placing this health care under social security can such a program be financed realistically. In effect, the legislation would transfer to the self-supporting social security insurance system the financial burden which now falls on individuals, private charities, and public assistance, financed by taxpayers. Mr. Chairman, what we are now considering can be stated in simple terms: the social security system in America which now protects the aged against the complete loss of income after retirement would also protect them against total medical privation.

This plan offers a feasible method for coming to grips with a clearly demonstrable need, the difficulties encountered by a great portion of our senior citizens to finance certain heavy medical costs. I fully realize that the provisions of the bill may not be the final answer, but I respectfully urge that the committee undertake a full review of the problem with the objective of developing a reasonable solution which will not impose exorbitant costs on our aged.

I would like to discuss briefly what I believe are several pertinent questions in regard to this proposed legislation. Is it needed? Is it desired? Is it preferable to suggested alternatives? And, what is its projected cost?

The report by the Department of Health, Education, and Welfare in response to the committee's request is sprinkled with references to the lower incomes and more costly medical expenses of the aged. The report declares in the introduction that

Aged persons now find it difficult to obtain adequate health insurance protection. As a group they have more need of medical services than younger persons. Because they use more than others, the average medical cost and hence the current insurance premium needed for aged persons is between two and three times as high as for younger persons.

Up until quite recently, most persons over 65 could not buy health insurance. At present, less than half of all persons aged 65 and over have some type of health insurance. While the extent of insurance protection has increased in recent years, voluntary action alone cannot meet the full need. Some who need the insurance most, because they already have expensive health problems, will find they are not accepted as insurable risks. Others, who could be considered good risks, will find the premium cost more than can be spared out of an income already stretched thin by everyday necessities.

Incomewise, the aged are not in a strong position. Of the 9.3 million on old-age, survivors, and disability insurance, about one-fifth have no other income than the monthly benefits they receive. Of the couples, with the husband aged 65 or over, who have their own households, almost half had cash incomes of less than $2,000 in 1960 and only 13.5 percent reported incomes of $5,000 or more. Half of the aged persons living alone or with nonrelatives-not in institutions— had incomes of $1,010 or less in the same year. Nonmarried aged persons living with relatives had, on the average, even less than this figure, the HEW report indicates.

The report specifies that the median total income of retired couples drawing benefits under the OASI, in 1960, was $2,190, or $183 a month.

What do these figures mean in respect to the need for expanding the social security program to provide insurance against the costs of certain medical expenses for the aged?

Let me refer to volume III of "Studies of the Aged and Aging," prepared by the staff of the Senate Committee on Labor and Public Welfare. The report is entitled "Income and Income Maintenance.”

The report points out that the Welfare and Health Council of New York City in 1955 prepared a family budget standard for the city that corresponded to the level of the city worker's family budget. The total cost of goods and services for an elderly couple living alone in New York City as of October 1954 was estimated at $2,137 if the head and his wife were both retired.

This figure was reduced to about $1,900 if the family included another member living with them.

Such costs might not be similar in all other areas of the United States, but, the report points out, they may not be greatly in excess of the average for the large cities, particularly when it is realized that almost two-thirds of the aged population live in urban communities.

These budget estimates were made in 1954 and, as we all know, have increased considerably since then. If almost half of the retired couples owning their own homes in 1960 had cash incomes of less than $2,000 as I previously mentioned, it is clear that many aged couples in cities cannot maintain a level of living equivalent to that represented by the New York City budget standard.

The same conclusion applies to nonmarried aged persons living alone. The 1954 budget estimate for these citizens was about $1,600 and $1,500 for retired men and women, respectively. These figures are to be compared with the HEW report that half of the aged persons living alone or with nonrelatives-not in institutions-in 1960 had incomes of $1,010 or less. Finally, the HEW report states that:

No matter what study is cited or how it treats income, it is likely to show that at least half of all persons 65 and over have less than $1,000 cash income for a year.

How can the aged be expected to provide adequately for their medical expenses under such conditions?

The HEW report points out that:

Persons 65 and over are twice as likely as younger persons to have one or more chronic conditions, 6 times as likely to have their activity restricted, and 13 times as likely to be limited in their mobility. Specifically, according to the national health survey, 77 percent of all persons 65 and over not in institutions had one or more chronic conditions or impairments and 42 percent were limited in their activity.

