In our opinion social security, and only social security, offers a ready-built thoroughly tested mechanism that would make this desirable arrangement available to practically everybody.

The proposed program of hospital insurance for the elderly would follow the same kind of threefold attack on dependency in old age as that found under the present social security program.

First, basic protection against the cost of hospitalization and of 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, for the members of the small group with such special needs and circumstances that they are unable to met their health costs through the proposed social security plan and their private insurance and other resources, help could be available through medical assistance which all the States would be in a far better financial position to provide on an adequate basis.

Hospital insurance under the contributory social security program would offer all these advantages while affording protection in a way that is consistent with our respect for the independence, the dignity, and the privacy of the individual.

Mr. Chairman, I have a detailed description of the provisions of H.R. 3920. I would rather not take up the time of the committee by reading this lengthy document.

With your permission, I would like to have this description included in the record of the hearings at the end of my statement and cover only the main points at this time.

(This appears on p. 38.)

The CHAIRMAN. Without objection it will be included.

Mr. CELEBREZZE. Social security hospital insurance would be provided to all people over 65 who are entitled to social security or railroad retirement benefits.

In addition, all people now over 65 as well as those becoming 65 in the next few years who do not or will not qualify for social security benefits would be eligible for the hospital benefits.

The proposed program would provide the following benefits for each spell of illness:

1. Payment of hospital bills. Each person would have a choice of three plans:

Ninety days of hospitalization at a cost to the patient of $10 a day for the first 9 days, with a minimum of $20; or

Forty-five days of hospital care with no deductible; or

One hundred eighty days of hospital care, with the patient paying either the national average cost for 212 days or the hospital's customary total charge for the care provided, whichever is less.

2. Payment for up to 180 days of skilled nursing-home care following discharge from a hospital.

3. Payment of all costs above the first $20 for outpatient hospital diagnostic services furnished within a 30 day period.

4. Payment of all costs for up to 240 visits a year by visiting nurses and other health workers in the patient's own home.

27-166-64-pt. 1-5

Benefit payments would cover the cost of all services in semi-private accommodations, drugs, and supplies customarily furnished for the care of patients in a hospital or skilled nursing facility.

No payment would be made for the services of personal physicians and private-duty nurses or luxury items furnished at the request of the patient.

I want to emphasize that that no payment under this bill would be made to the private physician in attendance.

Hospital insurance through social security would be financed by an increase of one-fourth of 1 percent in social security contributions for both employees and employers (0.4 of 1 percent for self-employed persons) and an increase in the taxable earnings base from $4,800 to $5,200. Part of the income from the increase in the earnings base will go for higher cash benefits for those earning over $4,800 a year:

The cost of hospital insurance provided older people not eligible for social security or railroad retirement benefits would be met from the general revenues of the Federal Government. The hospital insurance program and the additional social security contributions would both go into effect January 1, 1965.

These provisions are designed to help with the costs of major illness. Most people can meet the ordinary costs of a visit to the doctor's office now and then, even though such costs may add up to a great deal over the years. The fear of the aged is of the highly unpredictable large cost that arises from a major illness. H.R. 3920 concentrates on meeting hospital costs because it is the illness that necessitates hospitalization that is usually the most costly.

The other benefits in the bill are essentially less-expensive alternatives to inpatient hospital care and are included for this reason. By providing health insurance protection against these various other health costs, the bill would promote the most efficient and the most economical use of existing health care facilities and reinforce the efforts of the health professions to reserve hospital beds for acute illnesses requiring the intensive treatment that can be provided only in a hospital.

Mr. Chairman, there are certain arguments and allegations that have been made concerning the hospital insurance proposal that I would like to respond to.

Allegation: The hospital insurance proposal would give the Government control over hospitals and other providers of health services. The proposal would do no such thing. The bill has been carefully drafted to avoid such a possibility. The bill specifically prohibits any Government official from exercising such control.

Some people point to the conditions for participation that the bill applies to hospitals and other providers of services and claim that these conditions offer means through which the Government could control health facilities.

These conditions for participation are merely the minimum necessary to assure the safety of the patient and the quality of his care. They are requirements that have been developed by professional organizations in the health field.

State health agencies, not the Federal Government, would apply these conditions to determine whether a provider of services meets the requirements for participation. This State function would be much

the same as the function the States now perform in licensing hospitals. Moreover, the bill explicitly states that any hospital that is accredited by the Joint Commission on the Accreditation of Hospitals and that has a plan in effect for reviewing the utilization of its services will meet the conditions for participation.

As you gentlemen know, the joint commission is made up of representatives of the American Medical Association, the American Hospital Association, the American College of Physicians, the American College of Surgeons. The conditions for participation are consistent with, and would support, the efforts being made by State health agencies and by the Joint Commission on the Accreditation of Hospitals to maintain and improve the quality of care in hospitals and skilled nursing facilities.

The fact that the Government would pay certain health costs is sometimes said to involve governmental control. There is no cause for concern on this score. Payment for hospital services on the basis provided for in the bill is in accord with principles of reimbursement developed and supported by the American Hospital Association.

For many years Blue Cross plans and Government programs (such as the crippled children's program) have been paying hospitals on the same basis as that proposed without interfering in hospital management or operation. There is no ground for asserting that the proposed program, which would pay bills in virtually the same manner, would have any different effect.

Allegation: The program would interfere with the doctor-patient relationship and would tend to lower the quality of medical care.

Of course, this is not true. In the first place, the cost of services of the individual's own physician is not covered under the bill, so there could be no direct effect on the relationship between the doctor and the patient.

