costs running into thousands of dollars. Such costs often mean financial disaster.

Obviously, it is not practicable to increase cash social security benefits to a point where current benefits would cover the large health care expenses that occur in a week or month of hospital care. On the other hand, we cannot in good conscience give public assistance the primary role of alleviating so widespread a threat to economic security in old age. It is far better to prevent poverty to the extent possible than to rely on means-test programs that offer assistance only after the individual has been reduced to the status of a pauper.

When confronted with a potentially disastrous economic threat which falls unevenly on those exposed, it is only natural to turn to insurance for protection. Unfortunately, the elderly have not been able to protect themselves adequately through the existing health insurance arrangements as younger people have. The biggest obstacle is that most older people cannot afford adequate health insurance. The typical elderly couple in this country has an income of only about $50 a week-less than one-half of the average income of younger couples. Widows and other aged people living alone have an average income of only about $20 a week. Furthermore, the disproportionately heavy use of health services and facilities in old age tends to make health insurance much more expensive for the elderly than for younger people. And unlike working people, who may get group health insurance coverage through their place of employment, the elderly must generally be insured on an individual basis. This is a form of health insurance that, on the average, costs twice as much as group coverage offering the same protection.

A social security program of health insurance for the aged offers the only practical solution to the problem the aged face in financing needed health care. The program of health insurance for the elderly, as proposed in the King-Anderson bill, follows the same threefold attack on dependency in old age as that carried by the present social security program. First, basic health insurance protection against hospital costs and certain alternatives to hospitalization would be afforded the elderly through social security. Second, private protection would be built upon this social security base through employer plans and individually. Third, all the States would be placed in a far better financial position to provide adequate medical assistance to help the relatively small group whose special needs and circumstances make it impossible for them to meet health costs that exceed those covered by the proposed social security plan.

In these days, when the entire world watches to see whether our system or another can provide for a better way of life, it is most important that we show to all that our system has strength and adaptability, and that it will not leave the economically disadvanaged to suffer in want and without dignity. Social security offers the means which we should take to prevent the aged from having to fall back upon alms and charity when illness strikes. Such a program assists our senior citizens to live out their days in independence and selfreliance.

us.

The CHAIRMAN. We appreciate your presenting your statement to Dr. Wilson, Mr. Williamson? Will you come forward, gentlemen?

Dr. Wilson, you and Mr. Williamson told me of the very sudden illness of Dr. Groner which prevents his appearing this morning representing the American Hospital Association. We hope that he has a speedy recovery. We appreciate the fact that you are here to present the testimony that he would have presented had he been present.

You are recognized, gentlemen.

STATEMENTS OF DR. DAVID B. WILSON, CHAIRMAN, COUNCIL ON GOVERNMENT RELATIONS, AND KENNETH WILLIAMSON, ASSOCIATE DIRECTOR, AND DIRECTOR, WASHINGTON SERVICE BUREAU, AMERICAN HOSPITAL ASSOCIATION

Dr. WILSON. Mr. Chairman, members of the committee, I am Dr. Wilson, of the University Hospital, Jackson, Miss. I would like to bring out the fact that Mr. Groner has appeared before this committee, I believe, many times and he certainly is very familiar with this particular problem. This is my first appearance before the committee.

The statement that I would like to read, sir, is the statement that Mr. Groner, of course, prepared. I shall be happy to assist in any way that I possibly can but, generally, Mr. Groner has had a greater experience in this field than I have had at the present time. My name is Dr. David B. Wilson, director of University Hospital in Jackson, Miss. I am also chairman of the association's council on government relations.

Of course, as we stated, Mr. Kenneth Williamson, associate director of the American Hospital Association and director of its Washington service bureau, is here.

For several years, representatives of the American Hospital Association have appeared before the Ways and Means Committee to express its views with respect to the subject of providing for the hospital needs of aged persons. We have also discussed in detail the provisions of various bills through which the Federal Government would assist in providing for the financing of health services.

