(e) In the month of March 1961, payments through the vendor plan were made to hospitals by the Missouri Division of Welfare for 827 oldage assistance recipients. The total billed cost for these patients was $257,306. The total of the vendor payments was $144,271, which was 56.1 percent of the billed charges. The hospitals received $28,583 as total payments from all other sources for these patients, or 11.1 percent of the billed charges. This left the hospitals with the task of absorbing from other income the unpaid balance of $84,452, almost one-third of the billed charges. (f) The following statements appeared in an editorial in Hospitals, the journal of the American Hospital Association, in the issue of April 16. 1960: "Philadelphia's Hahnemann Hospital, for example, found that despite payments by State and community chest agencies, charity service rendered during 1959 cost the hospital approximately $850,000 ***. Voluntary hospitals in New York City are in the grip of a financial crisis brought on through providing charity services; the situation is so urgent that 15 hospitals have announced that they may shortly have to close their doors unless prompt and drastic action is taken. The annual deficit caused by this charitable activity exceeds $22 million.”

(g) The March 1961 issue of the Bulletin of the Hospital Association of Pennsylvania carried this headline: "Hospital Crumbles Under Huge Charity Burden." The story concerned the closing to indigents of the Chester Hospital in Chester, Pa. "Credit exhausted, much of the endowment funds cashed in and $212,000 in debt, the board took a full-page newspaper advertisement to announce that it must on March 1 close 17 free clinics and cease accepting those who cannot pay."

It seems to me that these excerpts speak most ably for themselves. Frank Groner, presidnet of the American Hospital Association, summarized this segment of the hospital problem in this statement (Hospitals, Apr. 1, 1961): “Philosophically, every group in our society should pay its own way. But many hospitals are forced to make extra charges to patients with Blue Cross or commercial insurance or to those who pay their own bill to make up for free care given the indigent and medically indigent patient."

In the same editorial, Mr. Groner highlights another major hospital problem when he states: "Hospital wages are becoming more comparable to those of industry; they have instituted benefit programs similar to those of business." However, the wages, at least for the aids, attendants, dietary helpers, laundry and maintenance workers, and others are apparently not entirely comparable to industry, since the same issue records the fact that nonprofit hospitals were specifically excluded from the administration's minimum wage bill. I believe it would be safe to say that in Missouri there are few hospitals, outside of some in the urban areas, whose lowest paid full-time employees receive as much as $1 per hour. Wages of 75 and 80 cents an hour seem to be fairly common. As long as that condition holds, it would appear that the hospital employees are being expected to bear too great an individual burden of contributing to the care of the medically indigent.

4. City governments.-St. Louis City, St. Louis County, Kansas City. and Springfield have city operated and financed hospitals and clinics for medically indigent residents of those cities. St. Joseph has an arrangement whereby hospital care is purchased from the voluntary hospitals. Each of the major cities, therefore, has a far more comprehensive plan for giving medical treatment to the indigent than any other areas of the State (with possibly one or two exceptions). Yet even in these urban areas it is not possible to state that all the medically indigent receive all needed medical care. This is reflected time after time in the case records and the experiences of the social workers and the visiting nurses. It is reflected also in the letters we frequently receive from recipients of public assistance in those cities when they are under pressure to pay a medical bill they have incurred. That the hospitals and clinics are not able to give all the care they know is needed also seems to be reflected in the budget discussions before the city governing boards. So long as the city governments continue to meet the increasing costs of these institutions, these five communities have at least minimum adequate provisions for hospital and some clinic care for the very poorest segment of their population. Very few other cities in the State are attempting to underwrite medical care costs. There are some cities which employ a city physician, and some who pay a limited number of bills for medicine, hospital care, and physician services.

5. County governments.--With the exception of Pettis and Clay Counties, and possibly one or two others, there is no county which finances a comprehensive

medical care program. Even where the county court is making a relatively large effort in this direction, the payments are often on a cut-rate basis. There are perhaps 10 or 12 out of 109 rural counties which levy a tax for hospital purposes, and the income is used by the county hospital. Generally this money is supposed to be used for building, equipment, or maintenance purposes, but in some cases it is used to underwrite the unpaid patient bills.

