I should add in the major medical plan where we add in other benefits like the cost of drugs and medicines and diagnostic X-ray examinations, and so forth, they are in the plan specifically at about an 80-percent level after the deductible is paid. So we were attempting to provide for persons whose incomes were under $6,000; something around three-quarters of their costs. Senator FONG. Thank you. You were trying to take care of those people who were making $6,000 a year or less? Mr. MILLER. Primarily. Senator FONG. Yes. What would you say would be the minimum income of a person who could afford it? Mr. MILLER. In answer to that question, I would say that we hopedwe were conscious, also, when we designed our plans, of the fact that our New York Kerr-Mills program is a very broad one and that the defined eligibility in terms of a family income at the time it was established of $2,600 a year. It has since been improved to extend that to $2,750 just this past year. In addition, our New York program has a phasing-out aspect of the Kerr-Mills which I think is a very fine thing. A person whose income is just a little bit over the $2,600 or $2,750 does not fall out of Kerr-Mills, he simply has to take care of expenses to the extent that his income is in excess of the Kerr-Mills limit, so that, for example, if his income was $3,000, he would have to pay the first $250 before being eligible, and that arrangement is maintained as income increases. We had hoped that our benefits, particularly the basic plan, would be attractive to folks who were below those Kerr-Mills limits as well as some that are above. We are also aware of the fact that many times a son or a daughter will seek to provide coverage for a parent. or another relative and pay the premiums for them. It is one reason that we have made our coverage so easily available that any person can apply for coverage for someone else, and we have found, based on our records of other addresses, that at least a third of our coverage is provided by presumably a son or daughter on behalf of an older person. So, I would say that we did not have in mind any minimum income and undoubtedly we insure quite a number of persons who do not have any income of their own. Senator FONG. I see. You said that you worked out this plan with Kerr-Mills in mind? Mr. MILLER. We had in mind the Kerr-Mills limit. Senator FONG. And that is up to $2,600. Mr. MILLER. It is up to $2,750 now. Senator FONG. So, this was primarily for those between $2,750 and $6,000? Mr. MILLER. We still hoped there would be a substantial number under that who would choose to be insured. We do not have any information to substantiate that there are. But undoubtedly there are many. Senator FONG. You have another package; catastrophic, which you give for $9 a month, $108 a year, and your maximum benefit for any confinement is $3,600? Mr. MILLER. That is right. Senator FONG. In selling these policies to 120,000 people, could you tell us what percentage took the basic and what percentage took the catastrophic? Mr. MILLER. Yes, sir, based on the persons we now insure, 38 percent have the basic alone, and 38 percent have the catastrophic, many of them as an addition to other insurance that they have; and 24 percent have both plans with us. Senator FONG. Thank you. Senator MCNAMARA. Thank you very much, sir. The discussion you just had with Senator Fong indicates that there seems to be sort of general agreement that 75 percent of the cost of hospitalization is considered adequate? Do you feel that is a true statement? Mr. MILLER. Well, that is what we aimed to do in establishing our plans; we were trying to provide benefits at approximately a threequarters level, covering a broad spectrum of benefits; we did find that a sample of our claims showed that we were actually paying out $31.43 per diem of hospital costs against indicated hospital charges of about $40. In other words, we were paying about 78 percent. STATEMENT BY MORTON D. MILLER, PRESIDENT OF THE NEW YORK 65 HEALTH My name is Morton D. Miller. I am president of the New York 65 Health Insurance Association, and vice president and associate actuary of the Equitable Life Assurance Society of the United States. I am here at the invitation of the chairman of the Subcommittee on Health of the Elderly to discuss the activities of the New York 65 Health Insurance Association, a group of 49 leading insurance companies which offers elderly residents of New York State health and hospital insurance in accordance with the provisions of law as enacted by the New York State Legislature. Perhaps the most significant fact about the New York 65 Health Insurance Association is that it is doing its job. During the course of the past 18 months, it has succeeded in bringing low-cost health and hospital and major medical insurance to more than 120,000 elderly New York State residents, many of whom might have had a large part of their savings wiped out by the costs of a serious or prolonged illness if they had not had this protection. Since it began operations on October 15, 1962, the New York 65 Health Insurance Association has paid over $15.6 million in benefits to some 32,000 policyholders and issued more than 74,500 claim checks. About one out of every four policyholders has received some benefits. Individual claims have ranged from a few dollars to more than $6,500. ENABLING LEGISLATION The legislation which made New York 65 possible (exhibit A), passed unanimously by both houses of the New York State Legislature, at its 1962 session, stated: "It is the concern of the legislature that many residents of this State of advanced years do not have readily available to them health insurance adequate to their needs. It is the legislature's intent to