The CHAIRMAN. Without objection that will follow your statement in the record.

Dr. LINFORD. The National Association of Social Workers appreciates this opportunity to present its views on medical care for the aged to the Ways and Means Committee.

In general we are supportive of House bill 3920. We are aware of the fact that this committee has been the chief architect of the country's social security system first launched 28 years ago and added to many times since 1935.

We also realize that medical care and medical care insurance has been considered by this committee almost continuously since 1935. During the decades of the 1930's, 1940's, and early 1950's, the proposals were for general medical care insurance which would have covered most of the population under systems that would have included quite comprehensive medical care services.

We are aware of the fact that most of the statistics that bear on this question are fragmentary. They have been gathered largely for other purposes, some of it is census, some of it is based on reports from the States.

They are subject to various interpretations. You have seen this morning some widely differing interpretations of these materials. However, we believe that during the last 4 years when this question of medical care for the aged has been rather intensively aired by this committee and before the public, that the issues have been narrowed, the range of differences has been narrowed and the number of issues have been drawn more sharply.

It appears to us that there is now substantial agreement on the following points: One, that there is a gap between the cost of needed medical care and the capacities of a large number of our aged population to pay for it and to pay for other necessities at the same time. This fact has been documented in so many places and so many times that I won't elaborate it here.

Second, the need for medical care and its costs are unpredictable for any one person or family and, therefore, cannot be budgeted for with the same confidence that one plans for rent, food, clothing, and other items in the family's budget.

Though it was brought out this morning that only 20 percent of the people who suffer these catastrophic illnesses, and therefore, it is argued that only 20 percent of the aged need to be cared for, I would point out that everybody's house does not burn down either.

Most of us insure our houses hoping that we won't be of the few whose house does burn but we need this protection. So do people, all' of us (want this protection so that we won't be caught and be bankrunted by a major illness that may befall us.

The third point on which there is agreement is that the answer to this problem seems to be medical care insurance-what Winston Churchill once characterized as a method by which the magic of averages can be brought to the benefit of the individual. What this means is that while we can't predict the illnesses and their duration for the individual we can for the larger group, and insurance is simply a device by which funds are collected from each member in a group over a period of time and out of which costs of illnesses are paid that befall individuals who belong to the group.

The fourth point, there is less agreement on it but-widespread agreement, at least-and that is that voluntary medical care insurance is not going to be able to do the job.

There are a number of reasons why this is so. In spite of the burgeoning of voluntary medical care insurance in the last 20 years it is a fact that fewer than one-half of the aged people have such protection, such people over 65, fewer than half have this protection and many of those who have it have very limited protection.

I would like to illustrate this from a case I know of personally involving a relative of a member of my faculty at the University of Chicago. This is an honored and respected couple in our community.

A man was former schoolteacher, head of the department of mathematics in the local high school. He and his good wife now living on retirement benefits thought they had ample protection against any illness which might befall them.

They owned a Blue Cross comprehensive policy, they belonged to a private clinic which offered its comprehensive physician services on a prepayment basis, and they belonged to a system operated by the teachers' retirement group which they belonged to.

In February of last year the wife suffered a serious illness involving abdominal obstruction. There followed a series of surgical procedures requiring 72 days of hospital care, special duty nurses, and expensive drugs. The result was a medical bill amounting to $9,654, of which the medical insurance policies, three of them that they owned, paid $2,681, or about 28 percent.

The out-of-pocket expense of about $6,000 wiped out the savings of a lifetime and required borrowing from relatives with no hope of ever being able to repay.

Unfortunately, this didn't end the matter for this couple, because the wife was in the hospital again for another operation before the end of the year and their policies had been exhausted and this time it was further borrowings from relatives and public charity.

As I left Chicago yesterday, I learned that the husband is now in the hospital. This may not be a typical case, but it is an example of what can befall people. The reasons for the limited protection and coverage of aged people under voluntary plans are many. Dr. Mott has just spoken of some of them.

He has had very good experience. Some won't buy it, others can't afford it, still others would like to buy it but can't obtain it for a variety of reasons. They don't belong to a group or their current health condition or age makes them ineligible and so on.

The National Association of Social Workers believes that the needs of the aged are so urgent that immediate action by Congress is imperative.

The issue today, we believe, is not whether the aged should be given adequate medical care but how should it be done. The alternatives appear to be four in number or some combination of them.

First, sort of Government subsidy to existing voluntary prepayment plans. Second, Kerr-Mills approach, a means test device administered by States supported by Federal grants in aid.

Third, coverage under social security provided by H.R. 3920, and, fourth a comprehensive national medical care plan that covers all persons including the aged.