State law provides that a county is to support poor persons in the county, and that "sick persons who are unable to support themselves, and when there are no other persons required by law and able to maintain them, shall be deemed poor persons." As a matter of historical interest, this law was originally contained in territorial laws dated January 2, 1815, and is still in effect. There are a number of counties whose tax revenue is so low that they are unable to finance anything like an adequate medical care program. There are other counties in which a real effort is made within limited finances. A very few counties will spend as much as $30,000 per year for this purpose. While the situation has probably improved slightly, the survey published in 1955 by the Missouri Health Council is still the most authentic survey of the rural situation. The study of 27 counties painted a rather bleak picture insofar as establishing the rural county as a financial resource for the medically indigent.

D. The State and Federal Government

I have taken considerable time in arriving at this rung of the ladder, primarily for the benefit of those who are saying that there is no problem, there is no need for any change, that "necessary medical care is available to all, regardless of income." Apparently a very sizable number of persons are not aware of the actual situation, or else are not willing to face it. After all, this would be the easy way out because then we would not have to worry about paying increased taxes for this purpose-and this can be a most attractive argument. Even though I have spent considerable time on it, it is still a very sketchy review of this tremendously large and complex problem. I hope most of you will be able to agree that it has been a fairly objective review, and that it shows without question that there is a large problem and that something must be done about it.

I am also grouping the State and Federal Government together in this section, and would like to explain the reason for this. The history of the State-operated medical care program goes back to at least the 1930's and in a few cases probably earlier. During that time about 15 or 16 States (Illinois, Kansas, Minnesota, North Dakota, and a number of Eastern States) established a program of adequate medical care of all kinds for the persons on assistance rolls, and paid by far the bulk of the costs (which in some States were very large) out of State funds. For example, Pennsylvania has had such a program since 1938, and it was directly due to the efforts of the Medical Society of the State of Pennsylvania that the plan was presented to their State legislature.

This situation was not true in Missouri. Federal matching for medical care first became available in 1956. Missouri's vendor plan for hospital care became effective in September 1959, after the State law was amended to enable Missouri to participate in the Federal plan. Federal dollars have paid more than half of the costs of our hospital care vendor program since that time.

The same statement regarding joint financing also applies to the money payments made to old-age assistance recipients. Since the beginning of that program in Missouri in 1935, the cost of necessary medical care has been one of the budgeted items in each case. The actual spending of the check has been and is the responsibility of the recipient, and many medical bills have been paid through the years by those recipients. On the other hand, the State law has always included a maximum payment limit, beginning with $30 in 1935 and now set at $65. In many, many cases it has not been possible for the recipient to pay for his food, shelter, and utilities, and still have money enough to pay the druggist, the doctor, or the hospital. No one will ever know how many of them, because of fear of the costs, postponed getting medical and hospital care until the need was overwhelming.

1. The Kerr-Mills laws. The approval of Public Law 86-778 on September 13, 1960, marked another major improvement in the legislation affecting the provision of medical care for the indigent persons in this Nation. There were two major parts to this bill, but one of them seems to be getting much more public attention than the other.

The less dramatic change is the one which increases Federal funds to the States for medical services for the 2.4 million aged in the Nation who are on old-age assistance. The matching formula was changed, in effect raising the

matchable average from $65 to $77 per recipient, provided that not more than $12 of the average expended per recipient is for some type of medical careand giving the States an extra 15 percent above the regular matching formula on the amount expended each month (within the $12 average) in the form of vendor medical payments. The purpose of this change was to encourage the States either to initiate or to expand their medical care programs for that group of aged persons which receives old-age assistance.

The other change effected by Kerr-Mills is that any State wishing to do so may now establish a new program known as medical assistance for the aged (MAA). In brief, the State may establish a medical care program for its needy citizens over 65 who are not on old-age assistance, and the Federal Government's share in the total amount expended by the States for medical assistance for the aged will range from 50 to 80 percent, under a formula based primarily on per capita income. In Missouri the cost would be split almost dollar for dollar (the Federal share would be about 52 percent, and the State's share about 48 percent). The State defines who will be considered as a needy person under this law, setting upper limits on property and income. An investigation would then be made in each case by the county welfare office, to determine that the applicant's resources were within the limits prescribed by the law. The State would also define the extent of services to be paid for under such a law, and could choose two or more services from the following list (so long as one is institutional the other is a noninstitutional type of care) or include them all: inpatient hospital services; hospital and clinic services to outpatients; nursing home, private nursing, and home health-care services; physicians and dentists services; physical therapy and related services; prescribed drugs, eyeglasses, dentures, and prosthetic devices; diagnostic screening; preventive services; and other medical and remedial care recognized under State law.

