Mrs. GRIFFITHS. You mean that someone sent a statement through the mail saying that people are deceiving persons in regard to this? Dr. RITT. I don't know anything about this, I am sorry. This statement has been filed as an individual. I am sorry there is some confusion about it. I did not file the statement.

Mrs. GRIFFITHS. It says here that he is executive director and general counsel of the American Academy of General Practice. That is your organization?

Dr. RITT. This is the organization for which he is the executive director and general counsel. I presume he is filing it as an individual. Mrs. GRIFFITHS. What is your position?

Dr. RITT. I am the president of the American Academy of General Practice.

Mrs. GRIFFITHS. Do you adopt this view?

Dr. RITT. I don't know. I haven't had occasion to read it.

Mrs. GRIFFITHS. It alleges that there are some people intentionally and maliciously deceiving persons in regard to H.R. 3920.

Dr. RITT. I would like to have occasion to consider the entire context of the report. I will be glad to check with Mr. Cahal.

Mrs. GRIFFITHS. Then we might give all these papers back to you. I would like to say that I am one of the few people in this place who thinks the proponents of the bill have overstated their case but I also think the opponents have overstated the case, too.

Dr. Rrrr. I read on page 4 here the line that you are referring to. "I submit." Is that the one?

Mrs. GRIFFITHS. Yes.

Dr. RITT. I presume this is an interpretation which he has placed on the bill as he has read it. I can't presume the answer for him. Mrs. GRIFFITHS. I object to including in our record the statement of Dr. Cahal.

Mr. BETTS. As I understand it has not been submitted for the record He does not know anything about it.

Dr. RITT. This is the first time I have seen it.

Mr. ALGER. Maybe we ought to invite him, Mr. Chairman.

Mrs. GRIFFITHS. Your employee has filed a statement of his own without clearing it with you?

Dr. RITT. Yes.

Mrs. GRIFFITHS. Perhaps you can take this up with him when you get back.

Mr. KING. I think that perhaps it should not be included in the record.

Thank you.

Mr. Wedemeyer, will you identify yourself for the record?

STATEMENT OF GOV. EDMUND G. BROWN, STATE OF CALIFORNIA, AS PRESENTED BY JOHN M. WEDEMEYER, DIRECTOR, CALIFORNIA DEPARTMENT OF SOCIAL WELFARE

Mr. WEDEMEYER. My name is John M. Wedemeyer. I am director of the California Department of Social Welfare. I am appearing

here today at the direction of the Honorable Edmund Brown, Governor of California, who has asked me to tell you that he regrets a prior commitment makes it impossible for him to appear.

He has asked me to present his statement on H.R. 3920. I have made available to the committee copies of the full statement and copies of four exhibits reflecting data on our experience with the MAA program.

I ask that these be included in the record and with your permission, knowing the crowded state of your calendar, I will simply try to summarize the statement which I have before me.

Mr. KING. Without objection, Mr. Wedemeyer, the entire statement. will be made a part of the record, also the exhibits.

(The material referred to follows:)

STATEMENT OF HON. EDMUND G. BROWN, GOVERNOR OF CALIFORNIA; PRESENTED BY MR. JOHN M. WEDEMEYER, DIRECTOR, STATE DEPARTMENT OF SOCIAL WELFARE, STATE OF CALIFORNIA

My name is John M. Wedemeyer. I am director of the California Department of Social Welfare. I appear here today at the direction of the Honorable Edmund G. Brown, Governor of California, who has asked me to tell you he regrets that a prior commitment makes it impossible for him to appear before you. Governor Brown has asked me to present his statement on H.R. 3920.

STATEMENT OF HON. EDMUND G. BROWN, Governor of CALIFORNIA

Mr. Chairman, your committee is conducting hearings into what I consider to be a central human problem of American society in the second half of the 20th century; providing Americans now and in generations to come with a method of meeting the costs of illness which are the inevitable companions of old age.

In seeking out this method, we are confronted by one of the cruelest paradoxes of our society. It is that, at a time in the life of man when the human need for medical care is greater than at any time since birth, the ability to pay for that care is at its ebb point. At a time when the science of medicine is constantly developing better means of prolonging and sustaining life, the costs of those developments is driving medical care out of the reach of those whose age necessarily means that their earning power is dwindling or has vanished.

The human result of this paradox makes mockery of what have been called man's golden years. Men and women who, in their active, working years, contributed so much to the prosperity, strength, and security of our country find they must surrender the independence of a lifetime in exchange for the costly medical attention demanded by illness.

Before they can get public health care in these costly crises, they must exhaust their private resources upon which they had built their hopes of independent, rewarding lives in retirement. Their homes, their savings, their income andfrequently the resources of their loved ones become hostages to the likelihood of illness in old age.

The old suffer from the workings of this paradox. The young suffer as it affects the lives of their aged parents and will suffer directly when they grow old.

