There are some legitimate cases of duplicate coverage where an employer provides him with $10 or $12 for 31 days, and he feels he needs hospital benefits of $18. This cannot be criticized.

Our own studies to development the total number of people insured have to eliminate this duplication of coverage. Our analysis indicates that there is about a 12-percent duplication in the 143 million.

Without going back and analyzing individual company records, it is impossible to get a line of delineation as to how much of this constitutes overinsurance, and how much is proper supplementation of another coverage.

In our estimates we have reduced the total number of coverages we know exist between Blue Cross and insurance companies by 12 percent because of our duplication considerations.

Mr. CURTIS. I understood you were having some difficulty with State insurance regulatory people and you are trying to correct that. Mr. RIETZ. The National Association of Insurance Commissioners has had a committee studying this problem for the last year, and industry has been working with them. This is directed toward developing the type of a nonduplication of benefit policy provision which will be equitable to the policyholder, but still will provide reasonable protection. It is not an easy problem.

I think they have made some real progress on it, particularly in the group insurance area. I think it is pretty well resolved now as to the mechanics by which it can be controlled in the future.

Mr. CURTIS. More power to you. I want to commend the industry for moving forward on this.

Now, the final data I would like to get, which is very important, and I want it to prevent what I think has been part of this statistical game that has been going on in this country. I know some of the newspapers reported what is going on here is a statistical game. I want to emphasize what is going on here is to stop it, and the way to stop a statistical game is to get all the data that bears on these problems. I frankly do not appreciate that kind of reporting. If I were giving only partial statistics, as I have charged the HEW with doing, that would be an example of a statistical game.

The key to what we are trying to find out is the budgets of our people over 65, not in relation to a catastrophic disease-I am talking about the ordinary persons-what would it cost them to buy an insurance policy that is available. I would like to get some idea of premium costs as part of an older person's budget. We could then begin to understand a little better how large a group it might be who cannot afford on their own top ut into their budget the premiums for health insurance coverage. That is what we are really talking about, is it not?

Most families hit by a catastrophic disease would have their budget knocked cock-eyed. I have catastrophic health insurance for my family because I could not afford the expense. I can afford $140 a year. It is that figure that I am seeking.

With this chart you are going to give us on companies that are now writing insurance, perhaps you could help us get some sort of a composite in relation to the budgets of our people over 65. This is putting a little task on you. Do you think you can help us?

Mr. RIETZ. This becomes a very difficult problem. We report so frequently.

Mr. CURTIS. Let me interrupt you.

Of course you are really in this business because that is your market? Mr. RIETZ. That is right.

Mr. CURTIS. That is why you should be able to give us a pretty good idea.

Here is your potential market. What is the percent? What do you think the potential market is?

Mr. RIETZ. We think we can supply coverage for at least 80 percent of the aged population ultimately.

Now, the economic condition of these people is improving. It is my own personal opinion, and the judgment of many of my associates, that the customary dollar income figures that are thrown around so freely to show these people are so hard up are not realistic figures in relation to their living standards. It fails to consider the family unit. Sound data is lacking in this area in my personal opinion. There have been two studies I know of.

One was done by the New York Department of Labor a few years. ago. There is a University of Michigan Research Center study underway, some of which has been fed out, both of which indicate that our aged as a group are not destitute old people and they can provide the majority of their needs. We have an element of family responsibility. I do not think this is anything we ought to be ashamed of in the society we live in. These people are living better than these gross income figures that are frequently tossed around would indicate.

Mr. CURTIS. I must commend the insurance industry for some of the advertisements I have seen on our golden age policies appealing to the sons and daughters of an older person-give mother a policy for Mother's Day.

I want to say this: That even if there were not this great feeling in the hearts of our people toward their parents, just on a dollar-andcents basis, inasmuch as the average equity in a home is $8,140 a year, it is good protection for the son and daughter who stands to inherit. Both on the basis of humanitarian reasons as well as on the basis of economic reasons where an older person might be hardpressed, the sons and daughters would be very well advised to take out a policy for mother and dad.

Mr. RIETZ. I think it is interesting both of these studies referred to indicate that our younger working generation, particularly those under 35 or 40, have more indebtedness and apparently more problems in meeting medical bills than our citizens over age 65.

Mr. CURTIS. Indeed that is so.

(The following material was supplied for the record:)

During his testimony on behalf of the American Life Convention, the Health Insurance Association of America, the Life Insurance Association of America, and the Life Insurers Conference in opposition to H. R. 3920, Mr. H. Lewis Rietz was requested to supply certain additional information for the record.