The National Association of Social Workers has little enthusiasm. for the first two; that is, the subsidy plan and the means-test approach and supports the social security approach with the hope that benefits may be extended to include physician services, drugs, and other medical services as well as hospital care.

It seems to us that the problems of necessary standard setting negotiation and supervision in a subsidy plan are so massive as to preclude its serious consideration. Moreover, even with a subsidy, comprehensive coverage could be achieved by some device of compulsion.

Now, we believe that the Kerr-Mills bill, while it has aided many people and may be desirable to keep it on the books, is not the answer to this problem and it has two basic defects.

One is that the States simply cannot afford to implement it fully. The States are heavily in debt and they are hard pressed to find the funds for other essential services with the result that even those States that have activated, tried to implement this program, have done so on a very limited basis.

My own State of Illinois provides a good example of this. This will be further detailed by Mr. Hilliard tomorrow. But suffice it to say now that we began briefly in 1961 to try to implement this bill with a $20 million appropriation but we shortly experienced serious financial crises which resulted in cutting this program back as well as other essential State services.

It has, therefore, been a rather ineffective instrument providing a very limited medical care service to a very small number of people. The second major defect in the Kerr-Mills approach is its employment of a means test in the provision of medical care. It is repugnant and degrading to a citizen to have his intimate, financial, and personal affairs examined over and over again in order to secure a service which society says he should be able to pay for himself but cannot.

The means test requires a person to prove his own inadequacies and failures, not once, but over and over again, each time he needs the service or whenever the agency administering the service decides that he should do it.

In my opinion, it is a national disgrace that we subject the 71⁄2 million recipients to public assistance to this degrading experience of the means test in order to obtain access to the necessities of life.

We have another tried and tested method of meeting the needs of people; namely, social insurance and we ought to utilize it to the maxi

mum.

So, on the basis of this line of reasoning my association supports the social security approach to medical care for the aged and we urge the Congress to act promptly and expeditiously.

Thank you very much.

(Dr. Linford's statement follows:)

STATEMENT BY ALTON LINFORD FOR THE NATIONAL ASSOCIATION OF SOCIAL

WORKERS

Mr. Chairman and members of the committee, I am Alton Linford, dean of the School of Social Service Administration, University of Chicago. I am testifying today for the National Association of Social Workers of which I am a member. I am accompanied by Mr. Rudolph T. Danstedt, director of our Washington office.

The National Association of Social Workers is an organization of 37,000 members who are professionally trained social workers employed in govern

mental and Catholic, Jewish, Protestant, and nonsectarian voluntary health, welfare, and recreation agencies.

Mr. Chairman, I would like the privilege of filing my full statement for the record and talking to it briefly. If possible, I would like to have included also a special issue of the Washington Memorandum, a legislative bulletin of our association, which details our position more specifically than it was possible to do in my statement.

The National Association of Social Workers appreciates this opportunity to present its views on medical care for the aged to the Ways and Means Committee. We are aware of the fact that this committee has been the chief architect of this country's social security system, first launched over 28 years ago, and added to many times since 1935.

We also realize that medical care and medical care insurance have been considered by this committee almost continuously since 1935. During the decades of the thirties, forties, and early fifties the proposals were for general medical care insurance which would have covered most of the population under systems that would have included quite comprehensive medical services. To some of us it seems almost as if we are marching backward when, in place of tackling the problem of medical care for everyone, we are offered what is in effect only hospital insurance and this only for the aged covered by old-age survivors' and disability insurance. What seems even less comprehensible is that this relatively limited service for what is obviously the neediest portion of the population is opposed with the same intensity that greeted the broader proposals almost 20 years ago.

AREAS OF AGREEMENT

The question of medical care for the aged has had a thorough airing during the last 4 years especially. Our association has been pleased to note that wide public debate of this question reveals that areas of difference have been narrowed, and that the issues are now fewer in number and more sharply drawn. It seems to us that there is at present widespread agreement on the following points of fact:

(1) There is an abysmal gap between the cost of needed medical care and the capacities of a large part of our aged population to pay for it and pay for other necessities as well. This fact has been documented so many times that it will not be repeated here. Suffice it to say that this gap is brought about by a combination of rapidly rising medical costs, higher incidence of illness, and longer duration of illness at the very time of life when income has shrunken. The aged experience more illness and are disabled for longer periods than other age groups.

