Chairman Mills confirmed that the committee probably would complete these decisions this week, and that in any event the medical care hearings will begin next Monday, July 24, 1961, at 10 a.m.

The CHAIRMAN. The Chair wishes to observe that over 400 requests to be heard were received. The Chair wishes to thank the witnesses for their cooperation in coordinating testimony so as to avoid repetitious oral statements.

Our first witness today will be the Honorable Abraham Ribicoff, Secretary of Health, Education, and Welfare.

Mr. Ribicoff, you appeared before the committee in your present capacity on other occasions. We welcome you back to the committee, sir, and you are recognized.

STATEMENT OF HON. ABRAHAM RIBICOFF, SECRETARY OF HEALTH, EDUCATION, AND WELFARE; ACCOMPANIED BY WILBUR J. COHEN, ASSISTANT SECRETARY (FOR LEGISLATION); WILLIAM L. MITCHELL, COMMISSIONER, SOCIAL SECURITY ADMINISTRATION; DR. LUTHER L. TERRY, SURGEON GENERAL, PUBLIC HEALTH SERVICE; AND ROBERT J. MYERS, CHIEF ACTUARY, SOCIAL SECURITY ADMINISTRATION

Secretary RIBICOFF. Thank you very much, Mr. Chairman.

First may I say that I am accompanied by Wilbur J. Cohen, Assistant Secretary; William L. Mitchell, Commissioner of Social Security; Dr. Luther Terry, Surgeon General; and Robert J. Myers, Chief Actuary of the Social Security Administration.

I appreciate the opportunity to appear before this committee in support of health insurance for the aged under the social security program, H.R. 4222, introduced by Representative Cecil R. King.

It is my firm belief that this bill, if enacted, is destined to become as significant as any piece of domestic legislation produced by the 87th Congress.

This committee has the opportunity to equal the landmark action taken by the 74th Congress, which passed the Social Security Act in 1935. They sought to promote freedom from fear-the fear of economic insecurity. To a large extent, Congress, under your leadership, has succeeded.

Today the later years of millions of Americans are plagued anew by fear. With lifespan lengthened, with medical science breaking into undreamed realms of discovery, the Nation's aged now face another aspect of insecurity-how to meet the mounting costs of medical care.

Gentlemen, let me set forth my position clearly:

1. The high costs of medical care for the aged are going to be paid for in this country. The issue is not whether to pay these costs. The only issue is how to pay them.

2. The alternatives to health insurance that have been suggested are not adequate, not fair to the elderly who need the care, and not fair to the public which pays for it.

Private insurance plus public assistance cannot do the complete job. If the medical assistance for the aged program, enacted by Congress last year, is expanded to cover a major share of the costs, the drain on State treasuries will be fantastic. If the issue is left to collective

bargaining, the pressures on employers to absorb the total cost will be overwhelming. If hospitals have to collect from those who can pay the costs for those who cannot, the burden on middle-income hospital patients will be unconscionable.

3. The facts will show that paying for hospital costs under the social security system is the conservative answer, the practical answer, the fair answer.

Let me begin by discussing the need.

The need for action: In his special message to the Congress on health and hospital care, the President described the need of the aged for insurance aganst health care costs. You may recall that he said:

Those among us who are over 65-16 million today in the United States-go to the hospital more often and stay longer than their younger neighbors. Their physical activity is limited by six times as much disability as the rest of the population. Their annual medical bill is twice that of persons under 65—but their annual income is only half as high.

The President went on to say:

Twenty-six years ago this Nation adopted the principle that every member of the labor force and his family should be insured against the haunting fear of loss of income caused by retirement, death, or unemployment. To that we have added insurance against the economic loss caused by disability. But there remains a significant gap that denies to all but those with the highest incomes a full measure of security-the high cost of ill health in old age.

The statistics to demonstrate the need are legion, and I want the committee to have them. I am submitting, in addition to my statement, two supplementary documents for the information of the committee. One of these, a report entitled "Health Insurance for Aged Persons," contains a comprehensive discussion of the financial circumstances and the health status of the aged and the need for a program of health insurance and also presents in detail the specifications for the provisions of the President's proposal and the reasons underlying the specifications. The second document, an actuarial report prepared by the Chief Actuary of the Social Security Administration, presents detailed estimates of both the short-range and long-range costs of the proposal, the assumptions underlying the estimates, and other pertinent actuarial material.