The bill before you now offers our country the opportunity to erase that paradox and the ill effect it has on the lives of every man, woman, and child in the United States.

H.R. 3920, introduced by Congressman Cecil R. King of California, is, in my opinion, the most important bill affecting the economic security and well-being of older Americans that has been before Congress since the Social Security Act of 1935.

It offers the American people the opportunity to save systematically during the active, working years of their lives to protect their health and economic security during their later years. It provides the opportunity to do this through a system

of contributory social insurance that has proved itself fiscally sound and in keeping with American principles of self-reliance and respect for human dignity. The people of California and, I believe, the people of this Nation support the purpose of this legislation. I strongly urge your favorable action on it in time to allow a vote by the Congress during this session.

My position on this legislation stems from conviction and experience: conviction that a nationwide system of health insurance through social security is the surest and most American way of meeting this real, human need; experience as Governor of a large, progressive, and prosperous industrial State which has endeavored, since 1960, to build a workable and comprehensive program of medical assistance to the aged under the Kerr-Mills Act which would meet the health needs of our older citizens.

I have testified from my conviction. I would like now to testify from California's 3 years of experience with Kerr-Mills.

CALIFORNIA'S EXPERIENCE UNDER PUBLIC ASSISTANCE MEDICAL CARE AND MEDICAL ASSISTANCE TO THE AGED

In 1960, your committee, responding to the problem faced by older people in financing medical care, secured enactment of an amendment to the public assistance titles of the Social Security Act known as medical assistance to the aged. I am here to testify that MAA, even as administered by a prosperous, progressive and conscientious State like California is not and can never be the answer to this problem.

Our MAA program does not offer comprehensive medical care for shortand long-term illnesses.

At great cost to State, local. and Federal governments, it covers less than 25 percent of the 142,000 Californians over age 65 with an income less than $2,000 a year, who require hospital care each year.

The cost of making MAA in California a comprehensive short- and long-term medical care program would bankrupt the State and county governments.

I concede that the MAA program can help protect those older people whose needs cannot be met fully by a basic health insurance program under social security and private insurance. MAA can be a valuable part of the spectrum of publicly financed medical care. But any effort to make this one limited form of health care insurance serve this need for basic, comprehensive medical care will only serve to make more severe the paradox to which I referred earlier. Let me review our experience in California going back prior to MAA as an illustration.

Before 1957 medical care was not part of the basic old age assistance standard of assistance. The recipient who had income was allowed to use it to pay his medical expenses (including prepaid health insurance premiums). If he did not have such income-or if he needed all or part of it to meet other special needs such as housing, transportation etc.-he did not have money to pay for medical care. This left him dependent on community resources such as county hospitals, free physicians' services, voluntary clinics, gifts from relatives, or his own savings.

The Social Security Act Amendments of 1956 furnished $3 matching Federal funds for medical care toward a total monthly per capita ceiling of $6. This enabled California to create its public assistance medical care program in 1957. By fiscal necessity, this program was limited to physicians' services in office or home, laboratory and X-ray, drugs, physical therapy, and ancillary service. California gave priority to these outpatient services in recognition of the need to give recipients an opportunity to seek medical aid and diagnosis at the first appearance of symptoms.

Additional amendments in 1960 and 1961 set the matchable ceiling at a total of $12 and $15 per month per recipient. These changes enabled us to improve program coverage by adding dental care, eye care, coordinated home care and services of rehabilitation centers meeting good medical standards. From the very beginning this program was implemented with the wholehearted cooperation of the California Medical Association.

Meanwhile, the aged person who required hospitalization or skilled nursing home service continued to be dependent on whatever resources might happen to be available in his community. Although California is a recognized leader in

providing high standards of financial assistance for other purposes to its older residents in need, hospital or nursing home care was available prior to 1962 only to those who had income in addition to their public assistance grants, those whose relatives would contribute, or who, as indigents could receive care in public medical institutions.

California has a well-developed county hospital system, as old as the State itself. Many of these facilities are among the best in the Nation., accredited by the Joint Commission on Accreditation of Hospitals. However, the narrow property tax base available for support of these facilities forced many counties to restrict admissions by the most rigid and stringent deterrents and eligibility requirements. The system fostered increased dependency and discouraged prompt and continuous care.

In 1961, California was in the vanguard of States in terms of the amount of aid and the proportion of aged persons receiving help. Its old-age assistance program provided financial grants of up to $101 for basic needs and up to $166 for allowable special needs and comprehensive outpatient medical services. But it offered inadequate financing of hospital and nursing home care. Our hope had been fixed on the enactment of a Forand bill or similar congressional action. However, Federal amendments of 1960 merely augmented public assistance for the aged. Those amendments continued the means-test requirement and left the extent of the program dependent upon the States' financial ability to implement the Federal law.

