While we have not been afforded the opportunity of reading in toto the testimony of the above-named organization, we have been afforded the privilege of reading the testimony of President George Meany of the AFL-CIO, and beg to advise that this very able statement by President Meany reflects in all detail the opinion of this council.

Your consideration in the above matter will be appreciated.

Sincerely yours,

FRANCIS S. FILBEY, President.

Hon. WILBUR D. MILLS,

MASSACHUSETTS STATE LABOR COUNCIL, AFL-CIO,
Boston, Mass., July 31, 1961.

Chairman, House Ways and Means Committee,
New House Office Building, Washington, D.C.

DEAR CONGRESSMAN MILLS: On behalf of the Massachusetts State Labor Council, AFL-CIO, I wish to record that our organization and its 500,000 members are strongly in support of H.R. 4222, the King bill, establishing health insurance benefits for the aged under the social security system. We heartily concur in the views expressed by AFL-CIO President George Meany on this legislation.

As you know, Massachusetts is one of the seven States that has availed itself of the medical care for the needy aged (Kerr-Mills bill) enacted by the 1960 Congress. While this medical assistance legislation has been beneficial to approximately 15,000 aged in Massachusetts since its adoption, it has still failed to benefit the majority of our citizens over 65 who are not on public welfare (OAA) or who, if on Federal social security, can't qualify or prefer not to undergo the community stigma of the means tests requirements.

In Massachusetts, there are approximately 575,000 persons aged 65 or over, 85 percent of whom would qualify for benefits under the King bill. Our State has long been one of the most progressive and liberal States as far as old-age assistance and other welfare benefits are concerned. However, Massachusetts, faced with serious fiscal problems, shortly will be unable to continue to finance these welfare benefits from existing tax revenues. Like most of the New England States, Massachusetts has a higher average per capita age than prevails throughout the Nation. Accordingly, the medical care needs of this higherthan-average age population can't continue to be financed from general taxation. In our opinion, financing medical care for the aged under the contributory social security system is more economical, efficient, and acceptable than the existing program or any other that has been proposed. Based upon my observation of the experience of Massachusetts under the 1960 Federal legislation, this stopgap measure has created more problems than it has solved. Medical care for the aged, integrated with the social security system, will enable a worker, on a pay-as-you-earn basis, to provide for his medical care problems and payments when he reaches age 65. He will be able to do so during his lifetime of work with a feeling of security, while retaining his self-respect and freedom of choice of doctors, etc., upon his retirement.

I strongly urge that your honorable committee approve H.R. 4222 and thereby bring about a logical and economical extension of the social security system. Respectfully submitted.

KENNETH J. KELLEY,
Secretary-Treasurer.

DETROIT, MICH., August 17, 1961.

WAYS AND MEANS COMMITTEE,
House of Representatives,

Congress of the United States,

Washington, D.C.:

As officers of the Michigan AFL-CIO, representing 600,000 members of labor in Michigan, we wish to record with your committee our interest in passage of the Anderson-King bill.

Our organization favors the social security system, but we feel it should also protect recipients against medical catastrophe because medical costs destroy hard-earned economic security of retired persons and impose tremendous burdens upon their children. We agree with the majority opinion of delegates who served on Section on Income Maintenance at last White House Conference on Aging that the social security mechanism should be the basic means of financing health care for the aged.

We object to any health program for the aged based solely on old-age assistance which constitutes a means test, thereby inflicting humiliation and unwarranted imposition upon the aged and relatives.

The 14 million senior citizens of our United States are proud of their independence, but aware of limitations against economic forces of their time, and on their behalf, we urge favorable consideration of H.R. 4222.

Today many thousands of elderly Mississippians are not receiving proper medical care due to the high cost involved. In a few short years many more thousands will find themselves in the same predicament. There can be no question that many have failed to live out a full lifespan because of the lack of finances. Others have placed an unbearable burden upon their relatives and friends.

It should be plain for all to see that our society can ill afford a continuation of this deplorable situation. There is only one feasible approach to this problem and that is a prepaid medical plan financed through social security. Such a plan is now being advocated by the present administration and is embodied in H.R. 4222. It is my understanding that your committee is presently holding public hearings on this bill and will act upon it soon. Regardless of the position taken by the Mississippi Chamber of Commerce, the American Medical Association, and other special interest groups, I am firmly convinced that a great majority of Mississippians are in favor of the ingredients contained in this piece of legislation.