As of January 1961, only five States (Massachusetts, Michigan, Oklahoma, Washington, and West Virginia) had any payments under this new program. This fact highlights one of the major problems in adopting the Kerr-Mills program in full: the tremendous increase in State general revenue funds which would be required to put the full program into effect. For example, in January 1961 Missouri spent a total of $140,960 for hospital care in behalf of its old-age assistance recipients. In contrast, Illinois, with a full-scale program covering all medical services, spent $2,441,744 in the same month in behalf of its old-age assistance recipients. Applying the Illinois average amount spent per recipient ($34.19) to the Missouri old-age assistance caseload would result in an annual program cost of $46,361,000 of which about $35 million would have to be State funds. This is a very rough comparison with the 1959–61 Missouri appropriation from State funds which was for a little more than $1 million per year. Assuming that there might be as many medically indigent needing medical care among the aged population not on old-age assistance, the above figure would. of course, be greatly increased, requiring perhaps as much as $50 or $60 million per year from State funds in order to give full effect to both parts of the KerrMills bill.

My personal conviction is in full agreement with the statement made by the Income Maintenance Section of the White House Conference on Aging, which said: "The States are urged to take full advantage of this (Kerr-Mills) legislation." However, I can certainly not agree with those who say that the KerrMills bill will do the whole job, and that other measures are unnecessary. My support of the bill stems from the fact that it is needed to bridge the gap during a transition period, until such time as all retired aged persons would be covered by social security, and would also be entitled to medical services in addition to this monthly benefit check. Kerr-Mills is an excellent beginning step toward that end. Instituting the program along with the social security program, we could expect the same eventual decrease in cases and costs for the Kerr-Mills part of the total program, similar to the continued decrease in the number of oldage assistance cases mentioned at the beginning of this paper.

2. Financing medical care for the aged through social security.-The official policy statement of the 1961 White House Conference on Aging includes this major recommendation: "The problem of furnishing an adequate level of high quality health care for the aged is so large and so complex that its solution will require the use of a variety of approaches, including individual and family resources, voluntary health insurance, industrial programs, social security, public assistance, and a variety of other programs. *** The majority of the delegates of section 2 (by a vote of 170 to 99) believe that the social security mechanism should be the basic means of financing health care for the aged."

I am proud of having had the privilege of being a member of the section which prepared and adopted the above statement. The size of the majority vote was helped in no small measure by the strong backing given to the social security approach at the conference by two former members of the Eisenhower administration, Marion Folsom, former Secretary of Health, Education, and Welfare, and Arthur Larson, former Under Secretary of Labor. Numerous other objective appraisers have also endorsed this approach, including Walter Lippmann, the American Nurses Association, the American Public Welfare Association, and an editorial in Business Week, an editorial in Life magazine, the New York Times, the Washington Post, the St. Louis Post-Dispatch, and many others.

The King bill (H.R. 4222) as now pending in the Congress is the administration's version of the best way to use social security for the financing of medical care for the aged. In brief, it contains the following provisions:

(a) Those eligible for benefits would be persons aged 65 or older who are eligible for benefits under OASDI or the railroad retirement system (estimate 14.25 million covered).

(b) Benefits would include: (1) inpatient hospital service, up to 90 days per period of illness, subject to a deductible amount of $10 per day for up to 9 days with a minimum deductible payment by the patient of $20; (2) skilled nursing home services, after hospitalization, of up to 180 days per period of illness; (3) outpatient hospital diagnostic services, as required, subject to a $20 deductible payment for each diagnostic study; and (4) up to 240 visits per year during a calendar year for home health services, such as intermittent nursing care, therapy, and part-time homemaker services. (c) The program would be financed by an additional one-quarter of 1 percent tax paid to the social security system by both employers and employees. In addition the annual wage base would be raised from $4,800 to $5,000.

In view of the many contradicting statements being made about the use of social security for this purpose, on what basis does the present wage-earning taxpayer, who will in time be the aged-person consumer, make up his mind as to supporting or rejecting this approach? The following statements are offered for his critical analysis:

(a) A program financed jointly by the employee and employer on a prepaid basis permits each individual to help pay for the cost of his own medical care which may be needed after retirement. This would seem to be far more in keeping with the American way of doing things, as compared to the necessity of millions of persons having to apply for relief or charity in order to receive medical care.

