COMPANIES HAVING MEDICAL CARE PLANS FOR PENSIONERS-Continued National Sugar Refinery Co. New York & Pennsylvania Co., Inc. New York State Electric & Gas Corp. Oklahoma Natural Gas Co. Pabst Brewing Co. Pennsylvania Railroad Co. Pineapple Medical Plan of Hawaii Railway Non-Operating Unions Ruberoid Co. St. Croix Paper Co. A. Schrader's Son Seaboard Airline Railroad Co. Solar Aircraft Co. Triangle Conduit & Cable Co. Washington Gas Light Co. Dow Chemical General Motors Brown & Williamson Tobacco During the course of the hearings, I asked the chairmen or presidents of 23 companies, some from the list appearing above and others from among the major employers in the St. Louis, Mo., area, to reply to five questions which I posed on the number of retirees the company had, provisions which had been made to finance health care for these retirees and what progress or trend has been noted in this important area. These questions are set out below: (1) The number of retired employees and where the information is available, the number of those over 65; (2) The number and percentage of retired employees who are covered by medical care protection; (3) The method by which such protection is provided, i.e., by voluntary participation by the retirees in a company program, by protection furnished by the company, by private action, etc. (4) To what extent would the present health care protection coverage of the retired employees be duplicated by medical care under social security as presently proposed; and (5) The trend of increasing coverage of retired employees, i.e., the progress that has been made in your company in offering health care benefits to retirees. This survey covers some 250,000 retired workers and a wide variety of health care plans. The initial date of effectiveness for these plans varies from 1935 to June 1961. The company pays the entire cost of care for retirees and dependents in some; the cost is shared in others; and in still others the provision is made for the individual voluntarily to continue, at his own expense, participation in the group health insurance program of the company. The number covered varies from 2 percent under the newest plan to 100 percent in others. The trend has seen few plans initiated in the 1930's and 1940's; a great number started and improvements made through the 1950's and into this lecade. The answers in most cases are keyed to the questions asked by number. Some do not do so but cover the points in narrative fashion. One company asked that its name not be used, although the information from it is included in this presentation. In the following re plies material outside of the replies to the questions and matters pertinent thereto is omitted. Also, booklets to which reference is made are not included. THE ALUMINUM CO. OF AMERICA (1) Alcoa currently has 3,884 employees retired on pension of which 3,500 are over 65. (2) Three thousand eight hundred and eighty-four being 100 percent of our employees retired on pension are protected by a program of hospitalization and surgical benefits. This protection also covers their wives which number 2,985. (3) Alcoa's medical aid program is provided by the company at no cost to the retired employees. Although the precise number is unknown to us, a number of such retired employees also are carrying additional private coverage at their own expense in such groups as Blue Cross, etc. (4) The proposed medical care program in H.R. 4222 would duplicate the hospitalization protection we now already provide to our employees retired on pension. The provision for skilled nursing, home services and home health services proposed in H.R. 4222 have generally not been considered insurable risks, and it is our opinion that they would entail tremendous administrative expense and would be subject to abuse and the possibility of fraud. (5) There has certainly been a trend of increasing coverage of retired employees in our company and we expect such a trend to continue in the future. It is our information that many other companies are also making available medical care coverage to retired employees and this trend is also increasing. AETNA LIFE INSURANCE CO. Question 1: There are 1,083 retired employees in our company and of this number 969 are over 65. Question 2: Of the total number of retired employees, 668 are covered by the medical expense benefit plan sponsored by our company. While this is 62 percent of the total, it is 98 percent of those eligible for the plan. This is because our plan for retirees was instituted 4 years ago. We estimate of those retired prior to adoption of retiree plan that at least two-thirds carry health insurance of one form or another such as Blue Cross or individual insurance policies. Question 3: Protection is available to our retired programs under the company's group-health insurance program. The company pays a major share of the cost for retired employees. Dependents are also eligible, and the company pays major share of this cost. Question 4: Our program for retired employees is a comprehensive medical expense benefit plan and therefore the benefits for hospital expenses would be totally duplicated by H.R. 4222. Question 5: Our program for retired employees was instituted in 1957 and we expect to increase the benefits substantially this year. This is consistent with the trend we have noted among employers whose group medical programs we insure. AMERICAN TELEPHONE & TELEGRAPH CO. (Unless otherwise noted, this information covers the American Telephone & Telegraph Co., its principal telephone subsidiaries, Western Electric Co., Bell Telephone Laboratories, the Southern New England Telephone Co., and the Cincinnati & Suburban Bell Telephone Co.) 1. Retired employees, approximately 66,600; (a) over age 65, approximately 40,000. 2. Retired employees covered by medical care protection, see (3). 