their relationships to patients 65 and over, or which involve direct or indirect supervision or control over the practice of medicine, despite contrary assertions in section 1601 of the bill. (The material referred to above follows:) EXHIBIT C STATEMENT OF STATE MEDICAL SOCIETY OF WISCONSIN, RE H.R. 4222 The statement on page 5, lines 17 to 25, of H.R. 4222 that Federal officers or employees may not exercise any supervision or control over the practice of medicine or the manner of providing medical services; or over the selection, tenure, or compensation of any officer or employee of any hospital, skilled nursing facility, or home health agency; or to exercise any supervision or control over the administration or operation of any such institutions, is contradicted by the following: 1. Page 7, lines 9-15, benefits provided by pathologists, radiologists, physiatrists, anesthesiologists, interns, and residents. Interns and residents must be training under a program approved by a recognized body which is in turn approved by the Secretary. This is an exercise of control over the practice of medicine. 2. Definition of "hospital," page 13, lines 21 et seq., lists services provided and requires that they be provided by or under the supervision of physicians or surgeons. (a) On page 14, line 4, such a hospital must maintain "adequate” medical records. Who determines what is "adequate"? (b) On page 14, lines 10-16, such an institution must have a hospital utilization committee. (c) On page 14, lines 22-25, the Secretary of HEW is given the authority to determine any other conditions of participation as he finds necessary in the interest of the health and safety of patients. 3. Under the definition of “skilled nursing facility," on page 15, at lines 17 to 25, there are requirements that it have medical policies established by professional personnel, including at least one physician; every patient must be under the care of a physician; and that the facility itself must be under the supervision of either a physician or a registered professional nurse. 4. Under the definition of "home health agency," page 17, lines 6–20, there must be medical policies established by professional personnel, including at least one physician; the agency must maintain adequate medical records of service rendered; and it must meet any other conditions of participation which the Secretary finds necessary in the interest of the health and safety of patients. 5. On page 18, lines 8-13, a hospital utilization committee is defined to include one or more physicians who are to review admissions into the hospital, duration of stays, and the services furnished. 6. On page 21, lines 13-21, and page 22, lines 1-22, there are provisions requiring that a physician certify in writing what services are required before the applicant may receive payment for those services. 7. Determination of what are reasonable costs of services is provided for on page 23, lines 15-25. The Department of HEW is given the authority to determine what is reasonable by establishing regulations. Such determinations would necessarily include the services of the four in-hospital specialties, described on page 7 of the bill, plus the costs of training residents and interns. Such costs would also include their stipends. 8. On page 26, lines 5-18, the bill would limit payment for services to those institutions which have agreed to accept their payments in full, except for emergency services. If an institution provides emergency services, even though it has not filed an agreement under 1610(a), it must accept as payment in full whatever the Department pays it for those services. 9. Beginning on page 26, line 19. to line 12, on page 27, there is a requirement that an institution or "provider of service," determined by the Secretary to be a hospital or other health facility under the bill, must sign an agreement to accept payment in full before it is eligible for payments, and it may not charge the patient for anything in excess of that payment. However, the "provider of service" may charge the deductible amount. The institution is required to accept whatever the Department pays as full payment for services rendered. Again this would include the services of the four specialties and the house staff enumerated on page 7 of the bill, lines 9-15. 10. On page 28, from line 23, to page 29, line 9, there is a provision for payment by HEW to the providers of services. This allows the Secretary to determine how much should be paid out and when payment will be made. The Secretary may reduce or increase the amount paid previously if he finds the amount paid to any "provider of services" was greater or less than what should have been paid. 11. On page 66, line 21, to line 8, on page 67, there are provisions, among others, that the Secretary of HEW shall conduct studies and develop recommendations to the Congress concerning the adequacy of existing facilities for health care; methods of encouraging further development of efficient and economical forms of health care which may be an alternative to inpatient hospital care; and feasibility of providing additional types of health insurance benefits within the financial resources provided by the bill. It seems a fair comment to suggest that this final section of the bill permits an undefined and almost unlimited expansion through a combination of HEW plans and the use of funds provided by the bill. Dr. ALLIN. In closing, let me state my major conclusions, which are that bill H.R. 4222 (1) Is unnecessary public health legislation; (2) Fails to contain any real assurance of achieving what it claims in the broad strokes of its purpose clauses; (3) Provides at most