as more realistic, a $150 tax credit for that. He could be his own. insurer in that instance.

Secondly, there are benefits presently in evistence under existing policies which, in my bill last year, I provided they could continue in effect if they met the basic minimums in the legislation.

Mr. Bow has adopted this and it presently appears in his bill, H.R. 21.

Thirdly, where doctor bills which have been included in the Bow bill this year and were not last.

So these differenecs now have been minimized.

I would like to very briefly discuss the interesting aspect of how the King-Anderson bill has gradually been evolving into more of a Bow-Cramer approach over the last few months as it relates, for instance, to covering people outside of social security which, of course, does away with the argument constantly advanced previously for King-Anderson that it does not take money from the Treasury to finance it.

As I estimate it, there are about 4 million people outside of social security who now, under the King-Anderson approach, would have to be paid for, their medical expenses, out of the General Treasury. If the cost of such persons were an average of $150 per year, as estimated in our approach, then the cost would be about $600 million out of the General Treasury.

Admittedly now, both King-Anderson and the Bow-Cramer and other approaches do cover people who do not have and cannot qualify for social security who are over age 25, I believe that to be a necessity. Secondly, I think it is important to note that the deductibility factor under plan 1, at least under King-Anderson, remains, and the $20 deductibility for diagnostic treatment and the $90 deductibility for first cost in hospitalization remains, and under plan 1 of the Bow-Cramer approach, it would not require such first-cost payment by the recipient.

I thank the committee for its attention.

The CHAIRMAN. Thank you, Mr. Cramer, for bringing to us this discussion of your bill in comparison with other legislation introduced. Are there any questions of Mr. Cramer? Thank you, sir.

Mr. MacGregor; we are pleased to have our colleague from Minnesota, Hon. Clark MacGregor, with us this morning.

STATEMENT OF HON. CLARK MacGREGOR, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA

Mr. MACGREGOR. Thank you very much, Mr. Chairman and members of the committee. May I state at the outset that whereas a number of Minnesotans do in their older years travel to the 12th Congressional District of Florida, the bracing air of Minnesota also keeps a number of them right at home for the remainder of their years.

The CHAIRMAN. I am sure all of you will demand equal time. Mr. MACGREGOR. I appreciate very sincerely the opportunity to appear before the Committee on Ways and Means. I support added Federal income tax benefits to persons over 65 years of age in the payment of their medical and hospital costs. There can be no question as to the increasing difficulties encountered by persons over 65 in meet

ing the requirements of having to pay for vastly increased costs of medical attention, hospital facilities, and nursing home care. The general problem of inflation-increasing costs of everything people buy-is a real factor. For this reason it is incumbent on all of us in the Congress to work for stability in the cost of living. This means, among other things, holding the line on Government spending generally, and getting the budget deficit down to manageable size and then eliminating it altogether and operating at a surplus in times of relative prosperity. If we could do this we would go a long way toward solving the problems we have at hand today.

It is a cruel reality that many of our most responsible and able citizens use their best earning years to set aside the amounts they feel will be needed in their later years for medical and hospital bills as well as for general living expenses, only to find later on that their cost estimates have little relation to the actual increased expenses. When the Government allows inflation to eat away at the value of the dollar we ourselves create some of the difficulty which now may make new legislation needed.

Faced as we are with the spiraling costs of medical and hospital attention-costs which some of our senior citizens cannot meet-it is important that we find the best solution. That best solution should, in my opinion, provide that the assistance be available to those who need it most. Those who do not need help should not qualify for it. Surely, this approach is the best way to assure that available public funds will do the most good-that Federal money will be directed as rifle shots at the specific targets of need, instead of widely dispersed in shotgun blasts which will dissipate the good that needs to be done.