The indirect effect on that relationship might well be good, because neither the doctor nor the patient would have to worry about how the hospital bills and the bills for other covered services were to be paid.

Medical care in the United States, is, at its best, equal to or superior to any in the world, and I would certainly oppose any program that might tend to lower that quality. One of the many reasons why the proposed program is so important is that it would make more adequate care available to the many aged people who cannot now afford the kind of care the United States is able to provide.

There would be no interference with established practices for providing health care; freedom of choice of physician and facilities would not be affected. Just as under Blue Cross, the patient_could go to any member hospital knowing that the costs of the covered services he receives would be paid for.

Under the proposal, the medical profession would continue to have the same responsibility for the quality of medical care available to the people of the United States as it has today. The providers of service would still be responsible for determining what services they would make available.

Moreover, the proposed program would put the hospitals on a more solid financial footing and make improvements possible that the hospitals cannot now afford.

Since hospitals would be paid for the full, reasonable costs of the covered hospital services the elderly receive, they no longer would be

saddled with the burden that now results because some aged patientsor assistance agencies responsible for their bills-do not pay their full way.

Allegation: Insuring the aged would result in great overutilization of hospitals.

This is not true even though utilization of hospital services would increase somewhat if this proposal were enacted. It is well known that persons with hospital insurance use somewhat more hospital services than do the uninsured.

However, the bill provides three kinds of safeguards against unnecessary utilization of covered services.

First, as is usual under health insurance generally, the physician must certify, and at certain times recertify, that services are required for medical treatment or diagnosis.

Second, a self-governing hospital utilization committee, composed of doctors and other professional people-not Government employees would gather and review data on admissions, duration of stay, and services furnished.

If after 21 days of hospitalization, the physicians' committee determined that further services were not needed, payment would, after due notice, be stopped.

This safeguard is modeled after practices that have been found successful in many of the best hospitals.

Third, since protection is provided against the costs of outpatient diagnostic services, skilled nursing facility care, and home health services, some of the pressure to use inpatient hospital care would be relieved.

Allegation: The program inevitably will be expanded to include workers of all ages, and the consequences will be high costs and an invasion of a field better left to private insurance.

I do not believe that such a thing will happen. As previously stated, there is a unique problem for older people. It is they who have the high health costs. It is they who have the low incomes. It is they who, as a rule, cannot buy low-cost group insurance. This combination of high health costs, low incomes, and unavailability of group insurance is what clearly disinguishes the situation of the aged as a group from the situation of younger workers as a group. The vast majority of young workers can purchase private insurance protection-usually on a group basis and frequently with the help of the employer. I think for younger employed people, voluntary private plans can do the job.

Allegation: It is impossible to make a reasonable estimate of the cost of the proposal.

We do not agree. The most expensive benefit in the proposal is the hospital benefit, and in estimating its cost we have used the great amount of data that is available on the hospitalization experience of aged people, including data on aged people who have hospitalization insurance.

Our estimate of the cost of the proposal is based on the best and most complete data available and on the best actuarial judgment. The Chief Actuary of the Social Security Administration, Mr. Robert J. Myers, is here with me today, and he will be happy to answer any questions you may have about the estimates.

Mr. Chairman, and members of the committee, I would like to summarize my position:

It is that: (1) our system of retirement protection under social security cannot provide real security for the aged until it includes a substantial measure of protection against the costs of expensive illness; (2) only in social security do we have a widely applicable mechanism through which people can pay while working toward protection after retirement; (3) people over age 65 cannot afford to pay at that time for adequate protection because the need for and therefore the cost of care is high and yet incomes are low; (4) for this reason private voluntary insurance cannot do the job alone, even though it can provide valuable protection complementary to social security; (5) it is neither desirable nor practical to rely on assistance as the primary method of meeting the health needs of older people, even though the medical assistance for the aged program could develop into an important adjunct to a basic social security plan; and (6) this coordination of basic contributory social insurance, private voluntary insurance, and public assistance is the same coordination that has worked so well in the United States in relation to cash benefits in retirement.

The problem facing us is an urgent and growing one. The number and proportion of aged persons in our population are increasing. The cost of health care-and especially the cost of the most expensive element, hospital care-continues to rise.

Medical technology continues to advance and health care becomes not only more valuable and more important but also more expensive. It is a cruel irony that the aged, who have more than ordinary health needs and who stand to benefit the most from improvements in health care, often find this higher quality of care beyond their means.

A practical solution is through an approach under which people make provision for a substantial part of the high health costs of old age in advance and over their working lifetimes.

The social security program is the only mechanism that can make this approach, and the protection it would provide, a reality for practically everyone. With basic protection furnished under social security and complementary protection by private insurance, the large and unpredictable expenses of illness could be met by most older persons without resort to assistance.

Illness in old age can in itself make a travesty of the golden years. Must older people also suffer the other consequences now associated with illness in old age-personal bankruptcy, unwilling dependency on children or on public assistance, and loss of pride and peace of mind?

The answer is "No." We as a nation owe these older people the opportunity to live their remaining years in dignity.

As the President stated earlier this year:

A proud and resourceful nation can no longer ask its older people to live in constant fear of a serious ilness for which adequate funds are not available. We owe them the right of dignity in sickness as well as in health. We can achieve this by adding health insurance-primarily hospitalization insurance-to our successful social security system.

Thank you, gentlemen, for your consideration. I am sorry that my statement is so long, but it is a very important bill.

(Summary of H.R. 3920 follows:)