in excess of the anticipated early year costs. As a minor point, this paragraph contains two factual errors. It is stated that the beneficiary roll increases by 300,000 aged persons per year, whereas the correct figure is about 700,000. Also, it is stated that in 1970 there will be 20 million persons aged 65 and over who will be entitled to the health benefits; actually, this figure represents the total aged population of the country at that time, whereas it is estimated that the total eligibles will number only 18 million.

In the last two paragraphs on page 48, general criticism of our cost estimates is made—namely, to the effect that they have generally been too low. I do not believe that this is the case since there are a number of instances when costs have been overestimated, as well as cases where they have been underestimated. This is particularly true when costs are considered relative to taxable payroll rather than in dollars; the former comparison is the more significant one since the financing of the program is based on a percentage tax rate. An example is given in the statement with the intention of proving the gross understatement in the cost estimates. This allegation is worthy of considerable analysis.

The statement points out that one of our studies, made in 1958, gives an intermediate-cost estimate for the disability insurance program of $548 million in benefit expenditures in 1965 as against actual 1960 disbursements of $568 million. It would indeed be a serious situation if the actual figure for 1960 were already larger than the intermediate estimate for 1965. Such is not the case, however, because the two figures cited are not comparable.

The 1965 estimate is taken from Actuarial Study No. 48 and relates to the 1965 act. On the other hand, the actual 1960 figure represents the resulting experience after the liberalizations in the 1958 act-provision of dependents benefits; liberalization of insured-status provisions; elimination of the provision providing for offsetting of other Federal disabilty benefits and State workmen's compensation benefits; and general 7 percent increase in the benefit level (and also for December 1960, the effect of eliminating the age-50 requirement). The effect of the addition of dependents benefits can readily be eliminated from the actual 1960 experience; $79 million was paid in such benefits, leaving $489 million payable in benefits to disabled workers. The combined effect of the 7 percent benefit increase, the liberalized insured-status provisions, and the elimination of the offset provision is a relative increase in cost of about 25 percent. Thus, the original estimate of $548 million for 1965 should be increased by 25 percent to $685 million, before it is compared with the 1960 figure of $489 million in benefits for disabled workers (i.e., exclusive of dependents benefits).

The original estimate for 1960 (shown in table 15 of Actuarial Study No. 43) was $350 million for the intermediate-cost estimate. When this figure is adjusted upward by 25 percent to reflect the liberalizations in the 1958 amendments, it becomes $438 million. Thus, the actual benefit experience of $489 million was about 10 percent above the original estimate. Even this dos not take into account the fact that the original estimate was based on 1956 earnings levels, while the actual benefits paid resulted from the higher earnings that arose. These higher earnings also resulted in higher contribution income in 1960 than was originally estimated-namely, an actual figure of $1,010 million, as against the original estimate of about $925 million. In other words, about $85 million more in income was received than initially estimated, versus about $50 million more in actual benefit payments than originally estimated (after adjustment for changes in the law in 1958).

ROBERT J. MEYERS.

The CHAIRMAN. The committee will recess for about 15 minutes. (Brief recess.)

The CHAIRMAN. The committee will please be in order.

It is the Chair's genuine pleasure to welcome to the committee today a friend of many years, George H. Ellison, of Little Rock, Ark., who is the president of the Arkansas State American Federation of Labor-Congress of Industrial Organizations. Mr. Ellison is one of Arkansas' very finest citizens and I am genuinely pleased to have this opportunity of presenting him to the other members of the com

mittee.

Mr. Ellison, you are recognized, sir.

STATEMENT OF GEORGE H. ELLISON, PRESIDENT, ARKANSAS STATE AFL-CIO

Mr. ELLISON. Thank you, Mr. Chairman. It certainly is a pleasure to me to be able to participate in this, especially in view of the fact that only a few minutes ago there seemed to be some question as to whether or not rank and file or local union members were in support of the national office.

I can tell you that the national office has never had such support from the rank-and-file members as they do in support of the King bill. The CHAIRMAN. The Chair is quite well aware of the fact and stated earlier, that the organizations having an interest in this have assisted the Chair in limiting the number of witnesses who are actually testifying. There were some 400 requests to testify on this subject matter. Many of those requests were from local State organizations of the labor movement as well as State medical societies, State chambers of commerce, and so on. About 200 of the requests were eliminated through the cooperation of the national organizations to which these State organizations belong.

You are here speaking for a State department of the AFL-CIO. We are pleased to have you.

