STATEMENT BY MITCHELL SVIRIDOFF, PRESIDENT, AND JOSEPH M. ROURKE, SECRETARY-TREASURER, CONNECTICUT STATE LABOR COUNCIL, AFL-CIO

Much has been written and spoken about the increasingly serious problem of financing the costs of health care for the aged. The fact that there is a problem is universally recognized. It is not our purpose in this statement to belabor that point, or indeed to argue the merits of H.R. 4222, the AndersonKing bill. That has been ably done by the many witnesses who have appeared before the Ways and Means Committee.

We are concerned that the enactment of two bills during the 1961 session of the Connecticut General Assembly should not be used to confuse the issue of financing medical care costs for the aged: (1) medical assistance for the aged, enabling legislation under the Kerr-Mills Act; (2) Connecticut 65 extended health insurance plan, a program which permits insurance companies to join in offering senior citizens health insurance against major medical costs. We do not believe that either of these bills will solve the serious problem of medical care costs which confront the aged population of Connecticut.

(1) Medical assistance for the aged. For those persons not yet covered by social security, this program is useful and desirable. However, to put the provision of basic medical needs in the category of old-age assistance the means test-is degrading and we strenuously oppose it. So long as there is another means-the social security mechanism-whereby our senior citizens may, with dignity, secure necessary medical care, by prepaying during their working life, then that should be the basic program for persons on limited retirement income. According to a report in the July 21, 1961, issue of Congressional Quarterly on implementation of the Kerr-Mills Act, only 5 States of 25 have provided comprehensive medical care through enactment of medical assistance for the aged. Connecticut is not one of these. Dental care, optical care, appliances, and special nursing care have all been eliminated from the Connecticut program. Connecticut is more fortunate than some other States; the basic medical needs will be provided-but only to those who, in effect, take the pauper's oath. A single person must have an income of $1,500 or less, and may retain liquid assets of not more than $900. To qualify, he must undergo an investigation of his income and his savings. Further, since the Connecticut law provides a $100 deductible feature, he must keep records of every penny he spends on medical care-whether it is aspirin, or physician or hospital services. (2) Connecticut 65 extended health insurance plan: During the 1961 session of the general assembly, Connecticut insurance companies introduced a bill, which has now become law, permitting insurance companies to join in offering senior citizens health insurance against major medical costs. This program has been acclaimed as a solution to the overall problem. We are pleased that the commercial insurance companies are attempting to provide health insurance plans for persons past 65. According to information we have received from the insurance companies, as to benefits and premium costs, we are convinced, however, that this new plan will fall far short of meeting the basic medical care needs of persons on limited retirement income.

The principal purpose of the plan is to provide major medical expense benefits. It provides maximum lifetime benefits of $10,000 but with a limitation of up to $2,500 in any one year. It goes into effect after basic hospital-surgical coverage has been exhausted (31 days of hospitalization, and certain surgical fees), and after the individual has paid $100 of the expenses of an extended illness. The premium cost is $10 a month. An additional $7 a month for basic policy coverage brings the monthly cost to $17, the annual cost to $204. In any year that the policy is used, of course, the cost would be increased automatically by $100. The total cost of illness would be much greater than that, of course, because neither the basic nor the major medical policy provides full coverage.' These additional costs are difficult to calculate. An idea of the inadequacy of coverage is indicated, however, when comparison is made between the $19-a-day average hospital bed and board charge for ward care in Connecticut, with the $12 a day paid by the basic policy offered by the commercial insurance companies. For a 31-day stay, a patient would spend $217 for hospital board and room charges alone. Other benefits under the basic and major medical policies are similarly inadequate.

1 Hospital fees will be covered at the rate of 100 percent for the first $250, and 80 percent for any expenses above that sum. Surgeons' fees, physicians' fees other than surgery, and nurses' fees will be paid at the rate of 80 percent of incurred expenses, within certain schedules.

It must be remembered, too, that the $204 annual premium cost for the basic and major medical policies would take care of only a part of hospitalizations, surgical fees, and physicians' fees while a person was hospitalized, and of nursing-home care to a degree. That sum ignores completely the money an aged person must spend on physicians' fees for home and office visits, on drugs to treat chronic diseases and the like. Dr. Allen Butler of the Harvard Medical School, in testimony on the Forand bill before the Ways and Means Committee in July 1959, stressed the importance of health costs for other than surgical and hospital care:

"It is well known that the major types of illness afflicting the aged are not surgical-they are the diseases of the heart and blood vessels, and nervous system, the degenerative disorders, and a wide range of other medical conditions which collectively outnumber the major surgical problems of the aged. Moreover, even the indivdual requiring surgery frequently must receive care also from a nonsurgical specialist or general practictioner before, during, or after surgery. Lastly, regular medical supervision and preventive services are essential to minimize or prevent the impaired health and major disabilities caused by the aging process and chronic disease."