Nevertheless, California accepted the expensive challenge posed by KerrMills. Pressed to finance our booming population's demand for new schools, new highways, water development, and other vital services, my administration earmarked $7.5 million of unused appropriated funds for the initial operation of the MAA program. We determined at that time that the program would have to operate subsequently within anticipated State revenue and without any substantial increase in local property taxes.

Within this framework, the administration decided upon a program aimed at the most urgent and unmet health needs of our older citizens. We gave priority to financing the ruinous costs of long-term care in hospitals and nursing homes since those costs were not being met in any organized fashion. We defined long-term care as that in excess of 30 days in a hospital or nursing home.

The situation we faced was this: available data indicated that of the 1,250,000 persons 65 and over in California in 1960, 788,000, or 63 percent, were estimated to have incomes of $2,000 or less annually. Of these, 250,000, or 31.7 percent, received old-age assistance. The balance, 68.3 percent, were estimated to be maintaining themselves independently on social security or other income, on savings or with the assistance of relatives.

Of the potential group of 788,000 people, it was expected that 142,000, or 18 percent, would be hospitalized on an annual basis and that 33,300, or 4.2 percent, of these people would require care in excess of 30 days. We anticipated an average population of 18,000, or 2.3 percent, persons at any one point in time during 1962-63 would be receiving care in long-term hospital wards and nursing homes.

The eligibility requirements were established:

1. The person may have real property holdings including his home and/or other real property assessed up to $5,000.

2. The person may have personal property up to $1,200, plus household and personal effects.

3. Income may not exceed the cost of maintenance for the person and his dependents plus the cost of his medical care.

The person had free choice of public or private nursing home or hospital if it met the licensing standards of the California State Department of Public Health.

Our proposal, which had the support of the California Medical Association and local government, passed without opposition and became effective January 1, 1962.

California's MAA program has not been the answer to all the health problems of our older citizens. Nor has it met enough of those problems nor covered enough people in need to pass muster as a comprehensive plan of medical care for the aged.

Each year more than 100,000 low-income older people are admitted to California hospitals for periods of less than 30 days. Our State's inability to finance this large uncovered sector can be seen readily in these two projections.

If we were to provide comprehensive hospital care from the day of admission, our 1964-65 estimated total MAA costs of $142 million would be increased by $54 million. Of this increase, $131⁄2 million would come from the State general fund and a like amount from the counties which would make necessary, on a statewide basis, an increase in the county property tax rate of 3.8 cents per $100 of assessed valuation.

If we were to follow the American Medical Association's recommendation to liberalize eligibility standards-and this would have to be done by increasing the personal property holdings exemption from $1,200 to the recommended $5,000-we would add an additional $88 million to the 1964-65 costs. The county share of this increase, $22 million, would add another 6.2 cents to the county property tax rate.

I submit that if California is unable to shoulder this load the less affluent States must be in even a more distressing situation.

The 1963 session of the California Legislature was keenly aware of this problem and we sought ways and means of alleviating it. Under legislation I recommended it was possible to cover acute care given to MAA recipients in county and contract hospitals.

The law specified that county hospitals must admit all those who are eligible to MAA and may no longer restrict their admission to the very poor. Neither may they require liens, agreements to repay, or contributions from relatives. Moreover, in nursing homes, eligibility was declared to exist as of the first day of the month following the date of admission.

These were substantial additional benefits. But even so, they do not guarantee the older person in need that he will receive prompt, continuous, and comprehensive care with a reasonable choice as to the hospital, nursing home, physician, or other providers of services.

Much has been said about the fact that some States provide MAA to those previously eligible for old-age assistance. By now you realize that, in California at least, the MAA services are more adequate than the old-age assistance medical care services. Here again, it is a basic problem of financing. Old-age assistance medical care services are limited to a Federal ceiling of $15 per month per capita while in MAA there is no ceiling. If medical care is to be available to those in economic need, artificial distinctions between those who may have more or less in the way of property are entirely out of place. It is bad enough to restrict medical care to those unable to pay, but worse to separate the poor from the poorer.

As stated before, California has attempted to use MAA for the benefit of the aged to the extent its fiscal resources permit. We use it to finance the costly, continuing, and catastrophic long-term illness and its attendant enormous costs to the older individual and his family. Our expenditures for the fiscal year 1962-63 were $60 million. For 1963-64, we estimate that they will be $120 million; for 1964-65, $142 million. Even with these substantial expenditures many older people will need short-term hospital and nursing home care which our MAA program does not cover. For many, this will mean that their savings and future self-support will be jeopardized.

Against this background of experience with a public assistance approach I repeat that our older people are entitled to security and protection against the costs of major illness as a basic right, earned by them through contributions by them.

In the time remaining, let me turn to discussing some of the advantages that we in California see in the provisions of H.R. 3920.

ADVANTAGES OF H.R. 3920

The Hospital Insurance Act of 1963 contains significant improvements, in my opinion, over previous versions submitted to the Congress. I have endorsed the provision for blanketing in nearly all people 65 and over through a temporary