THE NEED

Even in the United States, drastic legislation may sometime be justified in the face of a national emergency, so let us examine the health care status of the aged group in Oklahoma to see if H.R. 3920 may be justified as an emergency action to satisfy a significant unmet need.

Following is a conservatively estimated breakdown of the financial resources of Oklahoma's senior citizens to meet the costs of illness:

Methods of meeting health care costs in the over-65 age group, Oklahoma, 1962

1. From the annual report of the Oklahoma Department of Public Welfare, June 30, 1962.

2. Computed from comparative incidence rates of OAA patients and eligibles as compared to MAA patients and eligibles, using the records of the Oklahoma Department of Public Welfare.

3. Estimate established from information obtained from the Health Insurance Council, the Health Insurance Association of America, the Health Institute, the Oklahoma Department of Insurance, the Oklahoma Association of Health & Accident Insurors and individual insurance companies. The figure has been adjusted to eliminate duplicity of coverage.

4. From the 1962 report of the Oklahoma Blue Cross-Blue Shield plans, adjusted to eliminate duplicity of coverage.

5 and 8. Sample survey of patients 65 years of age and older in 44 Oklahoma hospitals on March 14, 1962. Figure 5 is also based upon a 1959 random sample of 169 Oklahoma physicians who reported their experiences with the over-65 age group on February 23, 1959.

6. From the Veterans' Administration Hospital, Oklahoma City, including 125 Spanish-American War veterans. Adjusted for duplicity of coverage.

7. From the Oklahoma Department of Mental Health and the Oklahoma State Health Department, July 1963.

Thus, it can be seen that the vast majority of Oklahoma's senior citizens are presently protected against the economic burden of illness, and it is reasonable to assume that many of those in the "unknown" classification are protected through the filial responsibility of their loved ones, a quality of our heritage which should not be disregarded nor abandoned.

When a similar study of our aged population was conducted in 1959, 19.4 percent fell into the "unknown" classification, and the reduction of this group to 4.4 percent is a result of the passage of the Kerr-Mills law and the significant growth in voluntary prepayment coverage for the aged segment of our population.

The evolution of Oklahoma's health care programs for the needy is illustrated below, the figures of which include the extra boost provided to Public Law 84-880 by the passage of Public Law 86-778 in 1960:

Obligations incurred for medical services, Department of Public Welfare, 1958-63

In similar fashion, voluntary prepayment plans have risen to the challenge by increasing their coverage of the over-65 age group, as illustrated in the following Blue Cross experience:

1957

Utilization study for over-65 age group, Blue Cross-Blue Shield, 1957–62

1958

1959

1960

1961.

1962_

There is absolutely no justification for H.R. 3920 in the State of Oklahoma. The Kerr-Mills law works in meeting the health care needs of those unable to provide for themselves, and voluntary prepayment plans are showing tremendous growth as evidenced by the Blue Cross-Blue Shield report.

Our health care programs, both government and private, are designed to meet the needs of Oklahomans, and Oklahomans are better qualified to determine the scope of such programs than would be a central, Federal agency. The flexibility of the Kerr-Mills law, coupled with voluntary health insurance, is the most economical way to attain high-quality health care for all, regardless of ability to pay.

THE COST

Based upon the average annual earnings per Oklahoma worker, which is given in the Annual Statistical Supplement of the Social Security Bulletin, 1961, table 24, the passage of H.R. 3920 would immediately impose new taxes upon Oklahomans in the amount of $17 million per year.

Our wage earners and self-employed paid $127,400,000 in 1962 to social security, up about $11 million over 1961. On January 1, 1963, social security taxes were again raised when the first of a series of scheduled tax increases was effective, and others are already planned through 1968 without considering the threatened increase called for in H.R. 3920.

Paradoxically, the $17 million in new social security taxes to be imposed by the passage of H.R. 3920, would come at a time when many Members of Congress and the administration are advocating a reduction in income taxes. In the meantime, Oklahoma's tax share of the $26 million being spent annually for medical assistance to the needy would continue. Although some of our State funds would probably be diverted to other State government functions, there would be no offsetting reduction in State taxes to compensate for the financial blow of H.R. 3920.

No logical explanation can be given to justify the imposition of $17 million in new taxes upon Oklahoma wage earners, to pay for health care which is otherwise being provided.

SUMMARY

Oklahoma is making great progress in meeting the health care needs of its over-65 population, through existing Federal legislation and the other usual means of financing health care. The problem is not solved, but it is solvable, and without further Federal intervention.

H.R. 3920 is unnecessary in the State of Oklahoma, regardless of the pros and cons of its provisions and costs. However, in respect to the merit of the

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legislation, suffice to say that it is fraught with ill-conceived principles and predictable monetary waste.

