ices would be covered only when they are provided as part of the hospital's services. Hospitals enter into various kinds of arrangements with doctors specializing in pathology, radiology, physical medicine, and anesthesiology. Some hospitals employ these specialists as salaried staff members; others arrange for these services by contracting with individuals or partnerships. In order to provide payments for these services for beneficiaries wherever provided by the hospitals, the administration proposal would provide payments to a hospital for the services in question whether the specialist is on salary or provides services for the hospital under some other kind of arrangement. Service provided by the patient's private doctor would not be covered, nor would services furnished by mental, tuberculosis, and, in general, Federal hospitals.

For both inpatient hospital services and nursing-home services, there is a limitation on the number of days of care that could be paid for in a period of illness-a maximum of 90 days for hospital care and a maximum of 180 days for skilled nursing-home care. This 2-for-1 provision is designed to provide an incentive to use nursinghome facilities, where medically appropriate, rather than hospitals. In addition there is an overall limitation of 150 units of service which may be paid for in a single period of illness. A "unit of service" is defined as 1 day of inpatient hospital care or 2 days of skilled nursinghome care again a 2-for-1 ratio. If someone eligible for benefits under the plan should go into the hospital and stay for 70 days, for example, and then require followup skilled nursing-home care, he would be eligible for payment for the cost of up to 160 days of such

care.

A period of illness is so defined in the bill that a new period could not begin unless there had been a lapse of 90 days during which the individual was neither an inpatient in a hospital nor a patient in a skilled nursing home.

For home health services an annual maximum of 240 visits is provided. Home health services involve periodic visits to the patient's home by therapists, nurses, and other professional personnel. The limitation placed on the payment of the costs of home health services is written in terms of "visits" rather than "days" so that the amount of home health services covered would be unaffected by whether a variety of services is offered on the same day or different days. A larger amount of service is covered in this area than in hospital and nursing-home care because home health services are far lower in cost than are hospital and nursing-home services.

The proposed health insurance program would not provide firstdollar coverage. There is no coverage of a deductible amount of $10 for each of the first 9 days of inpatient hospital care in a benefit period, and the minimum deductible amount is $20. Also, there is a deductible amount of $20 for each hospital outpatient diagnostic study.

The inclusion of the various deductible provisions in the proposal results in a substantial reduction (about 0.2 percent of payroll) in benefit costs, thus making it possible to provide a broader range of benefits and greater protection against the cost of catastrophic illness. It is expected that most aged beneficiaries would be able to budget for, or have modest resources available to meet, these small costs to which the deductibles apply.

Administration of the program: Overall responsibility for administration of the program for social security beneficiaries would rest with the Secretary of Health, Education, and Welfare. State agencies would be used, however, to carry out those services they are best equipped to perform. The bill, for example, authorized the Secretary to enter into agreements with the States to have them conduct any activities that may be needed to determine whether a provider meets the conditions for participation in the plan. The States could also be reimbursed under such agreements for making available consultative services to help providers to meet these conditions. This help would be in the nature of technical advice on request and would make available to institutions desiring assistance the benefit of State and community professional experience.

Conditions of participation could, of course, be readily met by institutions that fulfill the standards established by accreditation bodies. The Secretary could accept accreditation of a hospital or other facility by a recognized national organization as prima facie evidence that the institution had met some or all of the conditions for participation in the program. The help of State agencies would be used for the most part to determine whether unaccredited hospitals and nursing homes are eligible to participate.

Provision would be made for the establishment of an advisory council, which would advise the Secretary on matters of general policy in connection with administration. The Council would also advise the Secretary in the formulation of regulations. There would be 14 members of the Council, none of whom could otherwise be in the employ of the U.S. Government, and at least 4 of whom would have to be persons who are outstanding in fields pertaining to hospitals and health activities.

The proposal would be carried out through the use of the administrative machinery now used for the old-age, survivors, and disability insurance provisions. This would make it possible to administer the plan with operating costs of about 3 percent of benefit costs, because the administrative machinery for collecting taxes, keeping records, processing claims, and many of the other functions that would have to be performed is already in existence and operating smoothly in the administration of the present program.

Summary and conclusion: To summmarize, older people have low incomes and high health costs. We believe that many refrain from seeking care they need because they cannot pay for it or are unwilling to ask for help. Others, who do seek care, are made destitute by the cost of the care they get.

With the cost of health care rising and the number of older persons increasing rapidly, the need for protection against the cost of health care for the aged is an urgent and pressing one. The only satisfactory way of providing the aged with adequate health insurance protection is through a system under which the cost of the health insurance will be paid by people during their working years, together with their employers. The social security program is the only practical mechanism which follows this approach and through which in the future practically everyone in every State in the United States can secure basic protection.

Gentlemen, I have given you only a few statistics today. Many more facts and figures could be cited. But statistics cannot measure the anxiety and suffering of elderly people who see their small savings, their homes, their security about to be swept away by the near certainty of expensive illness.

Behind the facts and figures are human beings-average Americans-facing retirement on low income, knowing that in the days ahead there are almost certain to be large hospital bills. Many can just make it day by day on social security supplemented by minimum income from other sources, barely meeting the costs of rent and food and shelter. What they worry about is what happens if they get sick? Will their children be able to help? Will they have to sell their homes, draw the last dollar from the bank, for the first time in their lives apply for relief and go through the humiliation of a test of need, ask help from friends?

Even if medical care on a means-test basis were adequate and available for all needy, it would not be the answer. They, just as you and I, want protection before disaster strikes-not relief after they have lost everything. Growing old has its inevitable sadness; must we add the cruelty of fear and insecurity?

A quarter of a century ago we faced a problem much like the one we face now. We chose, as our basic solution then, a system of social insurance, under which the people, with their employers, would build their own old-age security while working by paying social security contributions into special funds from which payments would be made to them when they were no longer working. Now after 25 years, few would question the wisdom of the decision made by your predecessor committee.

I hope we will choose the social security approach again today as the Nation's primary answer to the problem of how to meet the costs of medical care for the aged.

The CHAIRMAN. Mr. Secretary, the charts which are appended to your statement will without objection be made a part of the record at this point.

Secretary RIBICOFF. Thank you very much.

The CHAIRMAN. Did you have in mind in connectiton with this material to which you referred earlier that the actuarial study would be of benefit to us if it be made a part of the record?

Secretary RIBICOFF. Yes, I think it is very important that it be made a part of the record, not only for the committee, but for other people interested in this field-the insurance actuaries and the general public.

The CHAIRMAN. Without objection, it will be made part of the record.

(The actuarial study referred to follows:)