two firm stipulations on any program of governmental financing for the health care of the aged.

I would like to restate here, points 3 and 4 of the policy statement adopted in January 1962:

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.

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 determinations made under public welfare programs.

The first stipulation made by our house was that administration, and in our view this means underwriting, be by the voluntary nonprofit prepayment system. We are opposed to the overall direct administration by the Federal Government of a program to provide for the hospital needs of retired aged persons. We believe that the desirable manner in which to plan for Government financing is through the voluntary, nonprofit, prepayment system. We have stressed our opposition to administration by the Social Security Administration because that agency is the one designated in the legislation under discussion here. However, we would be equally opposed to direct administration by any other Federal agency.

The second stipulation was that any governmental financing should be provided for the individual in relationship to the income of that retired aged person.

The house said:

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. We know that many aged persons need total assistance in financing of their health needs. We know that there are some who need no assistance. We believe, therefore, Government financing should be scaled in a realistic ratio to the income of the retired person. We believe the determination of need should be based solely on the current income reported by the individual for Federal income tax purposes or some other equally acceptable method. We oppose the use of the public welfare means tests as the basis for determination of need for governmental assistance.

Recognizing that whatever expertness we had was in the field of health services, our house of delegates said that so long as these stipulations as to administration and scaled assistance were met, the source of the tax funds was of secondary concern to us.

The administration of the program could be handled by underwriting through the voluntary nonprofit plans. This would use the already existing mechanisms of the nonprofit plans which have contractual arrangements with the providers of service. This would avoid any vast duplication of skilled and experienced personnel; it would permit statewide and local administration; and the individual

27-166-64-pt. 1-25

recipient would in every way appear as an independent, voluntary subscriber and not as a ward of the Government. Underwriting would give the Congress assurance as to the costs of the program each year.

The value of this approach has been amply demonstrated in the Federal employees program. The Government would benefit by possible savings resulting from the addition of this group to an already existing and very much larger group of participants. Procedures for utilization, control, and transfer of patients very likely would be much more effective if carried out through existing voluntary means. The Government would be providing support of voluntary health insurance and protecting the continuity of coverage of the worker until his retirement. The committee will hear later, we understand, from Blue Cross experts who can develop further the underwriting approach.

We believe that the tax funds, from whatever source, should be spent to assist the individual to purchase a program of health-care benefits which have been negotiated for by the Government, from voluntary health organizations.

On July 9, 1962, the association stated its opposition to the amended version of the King-Anderson bill as it had been presented to the Senate.

We stated that the proposal did not meet the conditions deemed essential by our house of delegates. We also reiterated our concern about whether the proposed financing was adequate.

In our testimony before this committee on July 26, 1961, this concern was discussed in considerable detail. We still believe that the best interests of the retired aged will not be served by the passage of H.R. 3920.

I would also like to take this opportunity to emphasize two other aspects of providing for the health needs of aged persons. These are the provision of adequate facilities and of adequate numbers of well-trained personnel.

It is realized that these matters may not come within the purview of this committee, but unless the Federal Government makes a much greater effort to provide adequate facilities and personnel, it is unlikely that the health needs of the American population, including the aged members of that population can be met.

No program of governmental financing voted by the Congress can buy services that are not available and cannot be provided. We are pleased that the Congress has approved a program to provide greater numbers of physicians, dentists, and other health-care personnel.

We urgently hope that the Federal Government will move ahead in programs to relieve the acute shortage of well-trained professional nurses. The association is deeply concerned with these aspects of personnel and facility needs. We recognize the special problems in long-term care and have created a council to study this specific area. The Congress has done a good deal during past years to help meet the Nation's needs for various health facilities; but however, we still have a very long way to go. We believe the continuing deterioration and inadequacy of much of our existing hospital plant is one of the most serious problems facing the country. Very little effort has been directed to solving this growing problem. We have a pressing need

for long-term care facilities, which is a matter of particular concern to aged persons. The Congress is providing assistance through a variety of programs, but shortages of adequate facilities in which high quality care can be given persist.

We appreciate this opportunity of meeting with this committee. We are deeply sensitive to the concern of the committee and its earnest endeavor to both appraise the problem and find solutions. We sincerely hope that our participation today will have been of assistance to you.

(The analysis referred to follows:)

REPORT ON KERR-MILLS PROGRAM

(Presented by Thomas Hale, M.D., Chairman of Advisory Committee, to Social Security Administration on Health Care of Indigent and Medically Indigent Aged, House of Delegates American Hospital Association, August 28, 1963) I have divided this report into two parts; first, a review of the development of the program within the States with certain supporting figures; and second, a review of the steps taken to assist with the development of the program throughout the country.

