Where Minnesota is concerned, we recognize the need for giving dignity and care to our senior citizens. We prefer to look first not to an added and compulsory social security tax in exchange for limited benefits, but rather we prefer to look first to existing insurance opportunities, to the upcoming operation of Kerr-Mills in our State, and to a new program of voluntary tax credits to finance more medical and hospital insurance to those who need it most. Thank you.

The CHAIRMAN. Thank you, Mr. MacGregor. Are there any questions of Mr. MacGregor? If not, thank you, sir.

Our next witness will be Dr. Young. Doctor, please identify yourself for the record by giving your name, address, and capacity in which you appear.

STATEMENT OF EDWARD L. YOUNG, M.D., CHAIRMAN, THE PHYSICIANS FORUM

Dr. YOUNG. Mr. Chairman and members of the committee, I am Dr. Edward L. Young. I am chairman of the Physicians Forum, a national organization of physicians established 24 years ago as a forum for the consideration of proposals to improve the quality and distribution of medical care. Our members, who number about 1,000 and are mainly private practitioners, also belong to their county medical societies or other recognized professional associations.

I am a practicing physician of Boston, Mass., and an honorary surgeon of the Massachusetts General Hospital in that city. I am a member of the American College of Surgeons and certified by the American Board of Surgery and the American Board of Urology. I am a member of my State medical society.

The Physicians Forum appreciates this opportunity to explain why we and many thousands of physicians favor the addition of medical care benefits to the Federal social security system. We agree with the vast majority of the American people that most aged persons have great difficulty in financing medical care and find charity medical programs, such as the OAA and MAA programs, demeaning and inadequate. The use of the Federal social security system is the best solution because it enables a person to contribute throughout his working life regardless of his job, and thus obtain, as a right, paid-up medical care benefits after retirement.

We should like to make clear that although we support this bill, we consider it a conservative proposal. It applies only to part of the problem, important though that is. The whole problem which must be faced sooner or later is that of assuring good medical care to everyone regardless of age, race, color, place of residence, or economic status. The gap between the potential of modern medical science and cur

rent medical practice continues to grow each year. We cannot afford to ignore this crisis in American health care the shortage of personnel, of facilities, and of services, and the lack of organization and the need to maintain a concern for the patient as an individual.

Our Nation is not unique in having these problems. They have also occurred in the other advanced and democratic countries. However, all these countries have tried to face these problems squarely and have made major national efforts to solve them.

For example, our northern neighbor, Canada, has had national hospital care insurance since 1958. This has assured to almost the entire population of Canada, young and old, complete inpatient care in general hospitals for as long as medically necessary. Although the ownership status of the hospitals has not been altered, hospital care costs are now financed by several combinations of National and Provincial Government funds. The program is well liked by the public, has had the support of the medical profession, and has rationalized hospital financing so successfully that the hospitals have little or no desire to return to "the old days."

Are there feasible alternatives to the social security approach! Opponents of the social security approach place great emphasis on the role of existing health insurance. We cannot add to the descriptions of its role which have been presented to this committee many times in great detail. From all such descriptions, one fact stands out: Existing health insurance covers only a small proportion of the privately paid-for costs of personal medical care. In 1961, only 27 percent of all the money people paid for personal medical care was channeled through health insurance. In other words, Americans did not have the protection of health insurance for almost three-quarters of their private medical bills.

With respect to those over 65, the role of existing health insurance is even less. About 15 percent of private expenditures for personal medical care of the aged was channeled through health insurance in 1961. Since the private expenditures for personal medical care of the aged, on the average, are more than double those for personal medical care of persons under 65-about $219 as compared to $100 in 1961the actual amount of medical care costs not protected by health insurance was 21⁄2 times larger for the aged than for persons under 65about $185 as compared to about $73.

The poor showing of existing health insurance is frequently challenged by the comment that the amount of protection provided by health insurance is steadily increasing. The significance of this increase is readily apparent from the following graph which shows the increase since 1948 when figures of this kind first became available. (The graph referred to follows:)

PROPORTION OF EXPENDITURES COVERED BY HEALTH INSURANCE, 1961

PROPORTION OF EXPENDITURES FOR EACH SEGMENT OF MEDICAL CARE, 1961

Dr. YOUNG. Only one conclusion seems possible: The rate of increase is so small that existing health insurance has little chance of solving the problem of financing medical care of the majority of younger people, let alone the much more difficult problem of financing medical care for the majority of the aged.

Opponents of the social security approach also claim that MAA and other charity medical care programs are, or can provide the help needed by the aged who truly need help. The aged needing help from such programs are the small minority who are destitute, who need charity, governmental or private, for all aspects of living including medical care. The problem for this minority is entirely different from the problem for the vast majority of the aged who are not destitute but have small fixed incomes. The majority need the help of a rational payment mechanism for financing their medical care, not charity.