But before talking statistics, let me say a few words about peoplesome of the many men and women who have taken pen in hand to tell the President of the United States what it means to face sky-high medical costs.

The President recently received a letter from a man in North Carolina who said:

I am writing you for some information about medical bills for the old aged. I don't know whether any of them has been passed yet. Mr. Kennedy, my wife is 72 years old and I am 74. We only get $51 a month social security between us both. I own a small house of my own so we don't get any old aged pension. My wife had to have an operation the other day and the bill is so big we just can't pay it. The welfare doesn't want to help. So, I just don't know what to do.

A woman in Georgia has written to the President:

I went to the hospital last February. Stayed a week and 1 day. It cost me $172. I have no hospital insurance and do not get enough money from social security to pay on insurance.

A man in Oklahoma wrote to me:

I am past 70 years old and am retired and drawing social security. It costs my wife and me $275 a year to carry hospital insurance and what we fear most is that the policies might be canceled if we have to use them. Something should be done about this. I am in favor of the social security plan which you advocated on TV a few days ago.

These and many other letters bring out very clearly, I think, how older people live in fear of the costs that illness brings. This threat is very real for most of the aged; it is not only the very poor or those with very expensive illnesses who can suffer financial disaster as a result of health care costs.

Let me describe the case of a couple in Connecticut, who were among those interviewed in a survey of old-age and survivors insurance beneficiaries made in 1957, at the time I was Governor. This couple let's call them Mr. and Mrs. Day-were getting along pretty well in their later years. Mr. Day had retired from his job as a general laborer in a factory in 1952 at the age of 74. He had worked hard, and he and his wife had saved what they could and had a small house paid for. The house needed some repairs, but they didn't feel that they could spend the money to put it in good condition.

Mr. Day's social security benefit was about $80 a month, and his wife's benefit was $40. They rented part of their house, bringing their total income to about $2,300 a year. We all know that a couple, even when they own their own home can't splurge much on $2,300 a year, but this couple was getting along. The financial picture of this retired couple, incidentally is just about the average.

Then Mr. Day had a stroke and had to go to the hospital for 11 days. The hospital bill was $405-not at all unusual as cases of hospitalization go. Out-of-hospital costs were $26.

This couple didn't have any health insurance. They had had health insurance when Mr. Day was working, but their protection ended when he retired. By the time they finished paying the hospital bill and the $26 for the doctor, their savings were pretty well wiped out by this one illness. They now have practically nothing to meet future emergencies with. What happens if Mr. Day has another stroke or Mrs. Day gets sick?

Here is the case of another elderly couple who was questioned in the 1957 survey. This couple was living in New York. They were receiving $113.90 a month in social security benefits for the husband and wife. The man was also getting a pension of $65 a month from his employer, making their total annual income about $2,150. They had about $1,000 in savings at the beginning of the survey year. They were living in modest circumstances, but they were getting along. Then the man had to have a serious operation. His care cost $1,263, including a hospital bill of $738. In addition, the wife had healthcare expenses amounting to $330. They managed to meet all their medical and hospital bills, but it took all their savings. At the end of the year they had no assets left, and the man was still in poor health. A couple like this probably will have to seek assistance to get future medical care.

The fear of future illness is something that people in this situation live with every day, and what they fear happens to many of them time and again.

Now a few facts that show the general situation of the aged. Nine out of ten of the people who live to be 65 go to the hospital at least once between age 65 and death.

Among couples, in about half of the cases the husband and the wife will each have at least two hospital stays between age 65 and deathat least four hospital stays for half of the couples after age 65.

When an aged person goes to the hospital, he is likely to stay longer than a younger person because he is more likely to have serious and long-lasting disease. People over 65 are in hospitals, on the average, over 211⁄2 times as much as younger people. I have here a chart that illustrates this point.

For

If you look at the chart, here: It is indicated in green that for people up to age 64 there are 883 days of care for every 1,000 persons. those over age 65, 2,332 days of care per 1,000 persons.

