65 and over, in California, including approximately 555,000 past the age of 75 and about 185,000 past 85. About two-thirds, or 869,000, had incomes of less than $2,000. Some 250,000 persons in this group receive assistance under the Federal-State public aid program of old-age assistance. The remaining 600,000 have barely enough to meet their day-to-day needs, much less to cover the costs of prolonged illness and hospitalization. California's aged are more fortunate than most States where the census shows a higher proportion of aged in this low-income category.

Additionally, studies conducted by the Federal Government and others in past years bear out the recognized fact that the need for health care increases with advancing age. I will avoid reference to the specific findings of these studies which include the National Health Survey; the 1959 Report to the Committee on Ways and Means on Hospitalization of OASDI Beneficiaries by the Department of Health, Education, and Welfare; the reports of the Rockefeller Foundation; the recent studies of the U.S. Senate Special Committee on Aging; and the Chart Book of the White House Conference on Aging, issued by the Federal Council on Aging under the chairmanship of Arthur S. Flemming, former Secretary of Health, Education, and Welfare.

These same studies and reports also show clearly that the problem is not met by either private health insurance or existing Federal and State legislation. As a nation, we are still without an administratively feasible and fiscally sound program that would afford the majority of our older citizens protection against such costs and, at the same time, guarantee that they receive health care under conditions which recognize their personal dignity and worth. While it is true that about 46 percent of the aged have some form of hospital insurance, it is often limited protection. The 1957 study of couples receiving social security who had hospital insurance showed that only one-fifth had as much as half of their total medical bills paid by their insurance. One-sixth reported none of their costs were met by their insurance.

The same reports showed that voluntary insurance cannot be relied upon as the major approach to this problem, especially with the known higher incidence of health care needs and limited incomes of the majority of our senior citizens. It is recognized that the costs of medical care and health care will continue to rise in the future at the rate of 5 percent annually according to most estimates. Under such conditions, it seems obvious that premium rates of voluntary health plans will have to be adjusted upward accordingly. It is doubtful that voluntary health insurance can expand to the point where it can be relied upon by the majority of the aged, either now or in the near future.

2. The King-Anderson bill is the most fiscally sound, administratively feasible, and humane solution to this problem

H.R. 4222 is based upon the utilization of the proven contributory social insurance principle. This same principle over the years has been used successfully to provide for a basic income upon retirement in old age to protect against the risks of permanent disability, and to provide against the loss of income to the family, caused by the death of the breadwinner. The extension of this same principle to pay for much of the health care costs of old age is eminently sound. It would mean that individuals could build up a prepaid system of health coverage for the period of retirement while they are working and able to pay. The program would be administered under the present social security and railroad retirement programs in the Social Security Act which have a record of providing maximum benefits at a minimum administrative expense. Most important, enactment of H.R. 4222 would avoid the continued pauperization of many aged citizens who, after lengthy periods as wage earners and contributors must virtually exhaust their personal and family resources in order to qualify for help in a medical crisis from either public or private sources. That this condition should exist in a country as rich and as enlightened as the United States borders on the indefensible.

3. H.R. 4222 has been described as a broad but modest proposal

Principally, it is designed to provide a way of paying the costs of hospital care, nursing home care, certain outpatient diagnostic services, and some allied services in the home, such as visiting nurse and homemaker services within certain limits as set forth in the bill. Since it excludes payment of such services as private physicians and dental services, drugs, and other forms of health care, many persons will want and need to purchase through available health plans coverage against such costs. Their ability to do so would be

facilitated if they had the form of protection that H.R. 4222 would provide. The insurance industry would then be able to pioneer in flexible and supplementary coverage which could result in comprehensive coverage, or most costs of medical care, available to all but a fraction of the total group of the aged. The argument is heard that enactment of H.R. 4222 would be detrimental to voluntary health insurance as well as undermine individual incentive to plan and save for their retirement years. The same argument was raised early in the history of the social security program. That the dire predictions of the thirties never came to pass is clear as a review of the volume of private life and pension insurance now held in this country will reveal. This particular argument has a tired sound, and I hope these hearings will put it to rest. 4. H.R. 4222 is not socialized medicine. It has been carefully developed so that the private patient-physician relationship will be maintained

