The average age of persons who enrolled during our second "open" enrollment period was 73.3 years.

We believe that the average age of those insured as of March 1, 1964, is substantially the same.

Question 5. Please provide all data available relating to premiums earned, claims incurred, utilization, etc., for each of the various segments of the New York 65 program (provide separate data for the regular basic and major medical portions). Answer 5.

These figures relate to the period from October 15, 1962, through December 31, 1963.

Question 6. Based upon all available information, advise whether any premium and/or benefit changes are anticipated or will be required during the next 2 years.

Answer 6. It is difficult at this time to answer this question. New York 65 has been operating for slightly more than 17 months. Our original projections on which our current premium rates are based were made for 2 years. So far we have been running somewhat ahead of our estimates as far as payments of benefits are concerned.

We are presently conducting our third "open" enrollment during the month of April. Since this enrollment is being undertaken without widespread public advertising, we do not at this time know what the final results will be in terms of numbers of new enrollees and in terms of additional premium income.

Our original projections indicated that if medical and hospital costs continue to increase at the same rates as they had for the previous 2 years, it seemed likely that some upward adjustment in the premium rates would have to be made at the end of the second year or reasonably soon thereafter. So far, medical and hospital rates have continued to increase at rates similar to those of the 2 previous years.

With the unknown of additional premium income due to new enrollments, which exclude benefit payments for preexisting conditions for 6 months, it is difficult for us to come to definite conclusions concerning future premium rates at this time.

All other indicators, however, point to the need for a modest increase within the next 2 years unless our current claims demands change from their present pattern.

We do not now anticipate any change in benefits.

Question 7. Note: To extent possible, provide all data for persons age 65 and over, excluding spouses who are under age 65.

Answer 7. We do not maintain such records. However, our best estimates would indicate about 3 percent of our insureds are spouses under the age of 65. Question 8. Supplemental request of March 17: Results of your mail survey of several thousand recent terminations designed to determine the principal reasons for such termination and their relative frequency.

Answer 8. A questionnaire (copy attached) was mailed in November 1963 to 1,748 individuals and replies were received from 703, or about 41 percent. The replies to the questionnaire were as follows: Unsatisfactory experience with a claim____. Bought other health insurance protection---. Benefits too limited__.

Moved out of New York State..

Did not receive offer to reinstate the insurance..
Combination of 2 of the above reasons:

Benefits too limited and bought other health insurance protection____
Unsatisfactory experience with a claim and benefits too limited---.
Unsatisfactory experience with a claim and bought other health insur-
ance protection____

Other

Deceased.

Cost

Confined to home for the aged...

Duplicate coverage__.

Requested reinstatement__

Questioned premium status_.

22

114

40

1

14

52

19

5

139

46

42

7

45

145

12

Miscellaneous‒‒‒‒‒

The 139 replies stating that the insured had died are significant in that we had eliminated the deaths which had been reported to us before mailing out the questionnaires.

Senator MCNAMARA. The next witness; and I might say there are only two more and we hope they are going to be short.

The Associated Connecticut Health Insurance Cos.; Mr. L. J. Kendall, Jr., general manager.

We are very happy to have you here.

Mr. SEERY. Senator, I am Mr. Seery, the chairman of the executive committee of Connecticut 65. Mr. Kendall is our general manager and he was not able to be here.

Senator MCNAMARA. All right, sir; you may proceed, then.

We have your statement. It came in a little bit late, but we have it and we appreciate it very much. Proceed in your own manner.

STATEMENT OF WILLIAM N. SEERY, CHAIRMAN, EXECUTIVE COMMITTEE, ASSOCIATED CONNECTICUT HEALTH INSURANCE COS.

Mr. SEERY. Thank you, sir. We apologize for being late with the statement but I have been out of town and it seemed to have been mislaid somewhere along the line.

Mr. Chairman, my name is William N. Seery. I appear as chair

man of the executive committee of the Associated Connecticut Health Insurance Cos., in response to the invitation extended to the associated companies in your letter of April 6, 1964.