3. Method of coverage: (a) Extraordinary medical expense plans paid for by the companies--66,600, 100 percent of retired employees. (b) Basic hospital plans paid for by retired employees (mostly Blue Cross)-50,000, 75 percent of retired employees (estimate). (c) Basic surgical plans (mostly Blue Shield) paid for by retired employees 43,000, 65 percent of retired employees (estimate). 4. Medical care under social security as proposed would largely duplicate basic hospital plan protection to the extent this was not canceled. It would cover and substitute for some of the benefits otherwise covered by the extraordinary medical expense plans. (These have antiduplication clauses.) 5. Studies of companies now having 58,600 of the 66,600 retired employees indicate increases in basic hospital coverage on a pension allotment basis for their pensioners from 53 percent in August 1954 to 65 percent in August 1959 to the current 68 percent in May 1961. (The difference between this figure and the 75 percent given in 3(b) above is due to allowance in the 75 percent for additional direct payment subscriptions in the companies studied, partly offset by estimating slightly lower coverage in two companies where the pension allotment basis is not available.) BROWN SHOE Co. (1) We do not have an exact record of the number of retired employees except those covered by life insurance, age 66 and over. This would be 710 out of a total of approximately 15,000, and does not include one of our retail divisions, who has its own records but does not have anything available on retired employees. (2) The company medical care protection plan is administered through the company only for active employees. Retired employees can convert their insurance on an individual basis when they leave the company. However, we do not have a record of these conversions. (3) See No. 2. (4) In the case of conversions, this would result in a duplication under the presently proposed social security program. (5) It has only been in the last 2 years that the privilege of conversion for retired employees has ben offered. This permits them to buy as individuals insurance which in many cases they could not get due to age and physical condition. It also is based on lower rates than could normally be purchased individually. The insurance companies will take into account the experience of these converted policies, and if they are not favorable, a conversion cost will be charged to the company. E. I. DU PONT DE NEMOURS & Co. (1) As of July 1, 1961, we had 7,591 employees retired with pension, of whom approximately 5,600 were over age 65. (2) Hospital-surgical protection is made available to all of our retired employees and their dependents. (3) This protection is provided through local Blue Cross-Blue Shield plans or similar community agencies. The company pays the full premium for the pensioner's coverage and 50 percent of the premium required to provide similar coverage for his dependents. (4) In general, we believe the coverage proposed under H.R. 4222 would be a duplication of the protection now provided for our retired employees. Since our program provides protection against surgical costs, it appears to offer broader coverage during hospitalization than H.R. 4222. (5) It has always been company practice to make available to retired employees and their dependents the same coverage that is provided for active employees. Our present practice of providing this coverage through local Blue Cross-Blue Shield plans was started in 1935. Over the years, as this coverage has been improved and the company's contribution toward the premium cost has been increased, these improvements have been extended to our retired employees regardless of age or physical condition. FORD MOTOR Co. (1) As of January 1, 1961, there were 21,154 former Ford Motor Co. employees in retirement. Of these, 19,467 either were 65 as of January 1, 1961, or would attain age 65 in 1961. (2) Currently, approximately 86 percent of these retirees are participating in Ford group medical insurance plans. (3) With two exceptions Ford medical insurance is provided by local Blue Cross-Blue Shield plans. In California, employers may choose the Kaiser Foundation Health Plan (Permanente) and in some plants in Michigan the Community Health Association (CHA). Employees who elect to continue their Ford group insurance after they retire continue in the same plan they were covered under when they terminated employment. They are eligible for the same benefits as are active employees and they pay the full group subscription rates, usually through deductions from their retirement benefits. Through the group coverage they receive benefits which are more liberal than they could obtain through a direct pay contract. 76123-61-pt. 4- 6 (4) There is much similarity between Blue Cross-Blue Shield coverage and that provided by the proposed legislation-they are designed to serve much the same purpose. Under the program of Representative King (H.R. 4222) and Senator Anderson (S. 909) payment would be made for a total of 150 units— a unit being 1 day of hospital inpatient care or 2 days of skilled nursing-home care. Blue Cross-Blue Shield plans generally do not provide nursing-home care benefits, but inpatient hospital care is provided for up to 120 days. In addition, some Blue Cross-Blue Shield plans are now experimenting on a pilot basis in a certain few areas including Michigan, to provide home-nursing service to group members through the Visiting Nurses Association. For reference, enclosed is a Blue Cross-Blue Shield booklet containing the major provision and group rates for those employees who retire in the State of Michigan. (5) Services available to retirees under Blue Cross-Blue Shield plans have been enlarged progessively since 1953. The present M-75 Michigan Blue Shield program, and many other local Blue Shield programs, are the result of local Blue Shield improvements over the years. Currently, service benefits covering a large majority of Ford retirees are available. These benefits apply to a wide range of surgical and medical benefits. GENERAL ELECTRIC Co. The number of persons on the General Electric pension rolls is 22,034 and 91 percent of them (20,046) have medical care protection through General Electric programs. Pensioners who retire before age 65 continue to have until age 65 the same medical care benefits they had while employed. For the majority, this is comprehensive medical protection which, after a small deductible (never more than $50 in a calendar year), pays 100 percent of the first $225 of hospital and surgical expense and 85 percent of any such expense in excess of said amount plus 75 percent of practically all other types of medical expense, up to a maximum of $7,500 in a calendar year and up to $15,000 in more than 1 year. Furthermore, if the person recovers, his full $15,000 maximum can be reinstated. Similar benefits are applicable to the pensioner's spouse, as well as to each of his unmarried children under age 19, or under age 23 if dependent upon the pensioner and not employed. There are 4,187 persons under age 65 presently on the pension rolls who have medical care coverage. After age 65 the pensioner and his wife are, if he had at least 10 years of service with the company prior to retirement, entitled to hospital and surgical benefits up to a maximum of $3,000 if he had 15 or more years of service or $2,000 if he had between 10 and 15 years of service. Furthermore, any unused amount remaining at the pensioner's death is available to his widow. At present the number of pensioners 65 and over having medical care protection is 15,859. Prior to age 65 the pensioner is required to continue to contribute the amount which he was paying when he retired, except that if he is retired because of disability the company pays the entire cost of his personal coverage. After age 65 no further contributions are required from the pensioner. General Electric was one of the first to provide that employees whose medical protection was terminated would have the right to purchase an individual medical expense policy. As a result, most of the pensioners whose service was too short to qualify them for coverage under the General Electric plan had the opportunity to continue coverage on an individual basis. There are enclosed two booklets which describe more fully the benefits available to General Electric pensioners. The General Electric Co. is one of the pioneers in providing medical care for its pensioners, having established its plan in 1948. At that time the maximum benefit payable was $250 and those pensioners who had 10 or more years of service were afforded the protection, all of which was provided without contributions from the pensioners. In 1950 the maximum was increased to $500 and 15 years of service was required. Again, in 1955, the maximum was increased to $1,500 for those persons having at least 15 years of service and $1,000 was provided for those having between 10 and 15 years. Furthermore, the protection was extended to the pensioner's wife. Finally, in 1960 the amounts were doubled to $2,000 and $3,000 and a further extension of coverage provided continuing protection for the widow. The benefits proposed by the King bill would, except as they relate to nursing home care, duplicate the benefits of the General Electric plans. If this bill is adopted, it would naturally stop the experimentation and expansion which the General Electric plan, and those of many other progressive employers, has undergone since its adoption in 1948 and would result in a curtailment of its benefits so as to remove the possibility of a pensioner being paid twice for his medical expenses. It is our sincere hope that the Congress will not adopt any measures which will stifle the progress which private programs have made, and are continuing to make, in providing medical care protection for pensioners. Certainly the Kerr-Mills bill which was adopted last year should be given an opportunity to function before it is replaced by a program which may well stop all innovations and progress in private plans. GENERAL MOTORS CORP. (1) The number of retired employees and where the information is available, the number of those over 65. (2) The number and percentage of retired employees who are covered by medical care protection. Retired employes with hospital and medical coverage such as Blue CrossBlue Shield, hourly and salaried, 29,861; 88 percent. (3) The method by which such protection is provided, that is, by voluntary participation by the retirees in a company program, by protection furnished by the company, by private action, etc. At retirement, employees are given the opportunity to continue their local group hospital and medical coverages, such as Blue Cross-Blue Shield, in force by authorizing deductions from their monthly retirement benefits which are transmitted to the local plan on their behalf. (4) To what extent would the present health care protection coverage of the retired employees be duplicated by medical care under social security as presently proposed? The medical care coverage proposed under H.R. 4222 (February 13, 1961), the Health Insurance Benefits Act of 1961, would appear to duplicate coverages for hospital services and supplies now provided under local plans such as Blue Cross. (5) The trend of increasing coverage of retired employees, that is, the progress that has been made in your company in offering health care benefits to retirees. Prior to 1953, retired employees could only secure individual hospital and medical coverage on a direct-pay basis with the local Blue Cross and Blue Shield plans-usually at a greater cost for less coverage. Since 1953, GM retired employes have been able to continue the same group hospital and medical coverage which was available to them under the GM program prior to retirement. The retired employee pays the full group rate applicable to him. General Motors has sought and welcomed improvements in the level of benefits provided under the many local Blue Cross-Blue Shield plans affecting its employes across the country. Retired employees have benefited by having these improved plans made available to them at the same group rate applicable to active employees. |