Although we have opposed certain proposals, we have in all cases made specific suggestions for changes and improvement because we believe it to be our responsibility to the Congress to do so. A detailed review of the long history of thought and effort which this association has given to the subject would be repetitive of what we have in the past provided for the record and would not be of particular help in the Congress. I do wish to emphasize that the record shows clearly that hospitals and this association have not treated the problem of the health needs of the older members of our population casually. We have devoted substantial resources to both study and action.

Since 1954, the association has undertaken four thorough appraisals of the problem. Three of these have been discussed in previous hearings of this committee. The last complete study undertaken jointly by our association and the Blue Cross Association in 1961 included an exhaustive study of the dimensions of the problem

of financing the health care of the aged. The findings of the study underscored two basic conclusions reached in each of the previous studies:

One, aged persons face a great and serious problem in providing for their health needs; and, two, the financial participation of Government is needed for an adequate solution to the problem. This report was published and a copy was set to each Member of the Congress in 1962.

The American Hospital Association called a special session of its house of delegates in January 1962 to review the position of the association on the health care of the aged in light of this study, and the following policy statement was officially voted by our house of delegates on January 4, 1962:

1. We reaffirm the crucial need to continue vigorous efforts to foster realistic and equitable programs in every State for the adequate health protection of the indigent and medically indigent under a mechanism similar to the Kerr-Mills Act.

2. We recommend the earliest possible implementation of a national Blue Cross program for a voluntary nonprofit plan available to all persons aged 65 and over.

3. We recognize that Government assistance is necessary to effectively implement this national Blue Cross proposal in order to enable many retired aged persons to purchase this health protection through the voluntary prepayment system. Conditional upon the administration of this proposed plan by the voluntary, nonprofit, prepayment system, the tax source of the funds is of secondary importance to us.

4. The individual aged person should receive governmental financial assistance on a decreasing scale related to income, the low-income person to receive major, or even total assistance, and the higher income person to receive less. The determination for Government assistance should be made in accordance with current income reported for Federal income tax purposes or, if this is not possible, some legally acceptable declaration of income. The determination should not be made in accordance with the usual means test determination made under public welfare programs.

5. We emphasize the urgency and importance of planning for the provision of adequate facilities and personnel in order that skills and services may be available to render high-quality care to the aged.

6. It is the sense of this meeting of the house of delegates of the American Hospital Association that the best interest of the retired aged will not be served by passage of the King-Anderson bill. Our opposition to this bill is based upon careful study of the needs of the retired aged and the overall economic effect of such a program. We believe that the retired aged will be better served by a program such as has been proposed by Blue Cross plans.

With respect to the first point in the policy statement I have just read, the association has carried out a vigorous program directed toward the full development of the Kerr-Mills Act within the States. When the act first became effective, we called a special conference with representatives of each of the State hospital associations and representatives of the Department of Health, Education, and Welfare. The program and its implications were explored at length. Following this, a list of guiding principles was developed by the association and sent to all the States to assist them in their development of the Kerr-Mills program.

The association staff traveled extensively and worked with many States on their problems. Further, an advisory committee of experienced and informed persons was formed by the association to work with the Federal administrator of the Kerr-Mills program. This group has had a number of meetings with the staff of the De

partment of Health, Education, and Welfare to discuss problems and explore particular statistics. The association also has surveyed all the States to determine the major factors limiting the growth of the program. Nine chief factors were found. Solutions to these seemed to lie primarily at the State level and not the Federal level. (The above-mentioned factors are as follows:)

NINE MAJOR DIFFICULTIES AFFECTING THE OPERATION OF KERR-MILLS PROGRAMS WITHIN THE STATES

1. Relative responsibility.

2. Payment ceilings.

3. Historic costs as a basis of payment.

4. Eligibility of participants.

5. Limited benefits.

6. Delays in payment.

7. Attitudes of welfare directors.

8. Lack of publicity of programs.

9. Deductible clause.

To assist the States, a program of regional conferences, to be sponsored jointly by this association and the Department of Health, Education, and Welfare, was proposed by the association. The first regional conference, covering six States, was held in Denver, Colo., on March 21-22, 1963. Representatives of the State governments responsible for administration of the Kerr-Mills program and representatives of hospitals, Blue Cross plans, the American Hospital Association, and the Federal Government participated.

