As to adequacy, the average portion of the total hospital bill covered by our Blue Cross benefits is: For Senior Texan coverage, 85 percent; for Kerr-Mills-OAA 77 percent; and for other coverages, 75 percent. Monthly rates for Blue Cross coverage range from $2.94 to $8.75 for an individual, and from $5.80 to $17.50 for husband and wife. The Senior Texan rate is $8.75 per person. OAA recipients pay no part of the monthly charges, of course, but we receive from the State $8.68 per month per recipient, which includes medical surgical coverage; $6.57 of this is allocated to the hospitalization portion of the coverage we provide. Senator MCNAMARA. Thank you, Mr. McBee. Are you familiar with the New York 65 plan? Mr. McBEE. Am I familiar with it? No, sir; not to a great extent. Senator MCNAMARA. I was about to ask you how it compared to the Senior Texan plan. I assume they are similar? Mr. McBEE. My impression is that it is similar, but I could not compare it exactly. Senator MCNAMARA. Apparently the rates are the same. They gave us a rate of $8.50; you give us a rate of about $8.75. Mr. McBEE. Yes, sir. Senator MCNAMARA. This old-age assistance group that you refer to, you say consists of more than 200,000, covered under your plan now. Is this a separate plan for these people in your Blue Cross? Mr. McBEE. Yes; it is a separate specific individual plan; yes, sir. Senator MCNAMARA. That includes both hospitalization and medical care? Mr. McBEE. That is right, with certain limitations on the medical care, $200 surgical plan in-hospital medical benefits. Senator MCNAMARA. Is this premium paid directly by the old-age assistance program to Blue Cross, or is it paid to the State and immediately turned over to you? Mr. McBEE. It is paid to the State and comes to us from the welfare department. Senator MCNAMARA. Very good. Senator Neuberger, do you have any questions or comment? Senator NEUBERGER. Yes; I thought that was a unique plan. I never realized that that is the way a State was using its Kerr-Mills. How many people are covered in the State of Texas by Kerr-Mills? Mr. McBEE. 228,780. Senator NEUBERGER. Do they have to submit to a means test? Mr. McBEE. Well, they have to be recipients of old-age assistance and to obtain old-age assistance they do have to undergo this means test and, of course, you would not be providing old-age assistance unless they were indigent. But it might interest you more, Senator, to know that this is an insurance plan, the welfare department put this out on bids. Senator NEUBERGER. What is the difference, then, between that special 65-and-over plan and the Senior Texan service? Mr. McBEE. The special 65 was a plan that we developed earlier specifically for those 65 and over; in fact, other people do have that, but it is a plan with which we made concentrated efforts to enroll those over 65, and while it was available to others, we did separate and segregate those over 65 so that we could have more information on their experience. Then the Senior Texan is available only to those 65 and over, which was developed later. Senator NEUBERGER. Can they come in at any age? Mr. McBEE. The Senior Texan? Yes, ma'am, there is no age limit. Senator NEUBERGER. You have said, I think, that the administrative costs are how much for Blue Shield? Mr. McBEE. For Blue Shield, our overall plan, or only the oldage group? Senator NEUBERGER. I am more interested in the old age because I am wondering how much of it is borne by State welfare? Mr. McBEE. In our contract with the welfare department we took the contract and agreed upon a guaranteed retention of only 3 percent. Three percent is all we can retain. Any remainder has to be used for benefits or returned to the welfare department. The contract has been revised. The agreement was that after the first 12 months we would revise it. We did expand the benefits some, and our actual cost on that is running about 2.51 percent for handling the welfare department program, but the State is assured of 97 cents out of every dollar. Senator NEUBERGER. But who does the investigation to find out if the person is deserving of the welfare assistance? Do you share the cost of the means test with the State? Mr. McBEE. No, ma'am; not as such. Not directly. No, ma'am. Senator NEUBERGER. So the cost is really borne by the taxpayer then? Mr. McBEE. That is right. At the first of the month the State department says, "We have 228,000 recipients; here is your check.” The doctor certifies their need for hospital care, and, of course, the local