encourage and facilitate the writing of such insurance by private insurers on a nonprofit group basis in order to make available to such persons broader coverage at lower rates than is possible on a regular commercial basis." The legislation specified that the association of insurance companies shall file with the superintendent of insurance "(1) its plan for offering, selling, issuing and administering health insurance which plan shall be subject to his approval as conforming to the purpose and requirements of this section, and (2) any policy, contract, certificate or other evidence of insurance, application or other forms pertaining to such insurance together with the premium rates to be charged therefore. No such policy, contract, certificate or other evidence of insurance, application or other form shall be sold, issued, or used; and no endorsement shall be attached to, or printed or stamped thereon, unless the form thereof and the premium rates to be charged therefor shall have been approved by the superintendent.” The legislation also provided "that the excess, if any, of premiums received by it (the association) from insureds over the cost of providing such insurance benefits shall be used solely for the benefit of the insureds." Furthermore, in order to reduce the cost of the insurance, New York 65 premiums were exempt from the New York State premium tax. FORMATION OF NEW YORK 65 As soon as the legislation had been signed by the Governor in March 1962, a group of New York domiciled insurance companies started to make plans for implementing the legislation. A steering committee was formed and held frequent meetings. By August 9, articles of association were signed by seven companies. All other life and casualty companies licensed to sell health insurance in New York State were invited to participate. A total of 49 joined (exhibit B). The member companies made available necessary initial financing and the actuarial assistance, legal counsel, sales and promotion guidance, claims and procedural programing and executive direction essential for the development of the program. These were volunteered as a public service contribution by the participating companies. As directed by the legislature, basic health and hospital insurance and major medical insurance were offered by New York 65. The plans were designed to offer a balanced package of benefits toward the costs of hospital confinement and medical services both in hospitals and convalescent nursing homes and slewhere, even at home. BASIC PLAN The regular basic plan provides at a monthly premium of $10 per person. Hospital room and board up to $18 a day; Doctor's fees in hospital (nonsurgical) up to $145, $6 per day first week; $5 per day, second week; $4 per day thereafter; Convalescent nursing home charges for 31 days up to $7.50 a day following at least 5 days of hospital confinement; and Plus surgery, in or out of a hospital, and radiation therapy for malignancy according to a schedule, up to $250. The same plan was also made available on an optional basis with hospital room-and-board benefits limited to $12 per day and all other benefits the same at a reduced cost of $8 per month per person. Less than 2 percent of those who enrolled in New York 65 availed themselves of this optional plan. MAJOR MEDICAL PLAN The New York 65 major medical which costs $9 per month per person has two parts: The first part pays benefits for hospital and convalescent nursing home care with a maximum of $3,600 for any one confinement. The second part provides benefits for other medical expenses up to a maximum lifetime benefit of $10,000. The first part of major medical provides benefits for: Hospital room and board up to $18 a day after the first 31 days of confinement; Other hospital services and supplies at 80 percent of the amount by which expenses exceed $150; and Convalescent nursing home benefits up to $7.50 per day for maximum of 60 days following at least 5 days of hospital confinement. These benefits were planned so that after the insured had been out of a hospital or convalescent nursing home for 90 days he is entitled to a new maximum benefit of $3,600 for any future confinement. The second part of New York 65 major medical provides benefits at 80 percent of the amount by which expenses exceed $75 in a calendar year up to a maximum lifetime benefit of $10,000 as listed below: Doctor's medical and surgical services for home, office, or inhospital care with the maximum expense equal to the excess of: the established Blue Shield fees in the insured's community for families with maximum yearly income of $6,000 over the benefits payable under other plans for these services; Private-duty nursing services by registered professional nurses, registered visiting nurses, or licensed practical nurses, not in excess of charges of $1,000 in any calendar year; Drugs and medicines which require a doctor's prescription; Diagnostic X-ray and laboratory examination and outpatient diagnostic services; Physiotherapy; artificial limbs and eyes; trusses and crutches; Oxygen and rental of equipment for its administration; Rental of radium and radioactive isotopes; Blood and blood plasma ; Rental of a wheelchair, hospital-type bed, iron lung, or other equipment for the treatment of respiratory paralysis; and Local ambulance service to or from a hospital or convalescent nursing home. The New York 65 major medical is designed to supplement New York 65 basic or similar coverage. If the insured does not have New York 65 basic coverage he should be prepared to meet the equivalent of New York 65 basic benefits out of his own pocket. Further details are included in the promotional folder for the current April 130 open enrollment period (exhibit C) and the