In privately-controlled general hospitals, about a fifth of all patients are aged 65 or over. But in general hospitals of State and local governments, which more often than private institutions provide care free or at reduced charges to those not able to pay in full, every fourth patient is at least 65 years of age. In Veterans Administration general hospitals, one out of five patients is at least aged 65.

The most important source of public funds for medical care of aged persons is now the public assistance programs.

Public Assistance Medical Care

From the beginning of the Federal-State old-age assistance program established under the 1935 Social Security Act, costs of medical care could be included in monthly cash payments of old-age assistance recipients. The payments were subject to Federal and State maximums, however, which very much limited the care made available in most States.

In 1950, the Social Security Act was amended to permit Federal matching of payments for medical care made directly to suppliers. However, these vendor payments had to be within existing maximums on Federal participation in individual cash payments. In 1956, old-age assistance was again broadened by establishing separate Federal matching for medical care payments over and above the cash assistance payment. In 1958, the effective ceiling on Federal matching was increased.

The 1960 amendments to the Social Security Act provided two extensions of medical care for the aged under the public assistance program: (1) increased Federal matching of medical care payments under old-age assistance, and (2) a new program of medical assistance for the aged, designed to provide help with medical bills for the socalled medically indigent. The 1961 amendments, signed by the President on June 30, included a slight additional liberalization of the Federal matching provisions for vendor medical payments under old-age assistance. Public Assistance Medical Care: Old-Age Assistance

Fifty-four jurisdictions administer old-age assistance (OAA) programs, including the 50 States, the District of Columbia, Puerto Rico, the Virgin Islands, and Guam. Forty-three of the States 10/ provided some medical care to old-age assistance recipients through vendor payments in September 1960. But these States varied widely in the content of their medical care provisions. Some State programs included a wide range of medical services, covering virtually the entire gamit of needed types of medical care, while in other State programs medical care provisions were extremely limited in scope. However, there was undoubtedly some room for improvement of medical care content and coverage in nearly all State old-age assistance programs.

10, The word "State" in Part I of this document applies equally to the 50 States, the District of Columbia, Guam, Puerto Rico, and the Virgin Islands.

Changes in medical care under old-age assistance since September 1960.--The 1960 amendments have resulted in increases in

the medical care provided through vendor payments under old-age assistance in a substantial number of States. According to information received by the Bureau of Public Assistance by May 31, 1961, of the 43 States providing vendor payments in September 1960, 23 11/ had taken steps by that time to improve the content or coverage of their medical care provisions through old-age assistance vendor payments.

During this period, three States reduced medical services provided through old-age assistance vendor payments. Two, Massachusetts and New York, moved many cases formerly receiving medical care under old-age assistance to the new medical assistance for the aged program, under which the recipients will continue to receive the same care as formerly. The third State, Colorado, has been forced, by a State constitutional limitation on funds expended for the purpose, to reduce medical care paid for through old-age assistance vendor payments.

Of the 11 States which made no vendor payments for costs of medical care in old-age assistance before October 1960, five 12/ have either begun to make vendor payments or are planning to do so sometime in 1961.

Changes in vendor payments: September 1960 - April 1961. --The above information is based on the States' descriptions of medical care provided through vendor payments under State old-age assistance plans. Their expansion of medical care services may involve the addition of a great deal, a moderate amount, or very little in the way of an actual increase in services rendered. In some States, expansion is only in the planning stage and may not actually materialize. In some States, the additional provision represents only a change in payment method, as when States have begun making vendor payments for services that were previously provided through money payments to recipients (the change in payment method being made because it brings increased Federal participation in the assistance payments). However, this change of method may mean a great deal to the

12/ Alabama, Kentucky, Mississippi, Puerto Rico, and South Dakota.

recipient because it may affect his money payment and the kind and
quality of medical care provided. Since many States have maximums
or other provisions limiting the money payment, the removal of the
special cost of medical care from the money payment permits more leeway
in meeting the recipient's subsistence needs, insofar as State or local
funds are available. In addition, the cost of a particular medical
service paid in the recipient's behalf frequently is greater than could
be allowed in the State's money payment.

A much more definite indication of the impact of the 1960 legislation on old-age assistance vendor payments may be obtained by comparing average vendor payments for States in September 1960 with the averages for April 1961, the latest month for which data are available, and by comparing average money payments for the same months. In September 1960, the average vendor payment under old-age assistance for all States combined was $10.75 per recipient. In April 1961, it was $11.06 (table 10). Specific program changes in Massachusetts and New York partly explain the fact that the national average did not rise more than 31 cents. In Massachusetts, more than 15,000 old-age assistance nursing home and other institutional cases were transferred to the State's new program, medical assistance for the aged, between September and April. This resulted in a reduction in the average old-age assistance vendor payment in the State from $45.86 in September to $17.10 in April (the only very large drop occurring in any State during the period). In New York, 16,000 cases were transferred from old-age assistance to medical assistance for the aged in March and April, and the average old-age assistance vendor payment dropped from $33.45 in September to $28.95 in April. Excluding Massachusetts and New York, the remaining 52 States had average vendor payments of $8.66 in September and $10.34 in April, or an increase of $1.68 in the average vendor payment over the 7-month period.

The number of States with changes in average vendor payments of specified amounts is shown in table 11. It is possible that some of the changes in State averages represent random month-to-month fluctuation; however, this is certainly not true for the States whose average vendor payments increased by a sizeable amount over the 7-month period.

Increases in average vendor payments have come to some extent at the expense of decreases in average money payments. Under the revised formula for Federal participation in old-age assistance, it was to the advantage of some States that formerly had low average vendor payments to begin paying for additional types of medical care through vendor payments rather than through money payments to recipients. For example, in some States nursing home care was formerly paid for through money payments. It is now covered through vendor payments, and the shift in payment method has brought a drop in average old-age assistance money payments together with the increase in average vendor payments. Among the 27 States in which the vendor payment averages had increased more than $1.00 by April, 9 States decreased their money payment averages by more than $1.00, while in 7 the money payment average increased by more than $1.00 (table 11).

Table 10.--Old-age assistance: Average payment per recipient for all assistance, for money payments to recipients, and for vendor payments for medical care, September 1960 and April 1961, and changes in averages from September to April, by State

Table 11.--Old-age assistance: Distribution of States by amounts of increase or decrease in average money payment and average vendor payment per recipient from September 1960 to April 1961 (corrected to June 27, 1961)

States with relatively high average vendor payments do not necessarily provide comprehensive and high-quality medical care for old-age assistance recipients, nor do all States with low averages have inadequate medical care programs. There are a number of variables other than the scope and quality of care received by recipients which influence the level of average vendor payments--variations in costs of medical care, availability of medical personnel and facilities, access of recipients to other medical care programs, provision of medical care through money payments to recipients, etc.

But,