In recent years, these problems have been aggravated by rising hospital costs. The costs have more than tripled in the last 15 years, as shown on the second chart, indicating that the average cost per day in 1946 was $9.39; in 1950 the cost rose to $15.26; in 1955 the cost of hospital care per day was $23.12; and in 1960 the average hospital costs were $32.28 a day.

The financial impact of repeated hospital stays becomes apparent when we consider that the median yearly income for a widow is about $1,000, and for an aged couple is less than $2,500. About one-third of the aged have no assets that can readily be turned into cash, and about half have less than $500. Much of the health insurance available to the aged provides very limited protection and that only at high cost to them, and less than half of the aged have any hospitalization insurance at all. This is not surprising, since it is impossible for most retired people to pay currently the high premiums that, considering the high incidence of illness among older people, would be necessary to provide adequate coverage.

Is it not true, though, as some people are asking, that whether people can pay for it or not, everyone in this country gets the hospital care he ought to have? I doubt very much that this is true. I believe it is true that very few, if any, who are absolutely in need of urgent care are turned away from our hospitals because of inability to pay. But what about those who are too proud to accept what they look on as charity or going on relief, who will dangerously postpone seeking care because they fear cancellation of their insurance, or do not want to dip into their small savings or to burden the limited resources of their children? Who can say with confidence that needed hospital care has not been foregone, that terminal illness and premature death have not been caused by the unwillingness of our older people to seek the care they need?

We know that hospital use by older people goes up when an assured source of financing is provided on terms that older people find acceptable. Insured older people do use more hospital care than the uninsured. Financial barriers do stand in the way of adequate care.

The present role of Government: The need must be met. But by whom? In proposing that the Federal Government play a part, we are not suggesting anything new. The Government is already involved in meeting the cost of personal medical care, for the aged as well as for other groups, and on a large scale. We are simply proposing a

more logical, a more equitable, a more efficient, and a more fiscally responsible approach to medical-care problems with which the Government is already involved and has been for quite some time.

In 1959, total expenditures for personal health and medical care in this country amounted to $22.5 billion. Almost 22 percent of this total-about $4.9 billion-was paid from public funds. Federal expenditures amounted to almost $2 billion, or about 40 percent of the total public spending for personal health and medical care.

The 1960 legislation providing for increased Federal grants for direct payments to providers of medical care under old-age assistance. and for medical assistance for the aged will, of course, increase public expenditures for health care. If all States were to put into effect medical assistance programs for the aged comparable with the average program now in effect or under study in the States, and if health insurance for the aged is not provided under social security, the annual cost, Federal and State, for this category alone would be more than $650 million. If the State programs were to provide better benefits in the future than the average now provided, the cost of medical assistance for the aged, in the absence of a health insurance program for the aged under social security, could run to as much as $1 billion a year or even more, with the Federal Government paying somewhat more than a half a billion dollars. Make no mistake about it; the Federal Government is already in medical care, and on a large scale.

It is in this medical-care business because there were problems that had to be met. Action had to be taken. The program of medical assistance for the aged was and is urgently needed. In fact, we believe that still further action is needed: use of the social security approach to insure against the costs of hospital care for older people.

The social insurance method: Provisions for health insurance benefits for the aged are a necessary part of income protection in retirement. Without such benefits the social security program cannot adequately provide basic security for the aged. For most older people old-age, survivors, and disability insurance cash benefits are barely large enough to keep them housed, clothed, and fed, and half of the beneficiaries do not have any significant additional regular income. The benefits are not large enough to meet the costs of expensive illnesses or to pay large health insurance premiums during retirement. The only way to remove the threat to the financial independence of older people posed by the high cost of illness is through providing the aged with basic health insurance protection in addition to their monthly cash benefits. And this can be assured only through the social insurance methods.

Basically the problem is that the larger medical-care needs of the aged as a group result in higher average costs than those incurred by younger people. To cover these costs higher premiums must be charged, and this at a time when, because they have retired, people's incomes are lower than in earlier years, and there is no employer to share the cost. We cannot expect them to finance the higher-thanaverage medical costs that they have at this time of their lives out of their lower-than-average financial resources. The best solution for a problem of this sort is an arrangement, like that for present social security benefits, under which people pay while they are working toward the cost of the protection that they will need to have in rerement, so that no further payment after retirement is required.