Mr. ELLISON. Thank you. I am grateful for the opportunity to tell you of the experience of union people in Arkansas and of their reasons for supporting the King bill, H.R. 4222.

The issue of health care for the aged is one that has stirred up great interest among our people. This is because they know that health care for the aged is not just a matter for the elderly themselves. Most of us have parents who are getting on in years-many of them too old to work-and the younger folks are naturally caring for them. This is not easy when you have growing children to feed and educate at the same time.

The old people would rather be independent, but the facts I have received from our Arkansas Welfare Department show why so many of them have to go without the things they need, including medical care, or turn to their children for help.

According to the new census, we have 194,000 people over 65— 102,000 of them are covered under social security; 56,000 are on the State welfare rolls. Of these, 8,000 get both a small welfare grant and a small social security payment. The social security payment is so small they still need and can qualify for welfare payments.

The average welfare grant in our State is $52 a month. The average old-age benefit paid to a retired worker is $60 a month. But, the average widow's benefit is only $48.41 a month. One out of three widows got $33 a month or less before the recent action by the Congress. Now the amount should be at least 10 percent higher. But that is still not enough to pay for hospital bills, nursing-home bills, and drugs during long illnesses. This won't really meet everyday needs.

According to the welfare department, 80 percent of the people over 65 in our State have an income under $1,500 a year, and 60 percent have incomes under $1,200 a year.

We made a real effort in Arkansas to pass a good law that would let us participate in the Kerr-Mills amendments passed last year. But, we still don't have a program. We put through a law that would

have helped quite a few people even though we didn't like the idea of having to go through a means test instead of having health benefits through social security. But that law, which was to become effective July 1, is still waiting for the necessary money. Unless the special session of our legislature, which is to meet the latter part of this month, is able to appropriate the necessary funds for this program, Arkansas will not be able to provide medical care under the Kerr-Mills amendments.

It has been pointed out that Arkansas did pass a law and plans to take advantage of the Kerr-Mills law. Actually, what happened was that they did appropriate $2 million which, under the 80-20 matching grant would have amounted to some $10 million to take care of the medical program, but Arkansas prohibits deficit spending by any State agency or department, so it is one thing for the legislature to appropriate money, it is quite another for the agency or department to actually receive the money.

So the first of the year the money was not available. The welfare commissioner announced that he hoped to be able to put this program into effect by the end of September. He has been told, and this announcement was made last month, that the $2 million would not be available, that the most he could expect from the revenues that have been received by the State is $1.4 million, which will cut the $10 million down to $7 million, again, under the matching grant basis. Now, last year under the welfare system we spent $6 million, providing drugs and limited medical care for some 30,000 people. That was primarily dependent children. Now we have 38,000 people plus the 56,000 that are already on welfare over 65 who can participate under the Kerr-Mills amendment.

So you can readily see that $7 million is not going to amount to much in the way of a medical program in Arkansas.

But, let us look at the plan which the State submitted, assuming the funds are made available. To be eligible, a person has to be 65 or older and have an income of less than $1,200 per year. For a couple, the income limit is $1,500 per year. You can't have a home that is valued at more than $7,500. That cuts out a lot of people. Of course, at today's prices that is not much of a home.

You can't have personal property, including your automobile, tools, real estate, other than your home, and cash surrender value on life insurance of more than $2,500.

Anyone who has worked all his life in Arkansas and been able to plan for his old age is likely to have more than $2,500 in personal property. That will disqualify many people. Then there is a special gimmick-you can't have more than $300 in cash, including a savings account. One thing that a lot of older people in the South are afraid of is that money won't be available to provide a decent funeral. Many older couples will have a savings account of $300 to $400 which they refer to as their burying money.

These people would not touch this little savings account if their lives depended on it. Yet, because they have provided for their funeral expenses, they will be disqualified from receiving medical care under the Kerr-Mills amendments in Arkansas.

But even if the State finds the money and people meet this strict test, not all of their health bills are going to be paid. In most cases they can be in the hospital only 30 days a year. If they are in a nurs

ing home, they can only get drugs up to $5 a month and only two doctors' visits a month. Nothing is said about paying for doctors' visits in your own home or if you go to his office. If you go to an outpatient clinic, that is covered, but usually not more than two visits a month. If we don't get all the money we need from the legislature, these benefits will be cut still further. If you enact the King bill, that will take care of the health bills for 102,000 people under social security. That would make it much easier for Arkansas to look after the 38,000 people who will be looking to the Kerr-Mills law for help.