Mr. Chairman and members of the committee, the Oklahoma State Medical Association urges that you dismiss H.R. 3920 from any favorable consideration. The CHAIRMAN. Thank you, Mr.Wickersham. Mr. Burton? Mr. Perkins? Mr. Jehle?

STATEMENT OF PHILIP F. JEHLE, WASHINGTON REPRESENTATIVE, PRESENTING STATEMENT OF T. DONALD PERKINS, PRESIDENT, IN BEHALF OF NATIONAL ASSOCIATION OF RETAIL DRUGGISTS Mr. JEHLE. Mr. Chairman, Mr. Donald Perkins, who was originally scheduled to appear in our behalf, is unable to be here today. I had intended to present the statement to the committee in his absence but I am well aware of the shortness of time and the great number of witnesses to be heard. Therefore, with your permission, I would like to have the statement appear in the record as though actually delivered. The CHAIRMAN. Without objection, the statement will so appear in the record. We appreciate your bringing it to us.

Mr. CURTIS. Mr. Chairman, is anyone prepared to answer questions that might be raised in regard to some of the points made? The purpose of a hearing is to give benefit of what information you have and then under cross-examination in the event there is some disagreement.

Now I am not going to insist upon it, of course, but do not put this on the basis of saving the committee's time. The committee is here for the purpose of hearing and examining the statement made in behalf of the retail druggists around the country. I do not know what is in this statement. If it wants to go into the record without being subjected to interrogation, we will let it go.

The CHAIRMAN. Do you have any questions?

Mr. CURTIS. I have no idea what is being said so I have no questions. The CHAIRMAN. Thank you, Mr. Jehle.

(Formal statement of T. Donald Perkins follows:)

STATEMENT OF T. DONALD PERKINS, SAN DIEGO, CALIF., IN BEHALF OF THE
NATIONAL ASSOCIATION OF RETAIL DRUGGISTS

Mr. Chairman and gentlemen of the Ways and Means Committee of the House of Representatives, my name is T. Donald Perkins and, for 40 years, I have practiced pharmacy in San Diego, Calif., where I own and operate a community drugstore.

I appear here as president of the National Association of Retail Druggists. The NARD, as you know, is a small business organization having a nationwide membership of more than 36,000 independent drugstore owners. The NARD speaks for its membership of family druggists on all legislative matters affecting their professional and competitive interests.

Accompanying me is Philip F. Jehle, Washington representative and associate general counsel of the NARD.

Mr. Chairman and gentlemen, I wish to state at the outset that the National Association of Retail Druggists shares with all responsible citizens the conviction that good health care should be readily available to all Americans regardless of age. The NARD further believes that no American citizen, again without reference to age, should be deprived of adequate health care for financial reasons. But it must also be clearly stated that the NARD likewise believes that those financially able to provide for their own health care needs should do so irrespective of age.

Financially secure persons should not be looking to Washington for material assistance they do not need. This policy, I am sure, is sound whether the aid being sought involves food, clothing, shelter, or health care. Our American tradition is to help those unable to help themselves--and only those. I might

add that in the past only those unable to help themselves would either seek of accept aid from others, including the Federal Government

In the light of these generally accepted economic and social principles, the NARD in convention assembled has formally examined and rejected, for many years in the past, legislative proposals of the nature and purpose of H.R. 3920, the Federal health care bill now before this committee. For your consideration, I would like to offer, in summary form, the main grounds for the NARD membership's opposition to H.R. 3920 and its predecessor bills:

1. Medicare benefits would not be limited to those elderly persons in actual financial need. In fact, under the proposed legislation, almost all persons over 65, whether or not eligible for social security benefits, would be eligible for Federal health care services. No consideration would have to be given as to whether an individual was in financial need of such assistance. Once a person living in the United States reached 65 years of age, he would become a Medicare beneficiary, unless he were a retired Federal civilian employee having a separate Government health insurance program or a recently arrived alien. As a result, a rather considerable number of persons would have provided for them by the Federal Government services they could easily afford themselves.

What reasons can there be, morally, socially, or even politically, for making health care services available at no cost to almost all persons over 65, regardless of their income or personal resources? How can such a Federal Medicare program be justified to the many medically needy persons under 65 ineligible for its generous benefits? Bear in mind that neither those over 65 nor the medically needy under 65 would have paid any social security taxes toward the Medicare plan. That being the case, why should one group be granted Federal Medicare and not the other? Surely, a 65-year-old millionaire executive has no greater claim to Federal Government aid than does the low income 40-year-old with a sick wife and five children.

2. Medicare benefits would not be needed by a fairly large proportion of the 10.3 million aged persons-60 percent of those 65 or older-having adequate private health insurance plans. Such Federal aid would also be unnecessary in the case of the medically needy aged eligible for Kerr-Mills plan benefits, or for those eligible for the veterans' health care program, or for those covered by the plan for retired military personnel and their dependents.