Critics of the bill have charged, or implied, that its provisions are "socialized medicine." This is fallacious. The bill provides a sound method of financing certain health-care costs only. It does not place the Federal Government in the position of operating and manning a program of health services. The physician remains absolutely free to prescribe and carry out the treatment indicated. The choice of hospital or physicians remains with the patient, except that the hospital must have agreed to participate in the proposed program. The standards for the various services to be provided are consistent with those adhered to by the recognized health professions and would follow the same standards now already practiced by such groups. Their purpose is to guarantee a certain quality of care and it is only reasonable that they be included.

The passage of H.R. 4222 should, in fact, strengthen, not weaken, the relationship between a doctor and his aged patient. The anxiety that most persons have at a time when hospitalization and surgery is pending should be lessened, especially if both the doctor and the patient know that no barriers to the care indicated exist. Elimination of this fundamental worry over the economic costs of care would expedite, in most instances, the recommendations made by the physician, particularly when hospital care is necessary. On this score, I doubt whether any surveys or studies have adequately plumbed the depths of feelings of desperation that many aged persons have when they are confronted with a long-term illness requiring surgery, hospitalization, and a period of convalescent and aftercare services. I hope there will be some testimony during these hearings on this point, which most practicing physicians recognize.

5. The Kerr-Mills bill is not the answer

As mentioned, California enacted legislation this year which implemented the medical assistance to the aged provisions of the Kerr-Mills bill. While I did not like its provisions requiring a means tests for aged people not receiving old-age assistance, I recognized that some of our older citizens would benefit from the somewhat complicated terms of the act.

Accordingly, the program which was recommended to and enacted by the legislature is designed to assist the chronically ill aged person who requires a lengthy period of hospital or nursing-home care. California Senate bill 325, as enacted, provides for the payment of such medical expenses after the first 30 days for persons in hospitals, nursing homes, or receiving care in their own homes. For fiscal reasons, it was necessary to limit eligibility to persons age 65 and over, whose average monthly income over the next 12 months is not expected to exceed the maximum State old-age assistance grant plus the cost of medical care.

Our State department of social welfare estimates that in fiscal year 1962-63, the first full year of operation, some 60,000 persons will receive help under this program. The total cost for the same year is estimated at $79.5 million, including $39.8 million in Federal funds, $20.3 million in State funds, and $19.4 million from county funds.

Despite these large initial expenditures, it is recognized that the program which we have established in California has limitations. Under it, priority is given to serving the chronically ill aged, a group whose resources are often wiped out when catastrophic, long-term illness strikes. In order to qualify, most heretofore financially independent aged persons will have to use their limited resources until they reach an assistance level. Then, on an individual basis, their claims for aid will need to be investigated by our county departments of social welfare.

We would have preferred a broader and more comprehensive program, one that would have covered short-term hospital care, related surgical expenses,

and contributed to the cost of physician care and drugs. However, with our State's increasing population and in recognition of other heavy demands on both State and local government for services such as education, highways, water, and others, we just could not afford it. Even so, California's plan of implementation compares favorably with some other States.

It is apparent that the Kerr-Mills bill cannot be looked upon as the answer to the health needs of the majority of America's 17 million aged persons. In addition to the inability of States adequately to finance the contemplated programs of "comprehensive care" envisaged under the Kerr-Mills bills, there is a more compelling reason for not regarding it as the solution: The vast majority of aged people do not want to be dependent upon charity when major illness occurs.