welfare department person certifies that they are recipients of old age and if they are, they are entitled to the benefits. Senator NEUBERGER. But if you had to do the investigating it would be quite a bit different; would it not? Mr. McBEE. There would be some difference. Senator MCNAMARA. Would you yield at that point? Senator NEUBERGER. Yes. Senator MCNAMARA. You are discussing the old-age assistance people now. Is there a limit to how much you pay under this old-age assistance plan? Mr. McBEE. Yes, sir. Senator MCNAMARA. How much a day do you allow? Mr. McBEE. On the room accommodations all Blue Cross members in Texas are on a cash allowance indemnity basis on the room only. On the room we allow $10 for accommodations for 15 days. All other benefits are covered for 15 days, and then after 15 days half of all ancillary benefits and $6 on the room, with no limit as to the number of days. For instance, we have some people in the hospital that were in there when we took the program in 1961. Senator MCNAMARA. Well then, somebody has to pick up the difference between the $10 which obviously would not be the total cost of the hospital room in most of the urban areas. These people cannot pay it themselves because they are old-age assistance people to start with and they have passed a means test. So who pays the difference to the hospital? Mr. McBEE. Somebody is privileged to pick up the difference. Now, we have many hospitals who report to us they are being paid 100 percent; neither we nor our welfare department have ever had a report of any recipient being badgered for money. Usually some relative or friends will say, take care of dad or mother, we will pay you the difference. They have pretty good coverage. Then, too, it is surprising how many of these people have other insurance policies and a number of them already had Blue Cross coverage and many of them retained it, and a surprising number of them have their old-age benefits and other insurance which supplants the difference. Senator MCNAMARA. Even though they have other insurance policies they are still eligible under the old-age assistance program? Mr. McBEE. Yes, sir. Senator MCNAMARA. That is interesting. And then about $10 a day is paid under your plan and the rest would be paid in some other manner either through charity or through relatives or other people who are responsible for the old-age person? Mr. McBEE. I did not quite get your question. Senator MCNAMARA. As I understand your answer, since the $10 a day does not pay the hospital bill that is allowed under your plan, somebody has to pick up the difference and you think it is done through relatives or charitable organizations; is that correct? Mr. McBEE. That is only on the room accommodations. Senator MCNAMARA. I am talking about the room accommodations, too. Mr. McBEE. All right. Yes, sir. It is picked up. Sometimes it is picked up, sometimes it is not. Hospitals Senator MCNAMARA. Then the hospital loses the difference? Mr. McBEE. They lose it or it becomes a community responsibility, but by and large someone pays it, or otherwise it does become a community responsibility. Senator MCNAMARA. Thank you. I did not mean to interrupt you. Senator NEUBERGER. That's all right. I am through. The State pays about $108 a year for each of those. Do you provide $10 a day hospital care on a return of do you give more than that on the premium? It says here, $8.68 you receive for each recipient. That is about $108 a year. Mr. McBEE. Ma'am? Senator NEUBERGER. $104.16. Mr. McBEE. $104.16. Now, your question, Senator, then was? Senator NEUBERGER. You give medical-surgical coverage included in that? Mr. McBEE. Yes, ma'am; $6.57 of that is allocated to the hospital care, and the remainder for medical-surgical coverage. Senator NEUBERGER. So, six from eight is two-$24 a year from the State cover $10 a day hospital? Is that right? Mr. McBEE. I am not sure I understood your question. Senator NEUBERGER. Out of the $8.67-it is the other way, I am reading it without the semicolon, the other way, $24 a year is for the medical-surgical coverage then? Mr. McBEE. That is right. That is $2.11 per month for medical and surgical. Yes, ma'am. Senator NEUBERGER. Thank you. Senator MCNAMARA. Senator Williams? Senator WILLIAMS. Yes, Mr. Chairman. For your old-age assistance program, you have a per diem indemnity, $10 a day for 15, reducing to $6 a day; is that right? Mr. McBEE. Yes, sir. Senator WILLIAMS. Is it a per diem indemnity for your other programs outside of old-age assistance, regular