Mr. WEDEMEYER. Governor Brown in his statement expresses his wholehearted support of the bill which is before you as being a sound method of meeting the paradox that now exists for the aged in being faced with their greatest need for medical care at a time when their ability to pay for it is at its lowest ebb.

He believes that H.R. 3920, which was introduced by Congressman King, of California, is the most important bill that affects older Americans which has been before Congress since the Social Security Act of 1935.

He expresses the support of the people of California, and, he believes, the people of the Nation for this legislation and urges your favorable action on it in time to allow vote by the Congress during this session.

He bases this support on two things, his personal conviction that such a system is the soundest and surest way of meeting this need and most importantly; out of his experience as Governor of a large progressive and prosperous industrial State which has endeavored since 1960 to build a workable and comprehensive program of medical assistance to the aged under the Kerr-Mills Act.

In suport of this, his statement includes a description of our development of the Kerr-Mills provisions. He reviews briefly our experience before and during this process. In 1957 some recipients who were unfortunate enough to have income were allowed to use this income to pay medical expenses but if they did not have such income or if they needed all or part of it to meet such needs, such as housing and transportation, and so on, then he had no way to pay for his medical care.

He was left dependent on such community resources as indigent hospitals, free physician services, gifts from relatives, and his own savings.

We were able by reason of the Social Security Act amendments to begin a modest program of medical care for the aged with a maximum limit of $6 per recipient, $3 of which was contributed from Federal funds.

By necessity this program was limited to outpatient care. California gave priority to the services which gave the recipients the best opportunity to seek early medical care and diagnosis. This program was improved in 1960 and 1961 and extended.

At that time we had one of the most liberal programs in the United States in terms of the amount of aid in proportion to the aged persons who received help.

And over the years there was a steady growth in the numbers of people who were given aid mainly because of medical needs.

It provided financial grants of up to $101 for basic needs, up to $106 for allowance of special needs and supplied comprehensive outpatient medical services but it did not support hospital and nursing home care.

Our hope is fixed on the enactment of the Forand bill or other congressional action.

With the passage of Kerr-Mills we began the program with some $7.5 million of State money which was accrued by reason of some savings in appropriated funds.

Within this program, within this amount of money, we gave priority to financing the ruinous cost of long-term care in hospitals and nursing homes since these were not being met in any organized fashion.

Because of physical limitations we defined long-term care as that in excess of 30 days in a hospital or nursing home. Governor Brown describes the situation that we faced in our estimates of the 1,250,000 persons over 65 in California, 788,000 were estimated to have incomes of $2,000 or less a year.

Of these, 250,000 were receiving old-age assistance. The balance were estimated to be maintaining themselves independently. Out of this 788,000 it was expected that 142,000 would be hospitalized each year and that 33,000 or more would require care in excess of 30 days.

We anticipated that under Kerr-Mills, as we formulated it, an average population of 18,000 persons in any one time would be needing care in long-term hospitals or nursing homes.

The eligibility requirements were established on a very liberal basis. A person could have his home and other real property holdings assessed up to $5,000. No limit on the value of the home. The person could have personal property up to $1,200 plus household and personal effects.

The only income limitation placed was that the income could not exceed his cost of maintenance and that of his dependents plus the cost of medical care.

Under this liberal program which we attempted to use to finance the catastrophic long-term illness and its cost and the attendant costs on the older individual and his family our budget was estimated to be $60 million for 1962-63, for 1963-64, $120, and we estimate that for 196465, we will be budgeting $142 million.

In spite of this, Governor Brown is convinced that the basic needs of the aged population of California cannot be met adequately through this procedure except at exorbitant cost to the State.

It covers now only about 25 percent of the 142,000 Californians over 65 that did not come under $2,000 a year who need hospital care each year.

If we were to cover the needs by providing care from the day of admission our estimated cost in 1964-65 would jump from $142 million by another $54 million. Of this increase, $13.5 million would have to come from the State's general fund and on a statewide basis counties would have to increase their property-tax levies by some 3.8 percent per hundred dollars of assessed value.