I. PROGRAM TO DATE

It is now 3 years since Congress passed the law setting up the Kerr-Mills program to help provide health care for the aging. Its major purpose, of course, was to aid those aged who-as determined by each State-could be classified as medically indigent, as distinct from the elderly on welfare. Officially known as Medical Assistance for the Aged-or, more commonly, MAA-the program authorizes Federal Government grants-in-aid to States adopting medically indigent plans which receive approval from the Welfare Administration of the Department of Health, Education, and Welfare. KerrMills, in addition, provided for some expansion of health care services for the aged receiving benefits under the old-age assistance program-public assistance (OAA), that is set up in the mid-1930's with the passage of the Social Security Act.

A progress report on Kerr-Mills was made to the house of delegates last year. There has, of course, since been expansion of the MAA program. Additional States are now taking part and the monthly caseload has increased in a number of States which were earlier participants.

Department of Health, Education, and Welfare (HEW) records are tallied for 54 jurisdictions-the 50 States and the District of Columbia, Guam, Puerto Rico, and the Virgin Islands. A year ago HEW officially listed 27 jurisdictions with MAA programs in effect. As of early this month, the number had increased to 32 with 8 more States needing but one or two final steps to get the HEW formal classification of “programs in effect."

These are the 32 jurisdictions with that formal classification: Alabama, Arkansas, California, Connecticut, District of Columbia, Florida, Guam, Hawaii, Idaho, Illinois, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Dakota, Oklahoma, Oregon, Pennsylvania, Puerto Rico, South Carolina, Tennessee, Utah, Vermont, Virgin Islands, Washington, West Virginia, and Wyoming.

The status of the additional eight close to participation early this month was: South Dakota had submitted its MAA plan to HEW and intended to begin the program as soon as HEW approval was received. Iowa was drafting a plan. Five States had enacted the necessary legislation to take part in MAA but had not yet submitted plans to HEW. Nebraska is one. North Carolina is another, with July 1, 1963, having been set as the starting date. The other three are Kansas, with a scheduled starting date of January 1, 1964; Minnesota, planning to make the program effective July 1, 1964; and Virginia, with an effective date of January 1, 1964. One more State, Missouri, had approval from its legislature and was awaiting its Governor's action.

Monthly figures are compiled on the program. The latest available are for May 1963, which we can compare with similar tallies for May 1962-the latter being the figures reported to the house of delegates last year.

But

For May 1963, per the HEW figures, the national total of MAA recipients was 129,468 in 29 jurisdictions. A year earlier, the MAA recipients for the month totaled 102,378 in 26 jurisdictions. In other words, the May 1963 caseload was 27,000 higher than 1 year earlier with three jurisdictions added. only a very minor share of the increase came from the three additional jurisdictions. They are the District of Columbia, Guam, and Vermont; and, for the three of them, HEW tallies show a total of 187 recipients in May 1963.

Payments for May 1963, under MAA are given as $28,870,612 which was an increase of more than $52 million above the May 1962 total of $23,220,666. For May 1963, the average payment per recipient was $222.99 as compared to $226.81 1 year earlier. It is interesting to note here that while both the total monthly payment and the caseload increased in the year between May 1962 and May 1963, the average national monthly payment decreased by nearly $4 per individual.

At the present time, we cannot make any significant comparisons of health care benefits to the aged under OAA with those under MAA. Current OAA statistics are for all benefits to the aged under public assistance that is, food, shelter, and other aid as well as medical care, with no breakdown as to the number of individuals receiving only medical care. However, on a dollar basis as computed for the calendar year 1962, approximately 20 percent of total OAA payments was for vendor payments for medical care.

This percentage can be applied to May 1963, total OAA payments to give an estimate of how much OAA money is going into medical care. The total OAA payments in May 1963 were $171,551,814. It can therefore be estimated that about $34.3 million of this total was for medical care for OAA recipients last May. This figure compares with the nearly $29 million reported for the same month for MAA recipients.

HEW has now started collecting data from the States to give specific details on recipients and type of medical care under OAA as well as MAA. The initial figures will cover fiscal year 1962. Meanwhile, we should consider a frequently asked question on MAA's effectiveness. It is whether accomplishments attributed to MAA are primarily due to transfers of former OAA beneficiaries into the newer program for the medically indigent aged.

HEW's latest statistics on transfers into MAA from other public assistance programs for the aged-including, for example, aid to the blind and permanently disabled, but primarily from OAA-are through September 1962. The tally total shifts from the start of MAA in October 1960. The transfers are recorded at 81,423. For the same 2-year period, MAA recipients other than transfers are totaled at 265,424. Percentagewise, therefore, the transfers were about 23 percent of MAA recipients through September 1962.

The bulk of transfers were in MAA programs in three States. They were: Massachusetts, which initiated MAA in October 1960, 22,553; New York, which started MAA in April 1961, 28,677; and California, an MAA participant as of December 1961, 17,972. Connecticut, about which there was considerable discussion in this House last year, had 4,346 transfers.