The purpose of the conference was to discuss specific problems and to determine what could be done to expand and improve the program. Additional conferences, to cover all sections of the country, have been planned for the near future.

I do not propose to attempt any detailed analysis of the Kerr-Mills program for the indigent and medically indigent aged. Kerr-Mills has stimulated considerable improvement and extension of State programs for the indigent aged under the old-age assistance part of the program.

We have stressed our belief that this should be the first goal of the States and that before the States undertake to develop programs for the medically indigent, they should first make sure that they are doing an adequate job for the indigent aged.

With respect to the medically indigent aged, progress is much more difficult to evaluate. State legislative bodies have been understandably cautious in advancing this side of the program. There is great uncertainty as to the number of potentially eligible aged and the costs of services. The services offered and the criteria for eligibility vary greatly among States. Apparently, too, some States have used the Kerr-Mills program as a means of obtaining substantial additional Federal financing without a commensurate increase in the number of aged who are being given care. Any complete evaluation of the Kerr-Mills program would require facts and figures that are not presently available from either the Federal Government or the States.

An overall review of the Kerr-Mills program was presented to our house of delegates last August. We will provide a copy of our analysis to the committee, if you so desire.

The CHAIRMAN. Is that too voluminous for the record itself? Mr. WILLIAMSON. It is about a nine-page statement.

The CHAIRMAN. I would like to have it in the record, if there is no objection, at the conclusion of your statement.

Dr. WILSON. Thank you, sir.

Reimbursement to hospitals for care rendered to recipients under the Kerr-Mills program continues to be a matter of primary concern. Inadequate provision on the part of the States for the payment for hospital care continues. It is realized that many State governments are under great financial pressure. However, proposals for the care of indigent and medically indigent aged that do not adequately reimburse hospitals simply raise the price of care to the rest of the community and do not solve the problem.

As I have stated earlier, we strongly support Kerr-Mills and urge its strengthening. We believe the program would be improved if it were treated as a health program, which it really is, rather than a welfare program. We believe its administration, at the State level, should be located in the agency concerned with health matters. Eligibility for Kerr-Mills benefits could be predetermined on a graduated income basis and not, as is generally the case at present, by a means test at the time the service is needed.

The second, third, fourth, and fifth points of the policy statement, adopted by our association, which I have read to you, relate to the implementation of a national Blue Cross program, utilization of a Blue Cross program with Government assistance, a program of graduated benefits, and the need for adequate facilities and personnel. Since these matters are related, I should like to discuss them together. The second point of our 1962 policy statement said:

We recommend the earliest possible implementation of a national Blue Cross program for a voluntary, nonprofit plan available to all persons aged 65 and

over.

The Blue Cross plans were providing benefits to 5.3 million persons 65 years of age and over at the end of 1962. The number of such persons enrolled in Blue Cross continue to grow. Lacking governmental assistance of a kind acceptable to our membership, and because there was no assurance that such assistance was likely in the future, the individual Blue Cross plans proceeded with a wholly voluntary program.

It continues to be our hope that one nationwide Blue Cross program will be possible. Meanwhile, we support the development of strong statewide Blue Cross programs. I believe that representatives of Blue Cross will be participating in these hearings. The details of their program and their efforts can best be provided by them. Our house of delegates in its establishment of policy, in addition to expressing its concern that governmental financing should be adequate, stipulated two conditions as essential to a program of governmental financing.

Our house of delegates acknowledged in 1962, as it had many years earlier, that governmental assistance is necessary in order to provide adequate health care to many of the aged. The house established