I believe their wishes should be respected, particularly now that a workable, sound, and effective proposal such as H.R. 4222 has been introduced. The primary objective of any major plan should be to uphold rather than downgrade the dignity of the aged.

I believe Congress should regard the Kerr-Mills bill as a supplementary program to help persons whose health needs cannot be met through either a combination of social and private health insurance. The present responsibilities in this area at State and local levels would be lessened and their resources could be more intelligently used in meeting unusually expensive health needs of aged persons.

Enactment of H.R. 4222 by the Congress would have just an effect upon California's new medical assistance for the aged program. First, it would meet the costs of hospitalization and nursing-home care for roughly 50 percent of the anticipated caseload for the first 90 days of hospitalization and for the first 180 days of nursing-home care. Second, the cost reduction would make it possible for California to reduce the period during which costs are not covered from 30 days to 21 days, as permitted by California Senate bill 325.

Fifty percent of the aged persons who apply for old-age security in California are also social security beneficiaries. There is reason to believe that the anticipated number of persons who will apply for help under California's program will show at least this percentage receiving social security. Actually, this rate may be higher since about 75 percent of aged persons in California receive social security benefits.

6. Our senior citizens should be treated as social assets rather than social liabilities

America's older people are among her most precious assets. They represent the reservoir of accumulated skills, experience, and knowledge which we too often neglect in our busy contemporary way of life. As workers, they have contributed (many under working conditions unknown today), to the buildings of our economy. As parents and grandparents, they have guided many of us to happy and more satisfactory lives than often was their lot. As citizens, they helped develop, lead, and defend America in the past.

It is unfortunate that in the later years, our way of life too often tends to overlook and isolate many of our senior citizens. Regrettably, we have built up an image of the older person as a dependent, incapable of further contributions. It is a false image, but one which persists.

It seems to me the primary motive behind the recent White House Conference on Aging was to reverse this unfortunate trend. Nearly every recommendation made by the delegates to the Conference was based on the recognition of the need for the aged person to be treated with dignity and respect as an individual.

It is evident that this profound sociological problem underlies and colors much of the controversy which has accompanied this bill and its predecessor, the Forand bill. Congress must consider many complex factors before reaching a decision on this measure. Congress also must decide on a program which recognizes the human elements as well as those of an administrative and technical nature. The measure before you, H.R. 4222, does just that. It recognizes that our aged people are social assets rather than social liabilities. It is based on fiscal and administrative methods that are dignified, businesslike, and will accord aged people the respect they merit in times of medical crisis.

For this reason, as much as any other cited in this statement, I urge your favorable consideration and approval of H.R. 4222.

The CHAIRMAN. Our next witness is Mr. Walter P. Reuther, president of the United Auto Workers and president of the Industrial Union Department of the AFL-CIO.

Mr. Machrowicz?

Mr. MACHROWICZ. Mr. Chairman, I know it is not necessary for me to introduce the witness before us. He has been before us a number of times. But I do just want to say that we in Michigan are very proud of him, not only as a labor leader, but as one who has been interested in the progress in our social development in this country. Although I know there are some members of the medical profession that feel that no one but a doctor is an expert in this area, I think we are dealing here not with a medical problem, but with a social problem, and I think that the witness before us can made a great contribution to our understanding of that problem.

The CHAIRMAN. Thank you, Mr. Machrowicz.

Of course, Mr. Reuther is well known to the members of the committee, having appeared before the committee on other occasions, and we welcome you back to the committee today.

You are recognized.

STATEMENT OF WALTER P. REUTHER, PRESIDENT, UNITED AUTO WORKERS, AND PRESIDENT, INDUSTRIAL UNION DEPARTMENT, AFL-CIO; ACCOMPANIED BY JAMES BRINDLE, DIRECTOR, SOCIAL SECURITY DEPARTMENT, UAW, AND LEONARD LESSER, INDUSTRIAL UNION DEPARTMENT, AFL-CIO

Mr. REUTHER. Thank you.