However, hospital bills, drugs, and medicines make up considerably larger proportions of the medical care costs for the aged than for the population as a whole.

As far as costs are concerned, the HEW reports that some 40 percent of those drawing OASI benefits in 1957 had medical costs of $200 or more. Of those who were hospitalized in general hospitals, only 18 percent had costs below $400. For the average couple with one or more members hospitalized, the median cost was about $700. Only about 9 percent of the couples reporting had any of their expenses covered by insurance.

With median medical expenses for married couples receiving OASI benefits running to a little less than $200 annually, and median income of such couples slightly under $2,200, medical expenses on the average for these aged people amounted to almost 10 percent of annual income. When we consider that the HEW reports that more than four-fifths of the aged incurring medical costs assumed responsibility themselves for

all their medical costs incurred during the year, the drain on the assets of the aged is readily apparent.

Thus, Mr. Chairman, we can see how medical costs can shatter the economic well-being of many of the retired and can encumber their children with a tremendous load in paying such costs. Insurance plans do not offer adequate coverage. Three out of four aged persons can now, and would be able to in the future under the health insurance provisions, show need in relation to hospital costs. These medical costs average about one-third of the income of these people, and the insurance plans now in operation defray only one-sixth of the cost for those aged who do have insurance protection. These plans can pay no more than approximately 7 percent of the overall medical costs for the vast body of our elder citizens.

This, Mr. Chairman, is why I believe that enactment of H.R. 4222 is necessary. Whereas some 46 percent of the aged are reported to have some form of health insurance of varying benefits, the adoption of H.R. 4222 would enable some 80 percent of our aged population to receive specified protection against the heaviest of medical expenses, that is, hospitalization and nursing home care.

Is such a bill desired by the public, Mr. Chairman? Last spring I sent out to the voters in my district a questionnaire. Among the questions was one asking each voter if he or she favored amending the Social Security Act to provide hospital, nursing home, and surgical services to our senior citizens. The results of the poll indicate that 71 percent are in favor of amending the act in this fashion.

This is a resounding percentage. I am sure that favorable percentages have ben returned to similar questionnaires sent out by other Members.

I have also received numerous letters urging adoption of the bill. It is a subject that in various forms has been before Congress for more than 10 years and sponsors of proposals in the field, as we know, have included among others, such eminent Members of Congress as the late Senator Taft and the chairman of the Senate Labor and Public Welfare Committee, Senator Hill.

What would be the cost of the program? According to the HEW report, if the program were restricted to eligible aged persons, hospital service benefits would cost $1,015 million in 1960. To this would be added $25 million for limited skilled nursing home benefits (for the aged and disabled). The cost for home health services and outpatient diagnostic services together would be $20 million. The total cost of health care during its first year of operation (October 1962 to October 1963) would thus amount to $1,060 million.

These are estimates of experts. Others have ranged as high as $1,370 million. In general I believe that it would be safe to say that the total cost would run in the neighborhood of slightly over $1 billion in 1962. It may be trite to refer to such oft-quoted figures as national spending of $6,074 million in 1957 for cigarettes or $9,140 million for liquor, but few people could reasonably argue that 1 billion for the health of our senior citizens would not be a far more salutory expenditure.

These figures and facts, Mr. Chairman, convince me that the only effective and workable answer is the social security approach. That is why I urge your fullest consideration of H.R. 4222 and the added features of H.R. 4111.

To get back to H.R. 4111, may I again point out its similarity to H.R. 4222, and explain the area of difference.

My bill, like the King bill, provides hospital care up to 60 days, nursing home care up to 120 days, outpatient diagnostic service, and surgical treatment. There is a more liberal outpatient diagnostic service and nursing home care without the requirement of prior hospitalization, both of which are included in H.R. 4222, but are more restrictive than what is provided in this new bill. Furthermore, in my bill, surgical services are provided in a hospital, whereas there is no such provision for them in Ĥ.R. 4222.