In their behalf and in the behalf of the 50,000 AFL-CIO members of Mississippi your committee is sincerely requested to report this bill favorably. Sincerely,

CLAUDE E. RAMSAY,

President, Mississippi Labor Council, AFL-CIO.

SUPPLEMENTARY WRITTEN STATEMENT OF JOHN I. ROLLINGS, PRESIDENT, MISSOURI STATE LABOR COUNCIL, AFL-CIO

The Missouri State Labor Council AFL-CIO, through its president, wishes to accept your kind offer of July 20, 1961, to file a supplemental statement in support of H.R. 4222.

The Missouri State Labor Council AFL-CIO has within its affiliation approximately 1,000 union organizations with about 300,000 members. When related to the populatiton in Missouri on the basis of 3% persons in a trade union member's family, about 1 million of Missouri's citizens would be closely associated with our trade union membership.

Missouri's population is 4,319,813; 503,000 of our citizens are over 65 years of age. Approximately 25 percent of these (120,000) are OAA recipients. Our State is among the highest in percentage of population above 65 years of age, and also among the highest in percentage of residents over age 65 who are OAA recipients. The average OAA monthly payment is about $70. When you com pare this monthly payment with a normal per day cost of $15 for hospitalization charges for bed and board, it is easily understood the predicament these elder citizens are in. Many of them are on the OAA rolls because of exhausting their meager resources by trying to pay for medical needs.

Recently an elderly St. Louis couple, 65 and 63 years of age, were found dead in bed. They left a note telling of their despair in meeting financial problems arising out of their medical needs. Mr. Palmisano had never recovered from a

heart attack suffered 2 years before. They had tried to get in a home, but the cost was $4.800 per year. Their equity in their home would have provided only about 1 year of care. One of the last sentences in a note left by Mrs. Palmisano read, "Please, for God's sake, try to help the sick and aged".

The financial condition of the Palmisanos is typical to thousands of Missouri's elderly couples-their resources exhausted by the high cost of medical care, they become a burden of the State or the local community.

Missouri Legislature just concluded, refused to enact a law authorizing medical assistance for the aged under Public Law 86-778.

In the opinion of the Missouri State Labor Council AFL-CIO, there is only one solution to this problem and that is through social security-with no means test. The provision for hospital services, home nursing services, outpatient diagnostic and X-ray services, etc., can and must be supplied through a sound system of financing, and provided as a matter of right to our elder citizens.

STATEMENT OF HAROLD C. HANOVER, PRESIDENT, NEW YORK STATE AFL-CIO

We express our appreciation to the chairman and members of the House Committee on Ways and Means for this opportunity to express the views of the New York State AFL-CIO on the merits of the Anderson-King bill, H.R. 4222 which is now pending before the Congress. It is the judgment of this labor organization and its 2 million members that the passage of this bill would be in the best public interest.

Health protection and care for our older citizens is one of the most pressing social problems confronting the people of our State. In 1950 there were 1,270,000 New York State residents 65 years of age and over; today the number is approximately 1.680,000 and is expected to increase to 2,550.000 in 1975 or 12 percent of the State's population.

Our population aged 65 and over spends approximately 50 percent more per capita for medical care. The relatively greater need of older persons for health services has been demonstrated in a number of studies on this subject, and the findings of the 1957 New York State Insurance Department's actuarial study show that the average number of days per year of hospital confinement is more than four times higher for a man aged 65 than for one aged 35, while the average annual surgery cost at age 65 is more than double that of age 35. Moreover, a report of the New York State Committee of One Hundred for the 1961 White House Conference on Aging shows that for the 65-and-over group, 75 percent have one or more chronic conditions, of which 27 percent have one, 20 percent have two and 31 percent have three or more chronic conditions.

Despite the greater medical care costs for persons 65 years and older, these people have far less income and ability to pay for such care. The primary Federal social security benefit on which most of the aging must rely in our State averages $79 per month. According to the 1958 studies of the New York State Interdepartmental Committee on Low Incomes, 80 percent of the aged population have incomes of less than $2,000 a year, while 60 percent of those over 65 receive less than $1,000 a year including social security.