First, I should like to express my sincere appreciation for the opportunity of once again appearing before your committee on the matter of medical care for the aged. I appear here as the president of the UAW; representing the 1,300,000 members of our union, and their families, and also as president of the industrial union department with approximately 7 million members in the industrial plants of America. I have a written statement which I should like to submit for the record and then to enlarge upon that orally, if I might. The CHAIRMAN. Without objection, your entire statement will appear in the record.

Mr. REUTHER. I would like to present, so that the committee will know the two gentlemen who are with me, Mr. James Brindle, who is the director of the UAW Social Security Department, and Mr. Leonard Lesser, who represents our organization and the IUD on social security matters in Washington.

The CHAIRMAN. We are pleased to have these gentlemen with us. Mr. REUTHER. Mr. Chairman, I appear here in support of the King bill, H.R. 4222. We support that bill because we believe it represents a sensible, a responsible, and a workable approach to a compelling human problem that America must face up to. We believe that this bill is a beginning toward meeting this pressing problem.

I agree with the Congressman from Little Rock who was the first witness before your committee this morning that perhaps we ought to talk about this on a philosophical basis. I happen to believe that no group in America has a monopoly on the loyalty to America and the basic principles for which it has stood these many years.

I happen to believe that America is the great hope for freemen everywhere. I lived under Hitler and I lived under Stalin. I worked in the underground helping the forces of freedom try to fight back

against totalitarianism. I know something about totalitarianism in a practical way, not just in an abstract academic way. I believe that America must find answers to basic problems-to prove that freedom can find these answers, and I think that in our kind of society we must achieve unity in diversity.

Therefore, we have to recognize that you cannot solve problems merely by using scare words. In this situation there are a great number of scare words being used to confuse the issue. There is the talk about compulsion. There is the talk about loss of freedom. There is the talk about socialization of many aspects of American society. I happen to believe that this bill does not take America down that road. Last week, the President of the United States called upon the American people to respond to a deepening crisis in Berlin and he spelled out the broader dimensions of the threat that communism poses to freemen everywhere. I pray, and I am confident, that the American people will respond to that plea by the President of our great country. Together we can work, despite political differences, to make America stronger and adequate to meet this challenge, because it is the greatest challenge that freemen have ever faced. We need, I believe, to build our military posture more strongly so that we can meet the threat of aggression wherever it may raise its ugly head, whether in Berlin or some other place. But I think we need to understand that military power is but the negative aspect of the total struggle between the forces of freedom and the forces of tyranny.

We must be strong on the military front as a matter of necessity, but we will not win the contest between freedom and tyranny merely by being strong in terms of military power. We will win that struggle in the long pull. We will win the hearts and the minds and the loyalties of the hundreds of millions of uncommitted people in the world who are the balance of power in terms of the forces of freedom and tyranny. We will win that support and that loyalty not just by an adequate military posture, which we need; we will win by demonstrating the quality of our free society. We are not going to win it by slick slogans coined on Madison Avenue. We are not going to win it by talking about the tremendous material prosperity we have or by the brightness of the chrome on the new Cadillacs. The true measurement of the greatness of a civilization is not its economic wealth or its material power, but is the sense of moral and social responsibility by which a society relates material wealth to human needs-that translates technical progress into human progress and human dignity by dealing with the basic problems of the whole of society.

This is what we are talking about here this morning. We can all agree that freedom is perhaps the most priceless thing that men can possess. No one is proposing that we tamper with it. We are talking about how, within the framework of a free society, under a free government, with a free economic system, which we all believe in, we can work out within that society practical mechanisms for solving basic problems, without sacrificing our political or spiritual freedom. This is the area in which we must prove ourselves; because we are going to be judged not by what we have, but rather by what we do with what we have.

I have been in India. I have had to try to answer questions by people in the villages, by teachers and students in the universities, and by members of Parliament. I have been in Africa. I have been in