If we were to follow the recommendations which have been made to liberalize eligibility standards still further which we can only do now by increasing the exemption on personal property holdings from $1,200 to a recommended $5,000, this would add another $88 million to the 1964-65 cost for California.

Governor Brown believes that California is unable to shoulder this load and believes on the other hand that there are substantial advantages to the program which is put forth in H.R. 3920.

There are several improvements that he thinks the present version affords. One is he endorses the provision for blanketing in nearly all people 65 and over. He has advocated that formally and is pleased that it is here.

He is also convinced that the benefits which are proposed will help older people from becoming dependent; that is, inpatient hospital

care, outpatient diagnostic services, health services, and skilled nursing home care following operations.

These are the things that will keep them from becoming dependent. The bill also, he believes, encourages private health insurance to offer plans which are within reach and which will supplement the basic benefits.

Even the new plan such as Western 65, which has been recently publicized in California, would still cost an aged couple for a reasonably comprehensive policy some $552 a year.

He endorses also the provisions of the bill which contemplate the use of voluntary organizations in administering certain phases of the proposed program and those provisions which assure that payment for services provided in the bill would be subject to supervision by medical personnel in accordance with the standards of the organization.

He also approves the idea that some phase of administration can be delegated to State agencies. His overriding reason for endorsing the bill, however, is the method of financing the service proposed.

He supports completely the social security contribution plan and believes it is a feasible one, one that has support from the people of California.

He says:

It is my profound belief, Mr. Chairman, that you and the gentlemen of this committee are in a position to allow the people of this country to take a great stride forward in the pursuit of a good and happy life by extending to the field of medical care the system of social insurance which has served three generations of Americans so well.

Thank you.

Mr. KING. The committee wishes to thank you, Mr. Wedemeyer, not only for a good statement but for your consideration of the time of this committee in making an expeditious presentation. Are there questions of Mr. Wedemeyer? If not, thank you.

Mr. ALGER. Just one statement, Mr. Chairman.

We don't have time for much cross-examination. I realize you are representing Governor Brown. The statement on the last page relative to financing, you say you deplore the fact that the strategy of some opponents of the program recommended by President Kennedy has been based on clever and covert efforts to undermine public confidence in the contributory principles of the Social Security Act.

I want to call your attention to the fact that we are very concerned about the actuarial basis, and our chairman, together with the help of Mr. Myers and others in the HEW, are developing these figures and to the best of my recollection they pretty well admitted that the contributory amount increase of the tax will not cover the expense of this

bill.

This, plus the fact that some of us are worried about the fact that there is an imbalance based on the accumulated deficits that we intentionally transferred to new entrants.

I am sure you are concerned as we are that this be financed soundly. You say that Governor Brown is interested in this as a financing means. We are concerned that this is not as actuarially sound as obviously Governor Brown thinks it is.

Mr. WEDEMEYER. I think Governor Brown has three points in mind, which refer in a way to things which have been said before this com

mittee today. First of all, he is concerned about the time factor, the needs are here now in a very substantial way. The means to meet those needs are not here.

Other plans which have been advanced depend heavily on individual foresight, a thing which is hard to assure early in life. Finally, he is concerned because under present plans, the cost of the alternatives to this type of care seem to fall heavily on people who even though they have the foresight, they have no capacity to plan in advance.

In our State we have a good deal of intermittent type of employment which makes it very hard for people to meet their current expenses and purchase other forms of coverage or care.

Thus, it does fall back pretty heavily on current tax or current earnings of people who are themselves sick at the time, current income of those people.

We believe that a system which will require building up of some fund will be that that comes closest to our need.

Mr. ALGER. Some of us are concerned that there is not enough being paid into the program to make it stand on its own feet. That is the only thing I wished to bring up.

Thank you.