(2) The need for medical care and its costs are unpredictable for any one person or family, and therefore cannot be budgeted for with the same confidence that one plans for rent, food, clothing, and other items in the family's budget. Few people have any choice about the illnesses they experience or any choice about how their end shall come a quick and, therefore, inexpensive heart failure or a slow and painful end preceded by months or even years of illness requiring expensive bedside care, hospitalization, physician's services, and drugs. (3) Most people seem to agree that the answer to this problem is medical care insurance what Winston Churchill once characterized as a method by which the magic of averages can be brought to the benefit of the individual. Although it is not possible to do so for the individual, it is quite possible to predict the number, kind, duration, and costs of illnesses for a large group. Insurance is simply a device by which funds are collected from each member in the group over a period of time, which are then available to pay for the illnesses that befall any and all members of the group.

(4) Although there is less agreement on this point, it is becoming increasingly obvious that the medical needs of the aged cannot be met through voluntary medical care insurance. When President Truman proposed his national health plan in 1945, opponents asserted that adequate health protection could be provided through voluntary medical care insurance plans. Meantime voluntary plans have sprung up all over the country-Blue Cross, Blue Shield, consumer plans, labor-management plans, and commercial life insurance plans. In spite of this burgeoning of voluntary medical care insurance, however, it is a fact that 18 years later, fewer than one-half of the aged 65 or over have any coverage in a voluntary plan, and many of those covered have severely limited protection.

I would like to illustrate the point of limited protection by a case of which I have personal knowledge. This case involved an aged couple whose nephew is a member of the faculty of the School of Social Service Administration of the University of Chicago. This couple was an honored and respected one in a wealthy suburban community near Chicago. The man was a retired schoolteacher, former head of the department of mathematics in the local high school, living on savings and retirement allowances earned over many years of service. This couple had thought that they had provided well for any illness that might befall either of them. In addition to Blue Cross they also belonged to a clinic which offered complete physician's services in office, home, and hospital in return for annual premium payments. In other words they had all of the protection that reasonably prudent people could be expected to obtain from voluntary

sources.

In February 1962 the wife suffered a serious illness involving abdominal obstruction. There followed a series of surgical procedures requiring 72 days of hospital care, special duty nurses, and expensive drugs. The result was a medical bill amounting to $9,654, of which the two medical insurance policies paid only $2,681, or a little less than 28 percent. The out-of-pocket expense of $6,973 wiped out the savings of a lifetime, and required borrowing from relatives with no hope of ever being able to repay.

Unfortunately, this didn't end the matter. Before the year was out another operation became necessary, this time in another hospital and by other doctors which simply added further indebtedness on this aged and impoverished couple. The reasons for the limited coverage of aged people in voluntary plans are many: Some won't buy it; others cannot afford it; still others would like it but cannot obtain it for a variety of reasons. They do not belong to a group, current health condition or age makes them ineligible, and so on. The cost of only fairly adequate protection outlined recently by Blue Cross and Blue Shield amounts to $180 per year for a single person and $360 for a married couple. Clearly this is beyond the financial capacity of a substantial proportion of the 17 million aged persons in our population.

(5) It is clear to all that adequate and appropriate medical care of the aged will cost a lot of money, whatever plan is employed to provide it. For example, it would require some $2.8 billion per year to purchase the above-described Blue Cross-Blue Shield policies for the 17,250,000 currently aged, and this, as my illustration demonstrates, would afford only limited protection.

ISSUE TODAY IS NOT IF, BUT HOW?

The National Association of Social Workers believes that the needs of the aged are so urgent that immediate action by Congress is imperative. The issue today is not whether the aged should be given adequate medical care, but how should it be done? The alternatives appear to be four in number, or possibly some combination of them:

(1) Some sort of Government subsidy to existing voluntary prepayment plans (2) The Kerr-Mills approach: a means test device administered by the States supported by Federal grants-in-aid.

(3) Coverage under social security as provided by H.R. 3920.

(4) A comprehensive national medical care plan that covered all persons including the aged.

The National Association of Social Workers has little enthusiasm for the first two, and supports the social security approach, with the hope that benefits will be extended to include physician's services, drugs, and other medical services as well as hospital care.

It seems to us that the problems of necessary standard setting, negotiation, and supervision in a subsidy plan are so massive as to preclude it serious consideration. Moreover, even with a subsidy, complete coverage could be realized only by some device of compulsion.

Kerr-Mills approach is basically defective.-The Kerr-Mills plan might be acceptable were there not a better one obviously at hand. It should be admitted that getting needed medical care to the sick is more important than how it is done and paid for. Nevertheless, when two plans are available for use, it is folly not to choose the better one, especially when the latter (the social security approach) promises to meet the needs of a greater number of aged on terms that are more acceptable to them.