There is also a point as to whether the transfers into MAA on a national basis have continued in proportion to the 81,423 recorded as of last fall. HEW reports in the negative. The number of transfers since last fall have been nowhere near the earlier rate, according to HEW estimates. The explanation is that the transfers primarily take place at the time the MAA program is started and the majority of the large population states were already MAA participants by last fall.

MAA benefits vary, of course, in each State. This is reflected in the HEW statistics on monthly payments and caseloads. In May 1963, for example, there was this range among the 50 States: New York had the highest total payments, $11,492,721, and the largest number of recipients, 33,491. Its average payment per recipient for the month was $343.16. On the other hand, Illinois had the highest average payment in May 1963-$445.44-but its MAA recip ients for the month totaled only 904 and payments added to $402,682.

At the other end of the scale, the State with the least number of recipients in May 1963, was Vermont with 74. Payments for the month totaled $28,685, making an average per individual of $387.64. The lowest average per recipient in May 1963, was Kentucky's $26.33. However, its caseload for the month was 6,471 with payments amounting to $170,388.

These statistical variations make it clear that the Kerr-Mills program cannot be judged intelligently on a national basis. The MAA operations, par

ticularly, must be studied on a State-to-State basis. There are each State's eligibility requirements to be considered as well as the benefits provided. Also, several States have themselves made revisions in their MAA plans subsequent to adopting the program.

Of all the Kerr-Mills programs in effect this summer, HEW classified only four as having a comprehensive plan: Hawaii, Massachusetts, New York, and North Dakota. A comprehensive plan is one defined as offering five kinds of major services with no significant limitations on conditions. The five major services are hospital care, nursing home care, practitioner's services, dental care and drugs. Even within the comprehensive plan category, time and payment limits on care and services may vary in different States. What are described as "significant limitations on conditions" cover such requirements as the one existing in a number of noncomprehensive plan States that the illness be classified as life endangering.

On a national basis, the single largest sum for health care services under MAA has been paid for inpatient hospital care. The latest full-year figures supplied by HEW cover the calendar year which ended December 31, 1962. Total vendor payments for MAA for that year were $250,862,000. Of this sum, $121,057,000—48.3 percent-was for inpatient hospital care. Nursing home care was next-$117,343,000 or 46.8 percent.

An interesting comparison can be made with vendor payments under OAA during calendar year 1962. The total was $383,146,000 of which 35.3 percent ($135,373,000) was for inpatient hospital care (compared to 48.3 percent MAA). OAA nursing home care payments accounted for 33 percent ($126,398,000) in contrast to 46.8 percent MAA.

Other items tallied for 1962 include physicians' services and prescribed drugs. Under OAA they were $47,301,000 and $47,021,000 respectively-each of which was 12.3 percent of the year's total vendor medical care payments for public assistance to the aged. Under MAA, the payments for physicians' services amounted to $5,452,000 and for prescribed drugs, $5,122,000—which were 2.2 and 2 percent respectively of the total 1962 MAA vendor payments.

What percentage of the Nation's aged is receiving MAA benefits is another question frequently asked to evaluate the program's effectiveness. The latest figures on this from HEW are for the month of December 1962. They show that at that time there were benefits under MAA for 10.7 per thousand people 65 and over in the 28 jurisdictions then covered by the program. This was about 1 percent of the aged in those areas.

A significant factor in increasing caseloads is the relaxing of eligibility requirements, which, of course, is primarily a matter for the individual States. HEW tallies for the first 2 years of the program show that roughly 20 percent of those who applied in their States as medically indigent were turned down as not meeting eligibility specifications. There were about 81,500 such refusals as of September 1962, at which time MAA had a 2-year cumulative recipients total of about 347,000 including the 81,423 transfers from other public assistance programs which I mentioned earlier in this report.

It is expected that the number of State MAA plans will increase. Wisconsin early this month had legislation pending to authorize adoption of an MAA plan there. The Georgia Legislature approved the needed legislation in 1961 but no funds are available. New Mexico has legal authority to take part in the program but a 1963 appropriation request was denied. Nevada enacted the necessary legislation this year but did not vote tax funds to put MAA into operation.

Ten States need enabling legislation. One is Indiana, where the Governor vetoed a bill passed by the legislature. Texas needs a favorable popular vote on a resolution for a constitutional amendment passed by its legislature, which would have to be followed by enabling legislation. The other eight States requiring legislative authority are Alaska, Arizona, Colorado, Delaware, Mississippi, Montana, Ohio, and Rhode Island.

Last year question was raised in the discussions before this House as to the adequacy of the facts and figures which were made available. Serious question was raised as to the overall picture which was being presented on the basis of the available figures. Our committee discussed this matter at length with the representatives of the Federal Government and expressed a strong hope that additional and more specific figures might be obtained. Although the Department of Health, Education, and Welfare agreed to check the matter carefully, the information given to you here is as complete as it is possible for us to