There are 32 insurance companies in this association which for 21⁄2 years have successfully offered to residents of Connecticut, age 65 and over, a major medical insurance program now widely known as Connecticut 65.

In response to a request from Chairman McNamara under date of March 10, 1964, I furnished to him on April 15 extensive information with respect to Connecticut 65. This included statements that I was privileged to make to the insurance committee of the Connecticut General Assembly on March 7, 1961 as to the purpose of the proposed

legislation under consideration, and at a public hearing in Connecticut on October 23, 1963, giving an accounting of Connecticut operations to that time. I do not believe it is necessary for me to repeat here all of the detail which is contained in those two statements.

I

In 1961, I stated to the insurance committee of our legislature our conviction that most senior citizens can and want to take care of their own needs, given an appropriate vehicle, and that we proposed to offer them an additional insurance opportunity especially designed to protect against major financial losses due to the cost of medical care. said that we proposed to do this without any requirement that the individual submit medical evidence of good health. In Connecticut 65 we have carried into effect these proposals and are proud of the accomplishments of this program.

What are the initial results of this private experiment in the field of voluntary health insurance coverage for the elderly? Well, in the first 29 months of its existence, Connecticut 65 gave major medical protection to 35,166 individuals whose average age was slightly over 74. Approximately 25 percent of these enrollees have received benefits in excess of $6 million with an estimated additional $1 million awaiting final claim filing. This represents an average of $817 per claimant.

This average of over $817 each for approximately 25 percent of the enrollees in the space of 29 months is clear evidence of the need of senior citizens for Connecticut 65 coverage and of its value to them.

At the end of our initial enrollment period in 1961 we insured 21,849 people. On March 1, 1964, we insured 25,479 people. These included 15,619 of those who became insured in October 1961. This persistence is notwithstanding the lapse rate contributed to by the high death rate among this age group, which is a major problem facing any health insurance plan to cover the aged. We estimate that at least 35 percent of the dropouts in Connecticut 65 have been the result of deaths.

We have estimated that Connecticut 65 covers about 10 percent of the residents of the State 65 years of age and over. The number of aged in Connecticut has increased and our enrollment has increased correspondingly.

We think that over 80 percent of our 260,000 senior residents now have some form of basic health insurance coverage. Most of them have hospital coverage. For example, Connecticut Blue Cross covers 160,000 people 65 and over. Many employers continue health insurance for retired employees, including the major medical coverage they provide for active employees, and this trend has been accelerating. Inaddition, some 50,000 to 60,000 have coverage through individual insurance company contracts. Basic health insurance is widespread among Connecticut senior citizens. Thus, it is not surprising that only slightly over 3,600 enrollees carry their basic benefits with Connecticut 65.

It is significant, however, that four out of five Connecticut 65 enrollees have chosen the high option $10,000 major medical coverage. Furthermore, the premium payments that Connecticut 65 enrollees make for major medical insurance are in addition to payments they make for basic health insurance.

I have referred to the fact that Connecticut 65 was a pioneering effort and that it was experimental in nature. Connecticut 65 is continuing to employ various marketing methods, always seeking those most productive per dollar of outlay. By this means, we expect continually to improve the position of Connecticut 65 and to assure the public of a continuing opportunity to obtain good major medical coverage at lowest possible cost.

As you are no doubt aware from the material furnished you by others as well as by Connecticut 65, the cost of health insurance care has been increasing and is expected to continue to increase due to costs attendant upon the improvement in medical knowledge and medical techniques, as well as to the upward trend in labor and other costs. Increases in the charges for health insurance must, of course, follow increases in cost of the benefits provided. Connecticut 65 increased its rates effective January 1, 1964, and you will no doubt be interested in the results. The net loss in Connecticut 65 enrollment was less than 1 percent at the time the increase was made effective. Furthermore, since January 1964 when the rate increase went into effect, new enrollees have once again exceeded terminations so that even this modest loss will be completely recovered very shortly.