only partial health services for a segment of the population, but does this regardless of need; and under compulsion; (4) Is unfair in looking after only a portion of those age 65 and over if there is any soundness in the premise that health problems at those ages constitute a pressing social problem demanding immediate legislative correction; (5) Contains numerous, intended and significant controls over the professional services of practicing physicians, and those in training, despite the claims of no interference and the often publicized assurances that this bill does not involve physicians. Mr. Chairman and gentlemen of the committee, I thank you for your attention. Mr. KING (presiding). The committee thanks you, Dr. Allin. Thank you again. Dr. Eubank? STATEMENT OF MAHLON Z. EUBANK, DIRECTOR, SOCIAL INSURANCE DEPARTMENT, COMMERCE AND INDUSTRY ASSOCIATION OF NEW YORK, INC. Mr. EUBANK. My name is Mahlon Z. Eubank. I am director of the social insurance department of the Commerce and Industry Association of New York, Inc. I speak for them. Commerce and Industry Association of New York, Inc., the largest service chamber of commerce in the East, represents approximately 3,500 employers, large and small, in all branches of industrial and commercial activity, including many corporations headquartered in New York but engaged in multi-State operations. Through its committee on health insurance, which includes executives specializing in this field from leading national business organizations, and its social insurance department, the association studies and actively presents management thinking on significant health insurance issues at both the National and State levels. 76123-61-pt. 239 The Commerce and Industry Association appreciates this opportunity to testify before your committee concerning the administration proposal, introduced by Representative King (H.R. 4222) and Senator Anderson (S. 909), to provide medical care for the aged under the social security system. Over the years Commerce and Industry has been concerned with the problems of the aged and is sympathetic toward making health insurance and medical care available to more of our senior citizens. In line with that active interest we favored passage of the Kerr-Mills Act (Public Law 86-778) as indicated in our letter of June 29, 1960, to Hon. Harry F. Byrd, chairman of the Senate Finance Committee. We actively supported legislation in New York, now chapter 195 of the Laws of 1961, implementing that act. Further, we have explained to our member firms through forums and workshops how to continue coverage for their retired employees under group plans. While we believe it is meritorious for this committee to focus attention on providing medical care for the aged, we are convinced solution of the program does not lie in the King bill or similar Federal legislation. There are other and better ways to insure that our senior citizens can obtain medical benefits fitted to their needs and desires. Our reasons for opposing the King bill or the approach it embodies are as follows: THE KERR-MILLS BILL SHOULD BE ALLOWED TO OPERATE This Kerr-Mills Act authorizes Federal participation in approved State plans which provide medical assistnace on behalf of recipients of old-age assistance (OAA) and for aged persons not on old-age assistance whose income and resources are not sufficient to meet the cost of necessary medical services (MAA). Under the new MAA program, Federal contributions are authorized for from 50 to 80 percent of total State disbursements for medical, vendor payments, or insurance. The Kerr-Mills Act, already implemented in a growing number of States, can do the job. It permits the several States to establish, expand, or improve their medical care programs for the aged in accordance with the need of each State's citizens in light of its current and prospective facilities. Much more comprehensive programs-in terms of medical services may be provided than are proposed in the King bill. This is particularly true in providing medical care for those who are chronically ill and are confined permanently in a hospital or nursing home. For example, in New York, annual medical care cost for an aged person confined permanently in a hospital or nursing home may be $4,000 a year. If a single person has only an income of $2,000-social security plus private pensions-New York State, under the MAA program, would allow him a limited amount for personal expenses and pick up the rest of the cost, a little over $2,000. Since the MAA program is so new, there are not yet sufficient guideposts fully to determine costs, income levels that should be covered, and services to be provided. Nevertheless, we do know, as predicted by those in and out of Congress who supported the Kerr-Mills approach, that— (1) The cost can be kept at a minimum by local administration on a case-by-case basis resulting in the elimination of those not in need. (2) Because of these savings it is possible to make all kinds of needed medical services available and not limit them to specified categories. (3) Cost is spread over the broadest possible tax base-all Federal and State taxpayers. Those who urge enactment of the King bill often contend that the means test of Kerr-Mills is degrading, that the elderly should have hospital or hospital and medical-services as a right under law and not as charity. This contention is misleading to the point of intellectual dishonesty. The social security taxes, over the long run, will cover only benefits to existing beneficiaries and administrative expenses. There is no funding as it exists in true insurance. Social security is not insurance. It is a pay-as-you-go benefit