In this connection it is interesting to note a statement on page 10 of the background paper prepared under the direction of the Planning Committee on Health and Medical Care for the White House Conference on Aging held in January 1961.

*** While they (the aging) use physicians' services more frequently than the rest of the population, the vast majority of these contacts occur in the doctor's office, in a clinic, or by telephone. Most of their medical problems are cared for on an ambulatory basis or in their own homes. About 5 percent of the people aged 65 and over are institutionalized. While the incidence and duration of hospital care are greater than for younger people, most of their stays in general hospitals are not protracted. * * *"

Dr. Leonard W. Larsen, presently president of the American Medical Association, was chairman of the Planning Committee.

Major medical insurance, or as it is sometimes called, catastrophic illness insurance, is not the major problem of the aged, especially if an aged individual must spend $204 of his limited retirement income to be covered against long-term illness. Even among the older population, more prone to serious and long-term illness than the remainder of the population, the incidence of major illness is such as scarcely to warrant depleting limited retirement budgets so that older persons could not pay for their day-to-day medical needs.

In any event, the Connecticut policy will not take care of the major medical problem. Benefits are limited to $2,500 in any one year. Arthur S. Flemming, when he was still Secretary of Health, Education, and Welfare, testified at a Senate Finance Committee hearing that "$6,000 is a conservative estimate of total medical expenditures incurred by persons who are continuously ill for an entire year."

We turn now to a brief discussion of the ability of persons on retirement income to purchase the Connecticut policy. We think it highly unlikely that many of Connecticut's retired residents will be able to spend $204 on this policy, or that many of Connecticut's retired couples could spend $408. Of Connecticut's 243,000 residents over 65, the Department of Health, Education, and Welfare estimates 168,000 have an annual income of $1,550 or less. Can a person living on this meager income afford to spend 13 percent of it on policies which will pay only a portion of his medical expenses?

In the November 1960 issue of Monthly Labor Review of the U.S. Department of Labor appears a Bureau of Labor Statistics budget for a retired couple for 20 major cities, based on autumn 1959 costs. The budget includes estimates of costs of goods and services for a couple living alone in a two- or three-room rental dwelling. No Connecticut city is included, but the New York City figures may be used as an area of comparable cost. The budget for a couple in that city is $3,044. Of this, $262 is estimated for medical care. Compare this figure with the $408 a couple would pay for the Connecticut basic and major medical plans. Medical care in the budget includes home, office, and hospital physicians' visits, specialists' (surgical) fees, dental care, eye care, group hospitalization insurance plan, hospital room anesthesia, drugs, and other medical care. It should be noted that many of these items would not be included in the Connecticut basic and major medical insurance policy. Parenthetically, attention is called to the frequency of use of the services covered by the Connecticut policy

through an examination of the kinds and quantity of medical care services included in the BLS budget. The attached table gives this information.

The major conclusion to be drawn from these BLS budget figures is that a couple living modestly on a $3,000-a-year income would expect to spend about $260 a year for medical care. How then could that couple be expected to spend $408 for a policy which would cover only part of their hospital and surgical fees? In conclusion, we should like to refute a statement made by Mr. William N. Seery, vice president of Travelers Insurance Co., in his testimony before the Connecticut Legislature on behalf of the insurance companies' program, and read into the Congressional Record by Congressman Thomas Curtis of Missouri on June 19, 1961. Mr. Seery said, "To the extent that we can successfully sell this coverage to individual older people, then to that extent the State of Connecticut will save tax dollars." We cannot conceive that a single dollar of Connecticut tax dollars will be saved. Certainly the 168,000 Connecticut residents over 65 who have an income of $1,550 or less will not be able to purchase basic and major medical insurance for $204. And it is exactly these people who are medically indigent and so eligible to have Connecticut tax dollars spent on them for medical care under the Kerr-Mills program.

In any discussion of this critical problem of meeting the medical care cost of our senior citizens, we inevitably return to the logic of prepaying during one's working life for medical care needs when one retires and is living on reduced income. The Connecticut State Labor Council vigorously supports H.R. 4222 and hopes that the Ways and Means Committee will give the bill its favorable consideration.