In conclusion, may I say that we are proud of our program thus far and expect that they will be still better in the future. Furthermore, it is to be noted that the example set by Connecticut 65 has led other States to inaugurate similar programs, programs that are but one more illustration of the dynamic way the insurance companies of this country are meeting the needs of its citizens.

Senator MCNAMARA. Thank you, Mr. Seery.

You have recently had an increase in your rates, and this has to be approved by the State insurance commissioner?

Mr. SEERY. Yes, sir.

Senator MCNAMARA. You indicated at the time that this was not a sufficient increase, that you expected to have to have further increases? Mr. SEERY. That is correct. And in my statement I cited Wilbur Cohen, Assistant Secretary of Health, Education, and Welfare, who a few years ago stated that hospital care costs would increase 5 to 10 percent a year for the foreseeable future. And it is just bearing out what Mr. Cohen had said.

Senator MCNAMARA. Is it true that your company received the aid of many insurance executives who donated their services to your program?

Mr. SEERY. In launching any program such as this, Senator, it requires a little extracurricular work. We felt this was a very worthy cause and it might have meant we worked a few Saturdays and Sundays that we otherwise would not have, but we were more than willing to do it.

Senator MCNAMARA. I am sure it is a good cause.

Does this reduce the cost of your plan somewhat? If you had to hire these executives, I suppose it would add a great deal to your overhead.

Mr. SEERY. I presume it would. Depending on the length of time they spent there.

This is significant. In our original testimony we estimated the expense would be between 10 and 122 percent, including a State

premium tax of 14 percent, which we pay and New York does not pay. For the first 9 months of 1963, I have these figures available, they were in my testimony before the Connecticut Insurance Commission. We were to target with 12.4 percentage points which represented State premium tax.

Senator MCNAMARA. Do you feel you will continue to get the help of these insurance executives?

Mr. SEERY. As a matter of fact, it is not needed today to that extent. The executive committee meets possibly three or four times a year; we have a paid staff running the organization now, and our contribution is rather limited currently.

Senator MCNAMARA. Do you pay the people for attendance at the executive committee meetings?

Mr. SEERY. No, as a director of an insurance company of which you are an employee you do not get fees for attending a director's meeting, so we do not here either.

Senator MCNAMARA. This goes in as part of their regular job?
Mr. SEERY. That is correct.

Senator MCNAMARA. Do you have any comments?

Senator FONG. Are the 32 insurance companies domiciled in the State?

Mr. SEERY. No; as far away as California, the Beneficial Standard, Continental, Allstate, from New York we have the Equitable, the Hancock, Massachusetts Mutual.

It being a pioneering venture, only 32 entered this one-
Senator FONG. Did you invite any insurance company-

Mr. SEERY. We invited any insurance company that had $100,000 or more of premiums in the State in order to keep the expenses down. Senator FONG. They were all requested to participate?

Mr. SEERY. No; they were given the privilege of participating. We Connecticut companies would have gladly taken it all had they not elected to come in.

Senator FONG. Do you know how many States have such policies? Mr. SEERY. It is pretty hard to keep count. I heard Mr. Miller speak here. I saw recently where the State of Michigan is contemplating such a program as this. Whether the legislation has been enacted or not, I do not know.

Actually, in effect today we have Massachusetts, Connecticut, New York, Texas, and California, with, as Mr. Miller said, Virginia and North Carolina enrolling currently. Legislation has passed in Ohio, and it is coming at us pretty fast right now.

Senator FONG. Have you given to this committee some of your brochures?

Mr. SEERY. Yes; those were sent to the committee here I believe about 2 weeks ago.

Senator MCNAMARA. We have them.

Senator FONG. Thank you very much.

Senator MCNAMARA. Thank you very much again, sir.

Our next and final witness is Mr. Herbert Woods, general manager of Massachusetts 65 Health Insurance Association of Boston, Mass. Will you see that the reporter gets the name of your associate?