With this approach as a guideline, I have joined in proposing a solution based on the tax credit system as advanced by the gentleman from Ohio, Congressman Frank T. Bow, and I have added a provision designed to assure that Government help goes to the neediest. My bill, H.R. 4043, provides a tax credit of $150 per year for every person over 65 with an annual income of $5,000 or less. It provides a half credit of $75 for every person whose income is between $5,000 and $10,000 per year. The same system would apply to married couples; a full credit where the income is $7,500 or less and a half credit where the income is between $7,500 and $15,000. The bill would provide no tax credits for this purpose for persons in income brackets above these figures.

The tax credit would be used under this program for the purchase of medical and hospital insurance for persons over 65. In previous testimony today Congressman Bow has described how this insurance program would work, and I will not take the committee's time to go over it again. Let me just say that this tax credit is simply money saved through reduction of a taxpayer's bill every year, thus enabling him to purchase health insurance with his own money. This approach gives each individual, and to each person providing for another, the chance to help himself, to rely on his own self-sufficiency without becoming an unwelcome burden on society. This plan is in accord with the principles of self-respect which we all value. It gives us a voluntary solution to the problem, a solution which would require a minimum of bureaucratic paperwork since the program would be administered outside the Government. Under this plan the Federal Gov

ernment would be wholly divorced from the practice of medicine and, just as important, it would stay out of the business of hospital administration. It expresses our belief in the American people's ability to think, act, and care for themselves.

Mr. Chairman, this tax credit proposal does not pretend to give anything to anybody. It is not a handout. It does not put the Government in the position of the charitable rich uncle dispensing gifts.

Our proposal says to those who need help: We in government will now take less of your money. You keep more of your own money and use it to provide insurance for yourself and your older family members which will cover your needs. Surely, this is the dignified and socially responsible approach to take.

In my opinion, we owe it to the people of this country to thoroughly examine this approach to the problem before we proceed to add compulsory taxation for this purpose, requiring everyone to turn over a greater share of his earnings to the Government in exchange for only a partial solution to the problems of increased medical and hospital costs. We should avoid the stifling intervention by a central bureaucracy into the field of medicine and health care. We should avoid turning over the very complicated matter of hospital administration to the Government.

It is not pertinent, may I say here, to say as some do: "In England and the Scandinavian countries the governments are closely involved with medical and hospital procedures and it works very well. So what is the matter with doing the same thing here?" The differences in size and in national attitudes between this country and the north European countries makes such a comparison useless. It is true that in Norway they eat lutefisk quite regularly, and I believe lutefisk makes a fine dinner, but it does not follow that we in this country should also adopt lutefisk as a staple on the menu for everyone.

To finance a program of hospital insurance by compulsory additions to the social security tax is to rely on regressive taxation. It places a disproportionate share of the burden on the working men and women of our country. It adds to the tax burden where it hurts the most. In addition, it would severely strain an already weak social security trust fund while at the same time it would provide fewer medical services than my proposal does.

At this point I want to comment on the claim that the people of this country are greatly in favor of the social security method of financing hospital and medical care for senior citizens. As our colleague, Congressman Thomas Curtis of Missouri, has indicated previously answers to questionnaires sent by many Senators and Congressmen to their constituents over the past several months reflect a definite lack of support for the King-Anderson bill. Specifically, 36 of these polls during this year have included a question on this issue. They reflect public opinion in districts represented by members of both political parties and in both rural and urban districts. In 34 of these polls a majority

of the voters opposed the Kennedy program-the King-Anderson approach. Some of the opposition ran as high as 90 percent. The findings of these polls have been documented by Congressman Curtis in the Congressional Record of October 8, 1963.

Mr. Chairman, there has been a great deal of misunderstanding regarding existing health insurance programs. The Health Insurance Association of America reports that at the end of 1962, 60 percent of all Americans over 65 were covered by voluntary health plans. And the trend is clearly in the direction of wider coverage through voluntary plans.