(b) The necessary funds would be collected during the working years, when income is highest. In contrast, higher taxes for general revenue purposes would have to be paid by all taxpayers, including aged persons after retirement, if public assistance and the Kerr-Mills bill are the only programs.

(c) Coverage would be almost universal. In time almost every retired person will be one who is eligible to receive social security.

(d) With the major addition of compulsory collection of taxes, the social security plan would operate in behalf of the Nation's retired aged persons in much the same manner as Blue Cross has so successfully operated in behalf of a large group of the Nation's employed persons and their dependents.

(e) Medical care would be available after retirement without requiring the person to deplete his usually limited resources or savings, or become a serious financial liability to the younger generation. (The small group of wealthy aged to which this would not have any meaning could elect, if they so chose, not to apply for their OASI benefits).

(f) The benefits would be available to each retired person as a matter of right. Just as is the case in OASI retirement benefits, this is something which the person has helped to pay for. There would not be the soulsearching agony through which any self-respecting and previously selfsupporting person goes before asking for free care from any source. The Kerr-Mills program is based on the means test, which is far more complicated than filing an application for credit or submitting an income tax report; the county welfare office would undoubtedly be required to make a thorough financial investigation of all income and resources.

(g) The knowledge that this protection was available when needed would lift one of the greatest of all burdens from the mind of millions of aged persons in this country.

(h) The benefits would be uniform on a nationwide basis, and the retired person would suffer no loss by moving from one State to another, as is now the case under the public assistance and the Kerr-Mills programs

(i) The increased tax on the employed person is small, the cost being about $1.50 per month. For this all workers will have what amounts to a paid-up hospital insurance policy when they retire; not just a favored few working in certain industries.

An example of what I mean here is given by a retired gentleman who worked many years as a salesman for a meatpacking company. When he retired, one of the retirement benefits given by his company was a $12,000 paid-up hospital insurance policy, covering both the retired employee and his wife. This is a wonderful thing. You can see his great feeling of security in knowing that medical bills for both of them will be paid if they become sick. I wish I had the same protection to look forward to, but most of us are not lucky enough to work for a company which establishes such a plan. When you examine such plans more closely, is there really a difference between the principle used by the meatpacking company, as compared to the use of social security for the same purpose? The money with which to pay for the insurance was not manufactured in a backroom by the packing company. It had to be taken out of their earnings, and reduced the net profit by that amount. And every time you and I buy a stick of that company's sausage we are most certainly helping to finance the retirement security of their employees. It definitely is a compulsory plan of fund collection-I have no choice but to contribute to it if I wish to eat that brand of sausage. Is this any different in principle than a plan which deducts a portion of the wages of all wage earners each month so they all may have a paid-up hospital insurance policy when they retire?

(j) It would help ease the present real financial problems of hospitals. public assistance programs, and private philanthropy, and would relieve voluntary insurance programs of much of the burden of carrying this highrisk group.

(k) It would in time greatly reduce the need for funds from the general revenues of the Federal and State governments now used in financing the old-age assistance and the medical assistance for the aged program.

(1) Social security by itself will not be sufficient to do the entire job: all the presently used methods of financing will continue to be needed. However, if the social security approach is adopted as the basic method of financing, as recommended by the White House Conference on Aging, it will provide minimum basic protection which can be used by any person as the foundation upon which to build a more nearly adequate program. The positive statements as given above appear to summarize the argument in favor of social security. It is, however, necessary to make some additional comments about some of the charges which have been made in opposition to the use of social security:

(a) Social security is not socialized medicine. Socialized medicine, when accurately defined, means a system where the Government owns the hospitals and employs the physicians. That system is followed in several European countries and in Russia, but I have seen no indication of any desire for a similar system in this country. The social security system of financing medical care has not the slightest resemblance to socialized medicine. I, for one, believe it would be far superior to the European system. It is quite possible that the use of social security might be the surest way to insure that socialized medicine does not become effective in this country. (b) Social security is not compulsory medicine. No one would be required to accept the benefits, and no hospital would be required to participate. The free choice of physicians and hospital is guaranteed in the proposed law.

(c) There would be no reason for impairment of the patient-physician relationship, and certainly no control over the practice of medicine or the administration of a hospital. If this is a valid complaint against social security, then Blue Cross, the commercial insurance companies, and the Kerr-Mills type of medical assistance plans must stand convicted of the same charge the "third party" policies and methods would be almost identical.

(d) The word "compulsory" is properly used when applied to social security taxation. However, the word "compulsory" applies in exactly the same