Of the 18 million persons 65 years of age and over, 22 million are recipients of charity programs. Of these only a very small number, 150,000, are MAA recipients-this is 5 percent of the aged who are charity recipients and three-quarters of 1 percent of all the aged. About 1 month ago the Senate Subcommittee on Health of the Aging submitted its report evaluating the program of MAA. It says:

The evidence available after 3 years of Kerr-Mills operation demonstrates conclusively that the congressional intent has not and will not be realized.

By what logic is MAA to be considered now or in the future even a partial answer to the problem of financing medical care for the 80 percent who are neither destitute nor affluent?

In April 1962 the Visiting Nurse Association of Boston had 738 patients on its rolls. Of these there were 596 who could not pay the full fee. The MAA paid the fee for 66. There were 129 others thought to be eligible for MAA. Seventy-four refused to apply and of the 43 who did 22 were refused.

We are, however, deeply disappointed that the money anticipated will provide such a limited part of the medical care required by the aged. We hope that experience with the initial medical care benefits will demonstrate the financial and organizational feasibility of including more of the health services which comprise a sound medical care program.

Outstanding features of H.R. 3920:

1. We particularly commend the requirement that the medical care. benefits be in the form of services rather than cash indemnities. The physicians forum strongly believes that cash benefits in any type of health insurance are so inadequate and so vulnerable to abuse that they often defeat the purpose of insuring medical bills.

2. Of great significance is the emphasis on services other than hospital care. To hospitalize patients who do not require such care is not only wasteful of funds but is inimical to their best interests; such patients are better served by home health care or other services which are geared to meet their needs.

3. Another commendable aspect of this proposal, which we mention with particular pleasure, is its thoughtful approach to quality of care. In testimony presented previously to this committee on several antecedent proposals, we strongly advised modifications which would assure the beneficiaries that the medical care provided is of good quality.

In a special statement on this subject adopted in March 1960, the board of directors of the physicians forum emphasized:

It would be a great disservice to the aged and to America's health services to enact legislation which ostensibly ignores quality considerations and consequently, in practice, finances and extends services of poor quality.

We find excellent the present proposal (a) the clear directive to the Secretary of HEW to formulate standards in consultation with the advisory council, State agencies, and national accreditation bodies, and (b) the leeway permitted him to use State agencies and accreditation ratings in determining whether the providers of services meet the standards. A related desirable feature is the authorization to use and pay State agencies for consultation services that would help hospitals, nursing homes, and home health agencies meet the standards.

4. This bill is an improvement over its predecessors in that the standards for participating nursing homes now require that they be affiliated or under common control with an approved hospital.

The reason such high standards must be specified is that most nursing homes, unlike hospitals, are privately owned and devoid of professional leadership. Although State licensure laws set forth minimal the exception rather than the rule. Moreover, some nursing homes have little or no concern for the welfare of their patients and are primarily profitable businesses exploiting the financial resources of aged and chronically ill individuals. To make Federal funds available to these types of nursing homes would only make a bad situation

worse.

The practical effect of the high standards in this bill will be that most of the aged will not receive nursing home benefits for a number of years. But this should not be misunderstood. This bill will not force abrupt wholesale closings of existing nursing homes nor deprive the elderly of the nursing home care they now receive. It will prevent Federal financing of poor nursing homes and will stimulate the development of good nursing homes. To achieve this last goal, there must also be a marked expansion of the Hill-Burton grants for construction of nonprofit nursing homes and other relevant efforts. We, therefore, consider excellent the addition of a new paragraph requiring a study of the best ways to increase the supply of good nursing homes. 5. The second significant improvement of this bill over its predecessors is the addition of a hospital benefit of 45 paid-in-full days which the aged person may elect on becoming eligible in place of automatically operative benefit of 90 days with deductibles.

As physicians, we concur fully in the view that deductibles encourage delay in seeking necessary medical care and that the resulting neglected illness ultimately requires a greater amount and more expensive kinds of care. Thus, in addition to impaired health and needless suffering, the cost of deductibles to the hospitals and the community is, in the long run, greater than the initial saving.

We, therefore, urge you to follow the logic of the medical view to its conclusion and delete the two hospital benefit alternatives which have deductibles. As you know, the 45 paid-in-full days of hospital care will cover about 25 percent of the general hospital stays of those 65 and over (U.S. National Health Survey, series B, No. 32, table 3, p. 16). If there are compelling reasons to retain the alternatives with deductibles, we strongly recommend that the paid-in-full alter