We of organized labor do not believe that medical care can be provided by private voluntary Blue Cross plans or the insurance industry.

The 1958 study of the New York State Insurance Department on Voluntary Health Insurance and the Senior Citizen shows that:

According to underwriting practices for individual policies 80 percent of the individual contracts were not issued after age 65; that 52 percent of the contracts were scheduled to expire at or before age 65; that, thus for more than half of the individual insurance contracts, older persons are disqualified by virtue of age limitations (p. 31).

Only 35 percent of New York State's citizens 65 years of age and over have hospital insurance. "Presumably, an even smaller proportion are protected by other forms of medical care insurance. As a consequence, a large proportion of older persons without adequate financial resources must rely upon care provided by public agencies, charities, or relatives, with an attendant loss of dignity. Many fail to seek care because of the costs involved and others go into debt" (p. 115).

Furthermore, these policies are evidently not geared enough to the chronic illness problem of the aged when, for instance, insurance vendors in New York State paid only $11,400,000 or 13.7 percent of the more than $83 million hospital bill for the aged in 1955.

Premiums for the aged are, as a group, prohibitively high. Under a guaranteed renewable for life policy, the relatively high cost ($215 annually from age 25) of providing a reasonable level of medical care benefits, for a family consisting of a man, his wife and two dependent children would seem to price this form of coverage out of the market for low-income families and many in the middle-income brackets. This problem is even more acute for an older couple who, for example, would have to pay $277 annually if they were in the market for the same policy at age 65. The inability of older people to meet such insurance costs is brought into sharp focus by relating the premiums of $277 with the fact that 63 percent of all heads of spending units in the United States, age 65 and over, have annual incomes (before taxes) as well as savings of less than $2,000 (pp. 121, 122).

The commercial insurance's inability to provide health security for the aged at a reasonable premium is also evident from the ratio of net premium earned to losses incurred, to insurance companies in hospital and medical insurance in 1959 in New York. According to 1959 loss and expense ratios published by the New York Insurance Department the stock companies in that year had incurred so-called losses of 44.6 percent, mutual companies 34.4 percent, and life and accident and health companies 44.9 percent.

In insurance terminology "losses incurred" means claims paid. So, in 1959 the stock companies paid out 44.6 percent of the money they collected in premiums for health benefits and the mutual companies and the life and accident companies paid out 44.6 and 44.9 percent, respectively. Where did the rest of the money go? The stock companies paid out 34.2 percent of all the money they collected for brokerage fees, commissions and advertising, the mutual companies 29.7 percent, and the life and accident companies 31.5 percent for these purposes. In view of these statistics, it is clear that commercial insurance, by its method of doing business, is unable to provide health security for the aged, most of whom are on reduced incomes. It also explains to a great extent why insurance vendors in this State paid only 13.7 percent of the hospital bill for the aged.

Neither can the Kerr-Mills Act be considered a substitute for a Federal insurance program as contemplated by H.R. 4222. It is a desirable, and indeed a necessary, supplement to such a program, but the problems the aged face in meeting medical costs can hardly be solved by this legislative measure alone.

The question whether the medical assistance for the aged under the KerrMills Act is becoming effective is not just a matter of whether the States have set up programs but also of the scope of the new programs.

New York State, for instance, initiated its program of medical assistance for the aged on April 1, 1961, but is in implementing the Federal legislation on many aspects overly restrictive:

(1) The number of persons defined as eligible to receive benefits was fewer than could have been authorized.

(2) The State provisions including the administrative requirements of the New York State Department of Social Welfare reduce the benefits authorized by the Federal Government.

(3) The law does not authorize provision for eyeglasses and other eye aids, dental services and dentures. Nor are laboratory services, except when provided by a hospital or a physician, included.

(4) The law forces the localities to treat every potential recipient for medical assistance as a pauper. Thus every aged person who may be eligible for medical assistance must be subjected to the same type of investigation employed in evaluating public assistance applicants. In fact, a more frequent followup is required than for public assistance cases.