Mr. KING. If there are no further questions, thank you again, Mr. Wedemeyer. Your entire statement will be made a part of the record.

Mr. KING. Dr. Buhler?

STATEMENT OF VICTOR B. BUHLER, M.D., PRESIDENT OF THE COLLEGE OF AMERICAN PATHOLOGISTS

Dr. BUHLER. Mr. Chairman and members of the Committee on Ways and Means, I am Dr. Victor B. Buhler, of Kansas City, Mo., president of the College of American Pathologists.

The College of American Pathologists is a professional society representing over 4,000 doctors of medicine practicing the medical specialty of pathology in hospitals, medical schools, and private offices throughout the country. I appear before you today representing these physicians in opposition to the legislation now before you for consideration, H.R. 3920.

As you are undoubtedly aware, a representative of the college appeared before this committee 2 years ago opposing the provisions of H.R. 4222, 87th Congress, and 4 years ago the college expressed its opposition when hearings were held on the Forand bill.

Because of the seriousness of the legislative proposal now before you and its similarity to other proposals which have been considered and thoughtfully discarded in the past by the Congress, the pathologists of this country feel compelled to once again voice their opposition to the fundamental philosophy and the particular provisions of this legislation which seeks to finance health care for a segment of our population, namely the aged, through the use of the social security mechanism.

First, I would like to emphasize that pathologists are doctors of medicine. After an individual graduates from medical school he must spend at least 5 additional years in intensive training in order that he may be certified to practice the medical specialty of pathology.

Mr. Chairman, members of the committee, despite the disclaimer in section 1701 of the bill before you that:

Nothing in this title shall be construed to authorize any Federal officer or employee to exercise any supervision or control over the practice of medicine or the manner in which medical services are provided.

The practice of laboratory medicine and the manner in which such medical services are provided would be specifically regulated were H.R. 3920 to be enacted.

The services of over 6,000 doctors of medicine practicing pathology are specifically included under the provisions of this act by section 1703 (a) (4) which defines the medical practice of pathology as a hospital service.

As physicians engaged in the practice of this specialty, we disagree with and resist the implied classification of the art and science of medicine as practiced by us as a "hospital service."

Make no mistake about it, tens of thousands of medical doctors' services are specifically controlled and regulated by the proposed legislation due to the inclusion of the medical specialties of pathology, radiology, physiatrics, and anesthesiology as a "hospital service" under the provisions of this proposal.

Laboratory medicine is just that-medicine. It requires the services of a highly trained medical doctor. Although many pathologists carry on their medical practice as directors of hospital laboratories, this situation does not alter the fact that these physicians are practicing medicine and that their practice would be controlled, supervised, and regulated were H.R. 3920 to be enacted into law.

In addition to those pathologists practicing in hospitals and other institutions, a substantial number of the pathologists in this country maintain private offices where they conduct the practice of laboratory medicine as a service to the other medical practitioners in private practice and their patients in the communities which they serve.

The enactment of this legislation would result in paying for certain laboratory services were they to be provided by the hospital to either inpatients or outpatients and not to pay for identical services were they to be performed in the private offices of a pathologist.

We submit not only is this manifestly unfair to both the private practitioners of pathology and their patients, but that this places the professional services of the pathologists of this country under the direct supervision and control of the Federal Government with all of the attendant inherent disadvantages of federalized medicine.

What about the cost of pathology examinations? Those aged recipients of benefits under the proposed legislation would have great incentive to seek the shelter of hospital and institutional care for diagnostic examinations which could be provided more inexpensively in private physicians' laboratories.

Pathology services provided as hospital outpatient services, in general, must reflect, in addition to the professional services involved, various hospital, administrative, and overhead charges which are more costly to the patient.

When diagnostic services are provided as hospital services-where the primary reason for hospitalization is a diagnostic workup the cost differential becomes greater because to the cost of pathology serv ices must be added room, board, nursing care, and hospital administra