollment policies referred to by the Health Insurance Association of America. The programs involved were the "Golden 65" plan of the Continental Casualty Co., the "Senior Security" plan of Mutual of Omaha, and the "Fund 65" policy offered by the Fireman's Fund Insurance Co.

The three companies concerned reported their enrollment to this Subcommittee. The most generous interpretation of the data supplied (see appendix A) yields a total of less than 750,000 different senior citizens covered by the mass enrollment programs at the end of 1963-about one-third of the 2 million originally claimed by the HIAA.

The extent to which the health insurance industry misinformation has been relied upon is evident even within our own subcommittee. In the "Minority Views" incorporated in our October 1963 report on the Kerr-Mills program, the following statement was made about the "mass enrollment" programs offered by individual health insurance companies:

According to a report made by J. F. Follmann, Jr., director of information and research, Health Insurance Association of America, at the end of 1961, 55 percent of the people past 65 had voluntary health insurance coverage.

It should be noted that this report is almost 2 years old. Since then there has been an intensive development and sale of new health insurance plans for older people. These have included mass enrollment plans requiring no physical examination. Several companies have sold over 1 million each of such plans. [Emphasis supplied.]

As we have noted, the three companies offering mass enrollment plans which do not include the right on the part of the company to refuse to issue policies because of the older person's medical history, in total, have less than 750,000 different people covered.1

This example of figure padding is rather clear cut. Later sections of this report describe more subtle variations of the "numbers game.' Other data made available to the Subcommittee on Health of the Elderly in response to its questionnaires also indicate that Blue Cross and other private health insurers-such as the Continental Casualty Co.-have substantially overstated the numbers of different aged people to whom they provide hospital insurance.

SURVEYS TO DETERMINE THE NUMBER OF AGED INSURED

During the past year, three reports have been made public relative to the number of older people holding health insurance. The earliest of the three, that of the Health Insurance Association of America,

1 (a) Continental Casualty Co.: 256,000 different people covered under "Golden 65." (b) Fireman's Fund: 42,000 different people enrolled in "Fund 65."

(c) Mutual of Omaha: 450,000 policies of all types issued under its "Senior Security" program (including 83,500 policies which the company could have refused to issue on the basis of medical history, and 145,000 "weekly indemnity" policies which only provide a supplemental hospital benefit of $7.14 daily).

claimed 10,300,000 different persons covered by some form of health insurance, "60 percent of the noninstitutionalized aged," at the end of December 1962. The HIAA claim was based upon reports from 123 of its member insurance companies and projected to include the association's estimate of the number of elderly insured by nonmember companies. HIAA then added to its total the enrollment of Blue Cross and other noncommercial insurers.

The second report was made by the National Health Survey of the U.S. Public Health Service based upon household interviews conducted during the period July 1, 1962, through June 1963. That report indicated 9,100,000 different older people insured-"approximately 54 percent of the civilian, noninstitutional population.' (An estimated 750,000-800,000 of the elderly are institutionalized.) The third report was that made by the Social Security Administration predicated upon interviews of the elderly in households and institutions by the Bureau of the Census. That survey revealed that 9 million of the total population (including those in institutions)some 51 percent of our elderly-held hospital insurance at the end of December 1962.

The social security "Survey of the Aged" noted that relatively few of the elderly in institutions have hospital insurance policies. But, assuming that as many as 10 percent of the institutionalized aged held hospital insurance policies, this would add about 80,000 people to the National Health Survey's 9,100,000. The difference in the totals reported by the National Health Survey and the Social Security Administration is relatively slight and may, in part, be accounted for by the fact that the report of the National Health Survey spanned a different period of time. The addition of the approximately 80,000 institutionalized aged with insurance to the National Health Survey's total of 9,100,000 for the noninstitutionalized elderly would result in a finding that 52 percent of the total older population hold some form of hospital insurance.

The survey conducted for the Social Security Administration by the Bureau of the Census yielded, in our opinion, the most accurate estimate of the number of aged covered by hospital insurance. The National Health Survey included the aged within a survey of all ages, while the social security study concentrated exclusively on older people. Nonetheless, as we have noted, the difference between the two surveys is very slight. The findings of the Health Insurance Association of America, however, are subject to serious question.

CRITICISM OF HEALTH INSURANCE ASSOCIATION'S METHODOLOGY

Our first disagreement with HIAA stems from that organization's conclusion that its reports from member-insurers and projections for nonmembers, indicate that "60 percent of the noninstitutionalized aged" are protected by "some form of health insurance." The key words, at this point, are "noninstitutionalized aged." For, unless specifically omitted (and the member companies were not asked to do so), the insurance company reports would include in their totals the elderly in institutions who held policies. Thus, the percent of older people with hospital insurance should have been calculated on the basis of the total aged population—including those hundreds of thousands in institutions.