3. The cost of the proposed Medicare program, even in its present rudimentary form, would be simply staggering. Through the committee chairman, it has been established that the initial costs of the Medicare program would be about $2.5 billion annually, necessitating a social security tax hike of at least 1 percent on the first $5,200 of income rather than the one-quarter of 1 percent claimed by the plan's proponents.

4. Financing of Medicare benefits by means of social security taxes places a greater tax burden upon lower income workers than it does upon high income recipients. Percentagewise, the worker earning $5,200 would be paying a greater portion of his gross income than would a person earning in excess of that figure. Frankly, I feel that the burden of providing health care to the needy should be shared more equitably by the American people. The answer, of course, is to use general tax revenues and to limit such assistance to those financially unable to help themselves.

5. Benefits provided would not assure adequate health care for our aged citizens. As has been noted, neither physicians' services nor out-of-hospital prescription drugs are included in the plan. Thus, the plan is incomplete and would be of only limited value to the eligible elderly.

6. The plan would produce an administrative nightmare, with Federal officials first working out contracts with 6,000 hospitals, 25,000 nursing homes, 700 visiting nurse groups, and, later, should physicians' services and out-of-hospital drugs be included, with 208,000 doctors and 55,000 retail pharmacists.

The paperwork involved in processing claims for the 12 million beneficiaries of the plan staggers the imagination. An extremely large force of Government workers would undoubtedly be required to do the job.

Although opposed to H.R. 3920, the NARD does ask to be recorded again before this committee as offering its continuing support to the Kerr-Mills plan. That legislative program properly limits its benefits to those in actual financial need of such aid. Moreover, the plan authorizes a complete health care program for its beneficiaries. Through Kerr-Mills, Congress has reaffirmed its belief in the capacity of our traditional free enterprise system to meet the health needs of our senior citizens. In our view, Congress should be concentrating all of

its efforts right now on making sure of the success of the Kerr-Mills health care plan.

I also wish to take this opportunity to state that independent retail pharmacists, like the Nation's physicians, would never deny essential services to the medically indigent. Personally, I have never refused to fill a prescription for a person unable to pay for it. The same, I am sure, can be said for retail druggists all over the country. Literally, millions of dollars of drugs are given to the medically needy every year by druggists like myself.

In passing, I should like to point out that the Kerr-Mills Act could be strengthened by an amendment expressly providing that plan beneficiaries are to be granted the same freedom of choice in making their prescription drug purchases as they will have in selecting a physician or hospital, for example Even though the "freedom of choice" principle is strongly evidenced in the legislative history of the act, thanks largely to you, Mr. Chairman, and to former Representative Mason, on the House side, and to Senator Humphrey and the late Senator Kerr on the Senate side, its statement in specific statutory terms would once and for all preclude any possibility of administrative misunderstanding. Retail pharmacists believe that plan beneficiaries should have an absolute guarantee of the same freedom of choice that is enjoyed by citizens able to finance their own health care.

Thank you for this opportunity to present the views of the NARD on this proposed legislation. It has been a pleasure for me to appear before you, and I hope I have given you a better understanding of the reasons why the Nation's retail pharmacists must continue their vigorous opposition to H.R. 3920. The CHAIRMAN. Dr. Burns?

Dr. Burns, you have appeared before this committee in the past. For the purpose of this record, however, will you again please identify yourself by giving us your name, address, and capacity in which you appear?

STATEMENT OF DR. EVELINE M. BURNS, ON BEHALF OF THE NATIONAL CONSUMERS LEAGUE

Dr. BURNS. Thank you, Mr. Chairman.

My name is Eveline M. Burns. I am an economist and professor at the Columbia University School of Social Work. My special subject is social security on which I have written a number of books and articles.

The CHAIRMAN. Dr. Burns, will you pull the microphone closer? Dr. BURNS. This is a very troublesome microphone, speaking as a member of the audience up to now.

I am here today to represent the National Consumers League which wishes to support the King-Anderson legislation although I must confess we feel it does not go far enough. We would like to see it cover, in addition to hospitalization and nursing home care, other types of medical services including the services rendered by physicians. Nevertheless, we realize that it is an excellent first step forward and will do a great deal to ease the burdens of hospital and medical care of all the citizens.

I have presented to you, Mr. Chairman, a statement of our position which in essence supports the legislation largely in terms of showing that most of the available alternatives will simply not do the job or do it in a way that is acceptable to most of the American people.

With your permission, sir, I would like to insert my statement in the record and perhaps address myself as an economist to some of the points which have been raised in the testimony in the last 2 days.

The CHAIRMAN. Without objection, your entire statement will appear in the record.