Also, under my bill, H.R. 4111, men from age 65 and women from age 62 would be covered, either by the social security system, railroad retirement, Federal civil service, or a voluntary plan. The voluntary plan entitles men under 65 and women under 62 to contribute at the same rates as social security into a Federal health care trust fund which would be administered by the Social Security Administration to take care of their medical expenses when they reach retirement age. In order that individuals now at retirement age would not be left out, the new bill contains a provision to give them immediate coverage whether or not they have paid into the fund; such coverage without payment being an emergency step would be effective until January 1, ! 1964. To be eligible thereafter a person should have to have paid into the fund.

The bill also provides that where widows and orphans are receiving social security death benefits, they would also receive medical coverage. Further, the bill would allow States and municipal governments to enter and insure their employees against medical costs when retired.

The cost of the program remains at the rate of one-fourth of 1 percent of the incomes of the salaried, to $15 a year maximum; and three-eighths of 1 percent of the incomes of the self-employed to a maximum of $22.50 a year.

The bill offers no danger of Government regulation of medicine. In fact, the terms of the bill specifically forbid it. Its operation would not interfere with the practice of medicine, the manner in which medical services are provided, or the internal management of participating institutions. There would be complete freedom of choice of doctors and medical institutions and there would be no fixed fees; instead, local conditions would prevail.

Much has been said about the need for medical care for the elderly. Unfortunately, too little heed has been given to the forgotten 4 million who are not on the social security rolls. That is where my bill picks up where H.R. 4222 leaves off. It covers all older citizens, for it is an unhappy fact that those not covered by social security are afflicted to the same degree with the ills which beset those who are. And, with medical expenses 50 percent higher for the elderly, the forgotten 4 million not on social security are hit the hardest.

Let us have no more degrading pauper oaths, means tests or the like. Let us instead guarantee to all our aged, who have used their lives to enrich our land, an old age free from oppressive fears of sickness and the financial catastrophy it can mean.

Mr. Chairman, I believe that H.R. 4222 should be carefully considered by the committee. I believe that it proposes a reasonable method for meeting an obvious need; that it is supported by a great

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many Americans; that it offers a concept superior to suggested alternatives; and, that its cost, spread over an insurance program can be satisfactorily absorbed by the American economy.

Most important, this legislation will not put the Federal Government in competition with the commercial insurance companies. On the contrary, the Health Insurance Benefits Act of 1961 will instigate a new movement towards medical insurance just as the Social Security Act of 1934 stimulated interest in the life and retirement insurance plans of private companies.

I repeat, it certainly is not socialized medicine. Like the other great welfare programs which our Nation has undertaken, such as national distribution of Salk polio vaccine, it offers a pragmatic solution to an existing problem. This program is simply another application of the social security plan. A small sum provided by the employee, and a small sum provided by the employer, will amount to enough money to disperse those ominous clouds that now hover over the heads of our citizens in their otherwise peaceful retirement years. I thank the committee for its courtesy and I respectfully urge, in its consideration of H.R. 4222, that it seriously study the additional provisions contained in my bill, H.R. 4111, and that it recommend effective and meaningful legislation in this vital area.

The CHAIRMAN. Dr. Durno? Dr. Durno is our colleague from the State of Oregon and we appreciate very much having him with us this morning. Dr. Durno, you are recognized.

STATEMENT OF HON. EDWIN R. DURNO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON

Dr. DURNO. Thank you, Mr. Chairman.

Mr. Chairman and members of the committee, thank you very much for permitting me to appear before this committee. I would appreciate the privilege of revising and extending the remarks that are on my paper before the committee.

The CHAIRMAN. You have that permission already, Doctor.
Dr. DURNO. Thank you.

I have practiced private medicine for more than 30 years before becoming a Member of Congress.

As a physician I belonged to the local and State medical societies; to the AMA and the American College of Surgeons. I do want to preface my remarks today by saying that I have never engaged in any of the organizational activities of the AMA.

I have not attended a single meeting of the AMA, and I consider myself in no way a spokesman of the AMA. My primary interest has been in the development of better medical care in my country and in my State, and I have vigorously followed that precept.

I helped organize the first doctor-owned hospital association in Oregon which was the forerunner of the present Blue Shield and the Blue Cross plans, in the early thirties, and I was a member of the State board of medical examiners for 12 years.

In that capacity as a board member we acted as a quasi-judicial body between the public and the medical profession. We listened to complaints and grievances.