system. Additional taxes on present workers will not lay up future benefits for them. They will be used for today's beneficiaries, and our children's taxes will provide for our benefits, not theirs. Thus the King bill is charity, pure charity, for its beneficiaries and charity whether they need it or not. The Kerr-Mills Act is no more and no less charity than the proposed King bill. It does provide more benefits for those who need them. And it does, as it should, deny benefits to those without a need for them. VOLUNTARY INSURANCE IS INCREASING Insurance companies, regardless of the fact that medical expenses are higher for the aged, are writing more and more policies covering people 65 and over. These include hospital and major medical policies, both group and individual. A booklet recently prepared by the Health Insurance Association lists about 100 different policies which are available. The General Assembly of the State of Connecticut through its Act No. 95 this year authorized insurance companies, domestic or foreign, that write health insurance in Connecticut, to join with other companies in developing and offering to that State's senior citizens comprehensive health insurance coverage against major financial loss. This program has been implemented and will be available to every resident of Connecticut 65 years of age and over who is not confined in a hospital and has not been confined in a hospital during the 31 days preceding enrollment. Emphasis in the Connecticut plan is on providing major medical coverage with a maximum lifetime benefit of $10,000 or $5,000 with a cash deductible of $100. A basic hospital and surgical plan also will be made available for those who do not have basic coverage through other insurance programs or hospital and surgical service benefit organizations. Rates are planned at the lowest possible level. Research, experimentation, and statistical studies on this new program may provide the answer for low cost medical care policies for individuals 65 and over with lower incomes. Enactment of the King bill would stifle progressive innovations such as the Connecticut plan. Not to be overlooked is the place of industry in its ability to make available health insurance in the retirement years which our aged will consider satisfactory. At present about three-fourths or more of our health insurance plans (group) are provided through employment. Five years ago, employers put up only about $1 billion, a little more than one-quarter of all the premiums paid for that type of group coverage. Now they are paying closer to $2 billion of the $51/2 billion premium cost. More and more of these policies are being written to provide continuance of health insurance after retirement under the group plan or with provisions giving the employee the right to convert to an individual insurance policy without evidence of health (a 1960 New York law, chapter 820, Laws of 1960, requires policies to have such a conversion provision). In many group policies employers pay the entire cost of postretirement continuance. Where the pensioners do contribute for health benefits, it is usually at a rate no greater than their contributions when they were active employees, with the employer and perhaps active employees contributing enough to cover the remainder of the cost. Prefunding of retirement health benefits under group policies also has been increasing. Under this arrangement, costs may be allocated to the working years where they belong. The benefits provided the retired worker thus can be made more secure for him. These important developments not only have great potential for making costs more manageable but also add greatly to the value of such personal security provisions. One factor tending to slow development of advance funding of health benefits, and life insurance as well, has been the absence of a ruling as to the tax status of the funds. Accordingly, the time has come, we believe, to request that this committee propose an amendment to the tax law to make it clear that sums set aside currently for prefunding the cost of life and health benefit insurance during retirement are currently deductible for Federal income tax purposes. The amount of health insurance coverage for the aged has shown a remarkable growth during the last few years. In 1952 about 26 percent of all the aged had health insurance. Today, according to the Health Insurance Association of America, 53 percent own some kind of insurance coverage or an increase of 100 percent from 1952. This represents a rise of 7 percent in the last 2 years, since the National Health Survey report for January 1960, covering a survey taken in the summer of 1959, announced 46 percent were covered by these programs at that time. The percentage of those 65 and over covered by private health insurance plans should show an even greater increase within the next few years because a large number will have additional funds with which to buy them. Appearing before the Senate Special Committee on the Aging on July 13, 1961, on this subject, Roger F. Murray, professor of banking and finance in the Graduate School of Business, Columbia University, said: During the past decade, there has been an explosive growth in the number of people covered by retirement plans designed to supplement their prospective benefits under the old-age and survivors insurance system. The number of covered employees in private industry, for example, is currently about 22 million, representing a growth of close to 50 percent in the last 5 years. In Federal, State, and local governments, of course, the coverage is almost complete. Because many of these plans are relatively new, benefit payments are still in |