BLS INTERIM BUDGET FOR A RETIRED COUPLE

TABLE 6.-All other goods and services budget quantities

• The average number of operations per year for an elderly man is 0.072; for an elderly woman, 0.053. About 60 percent of the operations among the men involve a genito-urinary condition, repair of hernias, or operations on the eye. Reduction of fractures and dislocations, operations on the eye, or conditions of the genito-urinary system accounted for 60 percent of the operations among elderly women.

Estimated cost is 98.6 percent of cost of fillings, extractions, and cleaning.
Estimated average cost in 1959; differs from city to city.

Requirements specified for hospital services do not apply when the cost of these items is covered by a hospitalization insurance plan.

13 The budget assumes 45 percent of the couples have a family membership in a group hospitalization insurance plan. In cities where plans do not fully cover the cost of hospital ward accommodations and specified ancillary services, an additional allowance covering the cost of these benefits is provided. 14 Estimated average cost in 1959.

15 Average prices for items selected to represent all types of prescriptions and non prescription drugs commonly required by the family weighted by their relative importances in the category of therapeutic end use in which they were classified. 16 Cost is 5.2 percent of total cost of prescriptions and drugs.

Source Monthly Labor Review, November 1960, vol. 83, No. 11.

DELAWARE STATE LABOR COUNCIL AFL-CIO,
Wilmington, Del., August 10, 1961.

Chairman WILBUR D. MILLS,

House Ways and Means Committee,

New House Office Building,

Washington, D.C.

DEAR CHAIRMAN MILLS: On August 1, 1961, William O. LaMotte, Jr., appeared before your committee as chairman of the Committee on Public Laws of the Medical Society of Delaware in opposition to H.R. 4222.

I am directing this communication to you to ask its inclusion in the record which is open until August 18.

First, I submit for the record the Delaware State Labor Council AFL-CIO's endorsement of H.R. 4222, known as the Anderson-King bill, providing health benefits for the aged through social security.

Secondly, I submit for the record a reply to Dr. LaMotte's testimony relative to a study made in Delaware which he purports contains "detailed and up-to-date knowledge of the ability of our older population (in Delaware) to pay for hospital care."

This study titled, “An Interim Report on the Aged Inpatient in Delaware's General Hospitals," is not a complete report. It is as titled, only an interim report; it covers only 5,690 of the 35,000 older citizens of our State. It covers only the aged patient in general hospitals.

It cannot conceivably be established by the statistics or by a wide stretching of the imagination, that the conclusion of this interim report demonstrates "the ability of our older population to pay for hospital care."

The Delaware State Labor Council feels health benefits for the aged through social security are needed as much for Delawareans as for other citizens in these United States.

Sincerely,

JAMES J. LAPENTA, Jr.,

Vice President and Legislative Chairman.

STATEMENT BY FRANK G. ROCHE, PRESIDENT, FLORIDA STATE FEDERATED LABOR COUNCIL, AFL-CIO

The Florida State Federated Labor Council, AFL-CIO, urges the Congress to provide health benefits through social security for the aged along the lines of the King bill, H.R. 4222.

We are convinced that the Kerr-Mills bill, passed in 1960, cannot do the job here in Florida. We have not been able this year to get the State legislature to take advantage of the new program of medical assistance for the aged although we tried to do so. We prefer health benefits through social security because we do not like the public assistance approach, which uses a means test. No one likes having to swear that they're needy or having social workers check on their income and the amount of life insurance and savings they have.

But we did want something more done for the aged, even if it did mean public assistance.

What happened in Florida ought to be of especial interest to your committee because Dr. Edward R. Annis, who comes from Florida, has been one of the chief spokesmen for the American Medical Association in attacking the King bill and boasting of how much the Kerr-Mills law is doing. I am personally acquainted with Dr. Annis for many years. He was too optimistic regarding the intention of the legislature. Governor Bryant campaigned on a no-new-tax platform and he and the appropriation committee of both house and senate adhered to this policy adamantly. The possibility of a special session to consider an additional tax levy is remote.

Dr. Annis told the country on a nationwide TV debate with Walter Reuther in February that Florida was going to pass a bill for medical assistance for the aged and that it would be a good one. But the Florida legislature adjourned without passing a bill necessary to provide medical assistance for the aged.

One reason was that it would have cost too much money. The State welfare people and the State health people disagreed as to how the money could be raised. They knew there was a problem but they couldn't get the support to do anything about it.