certificate booklet for the combined basic and major medical plan (exhibit D). EXCLUSIONS AND LIMITATIONS Preexisting conditions for which treatment or diagnosis had been received during the 90 days before New York 65 coverage became effective, are not covered during the first 6 months. Confinement in a hospital or convalescent nursing home on or during the 31 days prior to the effective date of New York 65 coverage means that protection would not begin until 31 days after the end of the confinement. Other principal exclusions are: injuries and diseases covered by workmen's compensation; care for mental and nervous conditions outside a hospital; dental care; eye examinations and glasses; hearing aids; diseases or injuries arising out of any war; expenses for services and supplies furnished without charge by any government; expenses which there would have been no legal obligation to pay if no insurance was available. Payments for New York 65 benefits are nonduplicating with benefits paid under any other health insurance plans which the enrollee might have. To allow those who enroll to study the plan and make sure that it meets their needs a special 10-day "free look" provision is included. This means that the enrollee has 10 days after he receives his certificate booklet to examine and study it and, if he is not satisfied, he can return it and get his money refunded in full. STEPS TAKEN TO MAKE NEW YORK 65 READILY AVAILABLE Any New York State resident 65 years old or over and his spouse, regardless of age, is eligible to enroll during open enrollment periods. No physical examination or medical history is required. Any interested person may obtain New York 65 protection through his agent or broker or directly by mail. Anyone, such as a son or daughter, is permitted to file an application and pay the premium for a parent or any other qualified person. As a matter of interest, pre miums on approximately one-third of the policies are being paid by persons other than the insureds. The legislature had authorized every agent and broker licensed to sell health insurance in the State to offer New York 65 to the public. To assist agents and brokers, New York 65 held meetings with them throughout the State, in advance of the public offering of New York 65, to familiarize them with its provisions. More than 25,000 agents and brokers have participated and are continuing to participate actively in enrolling the elderly in New York 65. These agents and brokers have given, and are continuing to give, of their time and talents for only a nominal financial return because they believe in what New York 65 is trying to accomplish. To make New York 65 protection readily available a statewide advertising campaign was undertaken through newspapers, consumer and trade magazines, television, and radio. This was supported by an educational program which sent information about the plan to news media, doctors, nurses, hospital administrators, chambers of commerce, and other organized groups. Direct mailings were undertaken to lists of prospects and other interested persons. OPEN ENROLLMENTS In order to afford all eligible persons the opportunity of getting New York 65 coverage and to protect the plan and the persons insured under it from adverse antiselection, and at the same time to enable us to concentrate our sales and promotion efforts, open enrollments are held periodically. The first open enrollment period was set for October 15 to November 15, 1962, and 107,404 applications were received. Of these, 39,739, or 37 percent, selected the basic plan alone; 41,888, or 39 percent, selected the major medical plan alone, and 25,777, or 24 percent chose the combination of both plans. A second open enrollment period was held from June 1 to 15, 1963. During this period, 33,552 applications were received and 702 persons who already had some coverage with New York 65 took this opportunity to add additional coverage. The results of the second enrollment showed that 40 percent chose the basic plan; 36 percent the major medical; and 24 percent a combination of both plans. At the present time, during the month of April, New York 65 is conducting its third open enrollment. To capitalize on previous advertising and promotional efforts and because New York 65 has become better known throughout the State, this enrollment campaign is being conducted without public advertising. We are working with the wholehearted support of the State's agents and brokers who, in previous enrollments, have been responsible for the majority of the applications. Our ability to enroll substantial numbers on this basis has the added advantage of keeping enrollment costs to a minimum. As of April 23, 1964, over 12,000 applications have already been received. SPECIAL ENROLLMENT OPPORTUNITIES New York 65 provides special enrollment opportunities for those who become eligible for New York 65 protection between open enrollment periods. These include persons who reach their 65th birthdays, those who retire after 65, those over 65 who move into New York State, those who marry an over 65 enrollee and those over 65 who become widowed. Such individuals may join New York 65 within 31 days of their eligibility date (Exhibit E “Special Enrollment Op‐ portunities in New York 65"). CONTINUATION OF COVERAGE Every person insured for New York 65 coverage has a guaranteed right to continue his insurance by timely payment of premiums. He can keep his New York 65 protection even if he moves out of the State, provided he continues to live in the United States or Canada. The total number of persons who actually became insured under New York 65 from its inception to March 1, 1964, was 134,679. Of this number, 110,135 were still insured as of March 1, 1964. |