Considering the state of finances in Arkansas, even that will be quite a burden, but we will do much better by them than we would otherwise.

A lot is being said these days about people looking to the Government to give them handouts rather than working. I can assure you our people in Arkansas don't like the idea of going on welfare. That is why they think the Kerr-Mills bill is not enough. It is all right if you have nothing else. But, we want to earn good wages and have a chance to keep on working even when we can't keep up the same pace as when we were younger. Too many older folks are out of work or just getting odd jobs even before they reach 65. But, they don't want to have to prove they are paupers every time they need to see a doctor or go to a hospital.

Our unions have done a lot of good in getting hospital benefits for people while they are still working. Most people in Arkansas working under a union contract have hospitalization insurance. Some is financed in total by the company, but most plans are on a matching basis. But I know of no company in the State of Arkansas that allows its retired workers to participate in their plant group hospitalization plan. My own local has the best insurance coverage I know of in the State. We have complete, total coverage, but you cannot participate after retirement.

When these workers retire they have reached an age when they need hospitalization coverage more than ever before. Any private insurance plan that is available to them will either be so high they can't afford it on their $60 a month income, or by the time the insurance company adds on the exception riders, they simply have no coverage left.

Considerable excitement was caused this year when Miss Fannie Hardy, assistant State insurance commissioner, publicly endorsed medical care for the aged under the social security system. She is also national president this year of the Federation of Business & Professional Women's Clubs. She knows from the complaints her department receives that private insurance is not the answer. Too often people spend more than they can afford on medical insurance and, as Miss Hardy told the press, "when they got sick they would discover that their case was not covered by their policy."

She was, of course, attacked by some of the medical societies. But our labor councils unanimously voted appreciation of her stand.

The Arkansas State AFL-CIO supports the King bill because working people need low-cost health insurance which will not be canceled when they are unable to pay the premium because of unemployment or disability. Such insurance is not provided by any private carrier. But the King bill will furnish such needed protection.

Thank you.

The CHAIRMAN. Mr. Ellison, we appreciate your statement very much in support of the legislation before the committee. You appeared here at the request of the membership of your union within the State to express these views, did you not?

Mr. ELLISON. Yes, sir.

The CHAIRMAN. The members of your union in the State have, you say, met in their local unions in various parts of the State and their attitude toward the legislation has been unanimous.

Mr. ELLISON. Yes, sir. In fact, I don't know of any issue that has ever created as much interest in local union meetings as the health care. Of course, we started discussing this, particularly the social security approach, under the Forand bill. It has been a matter in all of our education conferences. We hold about 20 in the State, in all the major cities. I don't know of any issue in my memory that has had more support or more interest by the rank and file people than the social security approach to medical care.

You see, our problem is, when we retire, we are at an age when our income is cut, our premiums are higher and everybody at 65 has arthritis or murmur of the heart. By the time they list everything that is wrong with you, you have no coverage. The cost is prohibitive.

The CHAIRMAN. It is the view, then, of the people you represent within our State that they would welcome the opportunity of paying this additional tax in order to get this protection at 65?

Mr. ELLISON. They feel like this about it, Mr. Chairman: It is going to cost us $12 a year at the most. Of course, the average wage in Arkansas, as you know, many of them make far less than the $4,800. For instance, I am 42 years old. I will pay the $12 a year for the next 23 years. For that I am getting coverage for my mother and I have paid-up hospitalization for me when I retire. That is the way we look at it.

The CHAIRMAN. On the part of your members, then, you have concluded that there is no objection to the increases in the tax involved in this?

Mr. ELLISON. I have discussed this for the last 3 years, I suppose, in every local union in the State of Arkansas. I have discussed it in front of religious groups. A couple of months ago I discussed it in front of the Board of Aldermen, the City Council of the City of Newport, and I have never found anyone that, once they understood the social security approach to this problem, that they have been opposed to it with the exception of the doctors.

In the Newport meeting the press was there. There were six members on the council. Five of the six members made definite statements to the press. It was carried on the front page the next day--I have the clippings expressing their approval and support of the social security program.

You know that Newport has been an agricultural town. You cannot, by any stretch of the imagination, say it was one of these redeyed, liberal communities.

The CHAIRMAN. I would not describe Newport as being that, if you are talking about Newport in Jackson County.

Mr. ELLISON. I am talking about Newport in the Second Congressional District of Arkansas.

The CHAIRMAN. That is very close to home.