In addition, the Kerr-Mills, or medical assistance to the aged program is still developing and expanding in a most heartening manner. The Federal Government and the various States should put forth substantial efforts to make this program work and to improve it where the need for improvement is demonstrated. And I know that this is being done. For example, in South Dakota there has been evolved a plan to purchase voluntary health insurance for persons who qualify under the State's MAA program.

Mr. Chairman, the Kerr-Mills program is developing well, in my opinion. I cannot accept the claim made by some that operation of the Kerr-Mills plan has not been successful. Examination reveals that much of the data used to support this claim is based on a period when many States were just getting started and were still in the process of perfecting their own programs. In this connection, I commend the statement made in the Senate on October 29, 1963, by Senator

Dirksen of Illinois.

In my State of Minnesota the legislature has enacted legislation providing participation in the Kerr-Mills program as of July 1964. This is a significant step forward. I was pleased to work closely with those members of the State legislature who spearheaded and directed this legislation through both of the houses and into final enactment. The bill was very popular in the Minnesota Legislature, since it passed the house with 132 "yes" votes, 5 "no" votes, with 7 members absent. In the senate, all votes were "yes" votes.

In 1960, there were 354,400 persons 65 years of age or over in Minnesota. The average monthly old-age assistance rolls number approximately 43,500. This is slightly over 11 percent of the aged population. Old-age assistance payments for medical care in June 1963, were $2,868,761. In the fiscal year ending June 30, 1962, $26,821,810 was spent on medical care for OAA recipients.

Old-age assistance medical care is comprehensive, includes all services, as well as surgery, drugs, and home care.

Under the Kerr-Mills program in Minnesota, recipients can own real estate up to $15,000 per person. All household goods, personal possessions, cemetery lots, and $1,000 in cash surrender value on insurance is exempt.

Single persons can have an income of $150 a month and $750 in liquid assets or cash. Couples can have $200 in monthly income and $1,000 in liquid assets and cash.

The MAA recipient is required to have spent $200 of his own money in medical expenses in the previous year. The individual can include such items as health insurance plans, hospital and nursing home care, and doctor and dentist bills.

After meeting these qualifications, the older people receive unlimited health care of all kinds in their home or a hospital or nursing home.

It is estimated that after the implementation of the Kerr-Mills program in July 1964, at least 38 percent of the senior citizens in Minnesota will have complete health service available.

Estimated annual cost of Kerr-Mills in Minnesota is $13,700,000.

The estimated cost of King-Anderson to Minnesota taxpayers in 1965 is $34.2 million.

In 1960, Dr. Marvin J. Tave, former professor of sociology at the University of Michigan, conducted a survey in Minnesota which showed that, at that time, 60 percent of the persons interviewed had hospital insurance. In the metropolitan area where hospital costs are much higher, 71 percent had coverage. Over 50 percent had medical and surgical coverage. It should be noted that this survey was completed before the Blue Shield and Blue Cross plans featuring coverage for the aged were available.

In Minnesota, Blue Shield surgical coverage, with its hospital benefits plan, covers nearly 79,000 persons over 65. Blue Cross, in three separate plans available to the aged, covers 65,000 persons over the age of 60 in the nongroup category.

We in Minnesota look forward to participation in the MAA program. We do not expect that in taking this step we will suddenly and automatically solve all of our medical and hospital care problems for our senior citizens. Certainly, our people will think of the job as a continuing one, and improvements will be made from time to time. And if we do not achieve effectiveness in the first year or two then we will make such changes so as to bring the Minnesota program closer to full effectiveness.

From our standpoint in Minnesota, we feel that the Kerr-Mills program deserves a thorough period of trial. It would be a mistake to impose an added social security tax burden on our working people now to pay for a program of limited hospital insurance when the people I represent are on the verge of benefiting under the Kerr-Mills program. My constituents in suburban Hennepin County and in Anoka County respond to opportunities for greater reliance on individual self-sufficiency, and for solutions to problems at the State and local level. The Kerr-Mills program we will embark on in July will give us that opportunity and we welcome it.