(5) Under the State law certain relatives are considered legally responsible for contributing to the medical care of aged relatives and therefore subjected to an intensive financial investigation. This provision, not required in the Federal law, must undoubtedly discourage many elderly parents from seeking medical assistance for fear of involving their children. In many cases, the time, effort, and cost that must go into the location and investigation of legally responsible relatives must outweigh in cost the amount of the contribution that can be obained from such relatives.

(6) The law provides for physical therapy services but not rehabilitative services, although physical therapy is only one relatively small part of the rehabilitative services needed by the disabled aged.

All these and similar statutory and administrative restrictions, intensive investigations, and complicated procedures will, unfortunately, discourage many

deserving aged people from seeking the benefits of the Kerr-Mills Act under which they are eligible. In the long run, this will hurt the program and deny vital services. Many elderly persons in need of medical care and assistance will not avail themselves of vital services.

When the State law of March 26, 1961, was put into effect, it was estimated that it established-in words of Governor Rockefeller's message approving the bill-"a program to supply institutional and noninstitutional medical benefits to 170,000 needy aged persons in New York annually, effective April 1. Of these men and women, 92,000 have not previously been covered by any public medical assistance, and many of the remaining number will become eligible for medical services not previously available at public expense."

Experience thus far raises questions as to whether anywhere near these figures will ever be reached. The monthly summary Social Statistics published by the New York State Department of Social Welfare shows that in April 1961 the number of persons aided under the new program of medical assistance for the aged was only 5,589, and in May 1961-the latest month for which figures are available the number of those persons was 16,337. These figures, however, do not mean that the new law made medical care available to as many as 16.337 aged persons who could not get needed medical assistance under the New York State's preexisting old-age assistance program. About 15,000 out of these 16,337 in May 1961 and almost all of those 5,589 in April 1961 were former old-age assistance recipients who were transferred to the new medical assistance for the aged program so the State could take advantage of the more favorable Federal grants available under the Kerr-Mills Act.

But even when the estimated figure of 170,000 persons eligible to receive medical assistance under the new program will be achieved and when to this figure will be added 66,000 men and women who are receiving comparable care under old-age assistance and 32,000 persons treated in mental health and other public institutions of the State, the medical needs of many aged in this State will be far from being met. For this total of 268,000 elderly persons receiving help in meeting their health needs must be measured against a total over-65 population in the State of over 1,600,000, only about 20 percent of whom have incomes over $2,000 a year, while 60 percent of those over 65 receive less than $1,000 a year including social security.

In penetrating editorials entitled "A Challenge That Can't Be Ducked" and "A Workable Approach to Medical Care," the April 16, 1960, and February 18, 1961, issues of Business Week magazine have pointed out that the problem basically is that the aged are high-cost, high-risk, low-income customers.

"The essential question, therefore, is whether the social security system is the best way of meeting costs that cannot be avoided, in any case. We see no better alternative to social security for doing the essential job: spreading the burdens of old age over the years when people are younger, are working, and have more adequate incomes."

A similar opinion in support of financing of health benefits through social security has been expressed on numerous occasions by Gov. Nelson A. Rockefeller. In a statement presented to the Governor's conference in Glacier National Park, Mont., on June 29, 1960, he said:

"The basic mechanism for achieving this (health insurance for the aged) should be the contributory social insurance system, supported by payroll taxes, which exists in the old-age survivors, and disability insurance system. A separate health benefit trust fund' should be established in this system to account for the taxes received and benefits paid.

"This well-administered system has proved to be effective and economical. Its contributory nature has been completely accepted and is, indeed, strongly supported by employees as well as their employers."

Thus in view of the proven inability of the insurance industry and present programs of public assistance to satisfy the medical needs of the aged, paying for health care through the time-tested social security system is the only common-sense method of minimizing the tragedy that illness imposes on older people. On behalf of the New York State AFL-CIO and its more than 2 million members, I respectfully urge the House Committee on Ways and Means to endorse and favorably report to the Congress the Anderson-King bill, H.R. 4222. The time is long overdue when we must bring into national focus through the Congress of the United States the importance of a nationwide effort to meet the interests and needs of our aged population. This committee has now the opportunity to do this. You can count upon our organization and the entire labor movement of New York State for genuine support in carrying out your mission.