Blue Cross coverage, or is that a comprehensive payment? Mr. McBEE. It is per diem indemnity on the plan for all of our plans except for some specially written national contracts. Senator WILLIAMS. Is this characteristic for all Blue Cross plans, do not some for the period of coverage pay the entire bill for a period where there is no contribution from the patients to make up the difference between the indemnity and the total bill? Mr. McBEE. You say is that characteristic? Senator WILLIAMS. Yes. Mr. McBEE. Yes, sir; on the regular enrollment, not talking about the aged? Senator WILLIAMS. That is right. Mr. McBEE. Characteristically all of the benefits are paid, and the room in the majority of the plans we happen to have an indemnity on the room, and in our regular services you can buy any indemnity you want. Senator WILLIAMS. I see. Just one further question. Do the hospital bills to you, that come to you, reflect any discount to Blue Cross-covered patients? Mr. McBEE. No, sir; they do not. Senator WILLIAMS. Thank you. Senator MCNAMARA. Senator Fong? You have in this program of Blue Cross about 1.75 million persons? Senator FONG. And of the 1.75 million persons, those who are 65 and over were 324,787? Mr. McBEE. That is right. Senator FONG. For the Senior Texan you say the coverage of the average total hospital bill is 85 percent? Mr. McBEE. Yes. Senator FONG. For Kerr-Mills, coverage is 77 percent? Mr. McBEE. Yes, sir. Senator FONG. And for other coverages, 75 percent? Mr. McBEE. Yes, sir. Senator FONG. A person under Kerr-Mills or OAA as you have it here is immediately indigent; is that correct? Mr. McBEE. Yes, sir. Senator FONG. He is unable to pay for any of his hospital bills? Mr. McBEE. That is right. Senator FONG. So, when you say 77 percent, what do you actually mean? If I were a medically indigent and I came within the provisions of Kerr-Mills-OAA and I went to the hospital and I had a bill, say, of $100, would the $100 be paid by Blue Cross? Mr. McBEE. No, Senator Fong, on the basis of what this says it would be $77. That is the average payment. Senator FONG. You would pay the hospital $77? Mr. McBEE. On the average. Senator FONG. You will pay $100 but you find that you lose $23? Mr. McBEE. No; we don't just pay that amount. We don't just pay the $77. Senator FONG. In other words, if there was a bill of $100 for me in the hospital, you would pay $77 of that? Mr. McBEE. If it happened to work out that way, yes. This $77, you understand, is an average. Let me give you another picture here, Senator. You see we have 15 days we term full coverage, it is not exactly, but it is where they get the $10 room and the full benefits. Now, this figure varies greatly, which is not included here. 87.1 percent of our OAA-Kerr-Mills people get out of the hospital within this 15day period when they have full coverage on all ancillaries and $10 on the room, and for those we pay 88.4 percent of the bill. In other words, for 87 percent of all Kerr-Mills patients we pay 88 percent of the hospital bill. But when you get into this long-stay cases it pulls it way down, of course. Senator FONG. I understand that. What I am saying is for an individual who goes to the hospital under OAA-Kerr-Mills plan in which you have a contract with the State, you said that 88 percent of his hospital bills is paid for in the majority of them. Mr. McBEE. For the majority, yes, sir. Senator FONG. And who picks up the other 12 percent? Mr. McBEE. That is what Senator McNamara, I believe, was asking. Usually it is picked up by relatives, I would say. Periodically there may be a chargeoff, but we have actually not had reports of chargeoff. I know there must be some charged to the community which usually supports the majority of the hospitals. There is some chargeoff, many of them, to our surprise after we got into this, have other insurance policies, bought maybe by themselves but maybe by their relatives; and some of them have as many as five. Senator FONG. If they are not able to pay for it, it is forgotten? Mr. McBEE. Yes, sir. Senator FONG. If they are able to pay for it Mr. McBEE. Yes. Senator FONG. You are now contracting with the State to take care of their old-age assistance recipients at the rate of $8.68 per month per recipient? Mr. McBEE. Yes. Senator FONG. And of that, $6.57 is allocated to hospitalization? Mr. McBEE. Yes, sir. Senator FONG. In other words, you have stated to the State government of Texas that for $78.84 a year, you will provide hospitalization for the aged? 33-420-64-pt. 3- 4 |