(1)

Mr. Curtis requested information with respect to costs in various kinds of nursing homes. Current and most reliable data available to the insurance business, with respect to the utilization and cost of nursing home care are set forth in the Appendix to the Associations' Testimony, pages 12-14 and 20-23.

(2) Mr. Curtis requested information as to the extent to which people now use skilled nursing homes to receive care for conditions which formerly required the use of a hospital. There are no credible data within the insurance business and we know of none from any other source which bears on this subject.

(3) Mr. Curtis requested information as to the extent of catastrophic hospital episodes among the aged population. According to data from the British Columbia Hospital Insurance Survey (the only such current data available regarded as reliable), 83% of aged persons hospitalized are discharged from the hospital within 30 days of admission. Well over half are discharged in two weeks or less. With an annual incidence of hospitalization of 18 persons per 100 of the total aged, if it is assumed that periods of hospitalization in excess of 30 days are "catastrophic," this study indicates that only 3% of the total aged population are subject to catastrophic hospital episodes in any year.

Honorable Wilbur D. Mills

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(4) Mr. Curtis requested information with respect to the proportion of aged persons' medical bills that would be covered by H. R. 3920. Inasmuch as the benefit provisions under H. R. 3920 are essentially similar to those contained in H. R. 4222 of the 87th Congress, the proportion of less than 25% would still apply. A documentation of this proportion appears in the Congressional Record for March 6, 1962, at page 3510.

(5)

Mr. Curtis requested information with respect to a "composite" premium for a health insurance policy for the aged in relation to their budget. There can be no such item as a composite premium. Premiums will vary by benefit structure, type of marketing, extent of individual underwriting and whether written on a group or individual policy basis. A range of premiums is indicated for the policies available to the aged which are described in the attached publication of the Health Insurance Institute. This is the publication which Mr. Rietz indicated would be made available to the Committee.

(6) Mr. Ullman asked if the in-hospital medical benefit provision in the Great Southern Life Insurance Company Policy for Senior Citizens is removed at age 65. The benefit is not continued in this policy after age 65.

(7)

Mr. Ullman asked if "your organization" had made estimates as to the extent of benefits paid to aged policy holders and the proportion that such benefits represent of the medical expenditures of such policyholders. The insurance business does not develop such claim statistics for the aged alone. Therefore, exact insurance data are not available.

The Health Insurance Association of America routinely examines outside source material on this subject as it becomes available. For example, the Association has reviewed statistics developed from household interview surveys conducted by or on behalf of the Department of Health, Education, and Welfare and the Health Information Foundation. In view of the limited sampling involved and the fact that any such survey is based upon personal recollection and understanding rather than records of actual claim experience, the results of these surveys were regarded as inconclusive.

(8) Mr. Ullman asked if it was not true that two insurance companies write more than half of the aged persons covered by insurance companies in the United States. In his response, Mr. Rietz suggested that the figure would be about one third, but agreed to furnish the exact

Honorable Wilbur D. Mills

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December 20, 1963

proportion. As of December 31, 1962, about 37% of the 6.1 million aged insured by insurance companies were insured by two writers of this coverage.

(9)

Mr. Ullman requested information as to the proportion of policies in effect with room and board benefits of $10 a day and under, $8 a day, $6 a day, and $5 a day. There are no statistics available which would provide a complete distribution of hospital insurance coverage among the aged by size of the daily room and board benefit. In July 1961 slightly under half of all the aged with health insurance were covered by insurance companies. The remainder held service-type contracts such as Blue Cross, which generally provide full cost for semi-private rooms in hospitals.

Based on a limited sampling obtained by the Health Insurance Association of America from insurance companies as of July 1961, among aged persons covered, 29% had room and board benefits of $15 per day or more, 18% had policies with room and board benefits of from $11 to $14 per day. This sampling did not obtain any further distribution on the remaining 53% with policies providing for $10 a day or less.

It should be noted that in July 1961, according to data from the American Hospital Association, the average daily room and board charge in non-federal, short-term, general hospitals was $17 per day. Also, insurance company coverage always provides in addition to a room and board benefit, benefits for ancillary hospital services. Additionally, information from companies reporting in this sampling indicated approximately 20% of the aged which they covered had supplementary or comprehensive major medical expense protection. Under this type of coverage the insurance companies would pay 75-80% of the cost incurred for virtually all types of health care, including hospital charges, prescribed by a physician in or out of the hospital above a certain amount first paid by the insured, and up to an aggregate maximum benefit which in some cases may be as high as $10,000.