First, health coverage through collective bargaining for those over 65 who are still working. And second, the effectiveness or lack of effectiveness of efforts to extend coverage to retired workers by private insurance through group arrangements.

Now, as to No. 1, health coverage through collective bargaining for older people, who are still working. In gaging the effectiveness of this whole approach we examined the claims of the insurance industry and we find that apparently in an attempt to show that there is no need for a Government program the figures have been distorted and grossly misinterpreted.

The facts are, as we demonstrated at length in our paper, that few older workers have protection. Many fewer older workers have protection than has been claimed. In fact, we understated our case in our paper and I would call attention to two corrections that we have made on the copy that we have filed with the reporter.

On page 3 of our statement in the third full paragraph on line 3 you need to strike out "the year-round," and on page 4 dealing with the same subject, the second line after the end of the quote at the top of the page strike out again "year-round." Both these references are to those who have significant employment but not full year-round employment.

What happened, apparently was that the insurance industry made an estimate of the number of employed people who had some kind of protection under a group policy, then they projected the same proportion into this group of aged employed persons. But the fact is that a much, much smaller proportion of the people age 65 and over have the same type of employment that characterizes those under age 65 so you cannot project this. The estimates that they arrive at on the basis of such a projection are completely erroneous. Now, No. 2, health coverage for retired workers through collective bargaining. Here in our paper we cite extensively the responses to telegraphic requests we sent to some 30 of our largest and more experienced affiliated unions. The experiences that they cited in response and these are people who are on the frontline of the collective bargaining efforts to meet the problem of health care for their older workers and retired workers the experience that they cited in response to our inquiry can be summarized as follows:

(a) Most companies do not extend health insurance to retired employees. I do not mean insurance companies, I mean employing companies. Most companies do not extend health insurance to the retired employees. Those that do are usually the larger concerns. We know that while General Motors and the big steel corporations and all are in our minds often when we think of employers, we know that still the vast greater proportion of workers in this country do not work for these giant companies, they work for much smaller companies.

Now the movement, such as it is, to extend insurance to the retired employee has not caught on at all among the smaller employing units that affect such a great number of our people.

Second, many workers are not eligible because the health benefits are tied to the pension plan and many workers do not qualify for the benefits of the pension plan because their employment with one company has not been long enough and therefore do not qualify for the health benefits.

The best estimate we have is that from a third to a half of those covered under the pension plan will have any expectation of having the protection of the health plan after retirement.

Third, the costs are prohibitive. In very few of the plans, while they may extend beyond retirement, does the employer pay the whole cost or a significant part of the cost. So that while the retired worker may have the privilege of extending at the group rate, the costs are prohibitive and many of the people drop out when they go on a reduced retirement income.

And fourth, the benefits to the retired workers are almost always reduced; that is from those provided in the plan. Now, this is particularly significant because we know that when people reach retirement age their need for coverage rises dramatically, but under these plans that extend the protection after retirement the protection drops.

It drops just when it is needed most, and in this respect I would like to call the committee's attention, Mr. Chairman, to a very significant report that just came out last week, in fact it reached our building last Friday, after, under the rules of this committee to get the statement over, our statement was already on the mimeograph-and you know what is on the mimeograph is like the laws of the Medes and Persians, it cannot be changed at that late date. This very significant study, a research report from the National Industrial Conference Board, which is not, need I say to anyone in this room, a labor-oriented research group, but an industry-oriented research group.

They have here in their "Studies in Personnel Policy," No. 190, a study of corporate retirement policy and practices, chapter 6, which deals with the coverage of health insurance and hospital insurance under these retirement policies, and I suggest, Mr. Chairman, that your committee get this chapter 6 and make it a part of the record, but at this time I would like to cite what this industry research group says, and I quote:

By and large, companies that continue commercial health insurance for retired employees do not extend the full scale of benefits provided by the program that covered the employee prior to retirement. As table 25 indicates, 65 percent of the base plans and 86 percent of the major medical programs in this study reduce coverage at retirement.

Continuing the quotation after skipping two short paragraphs:

Apparently the reduction of health insurance coverage at retirement is more widespread now than some years ago; at least under base plans, the only type for which data are available. Thus, in the 1955 conference board study only 50 percent of the 71 companies that continued hospital coverage after retirementreduced benefits as compared with 65 percent in the current study.

In other words, this picture that has been given to us of an onward march-just leave private industry alone; it will take care of the problem is not supported by one of the most reputable research organizations sponsored by industry itself.

In conclusion, Mr. Chairman, I would say that in the light of our experience and I submit that our experience is the most extensive in the country with the collective bargaining effort-we concluded that meeting the health costs of the aged through extending collective bargaining provisions is hopeless.

What is needed in this area is clearly the typically American, pluralistic approach, a basic Government plan through social security, sup

plemented by all kinds of private arrangements, the unilateral plans of employers as well as those negotiated through collective bargaining, and here is where our most basic difference with the insurance industry

rests.

It is their contention primarily that they can do the job alone and that no Government program such as that contemplated in KingAnderson, is needed. We make no such contention in support of KingAnderson. We say that King-Anderson as representing a Government program, a basic Government program, like social security, should provide the floor of protection for all of the working people of this country, and that there is a place for insurance. There is a place for private insurance. There is a place for commercial insurance. There is a place for the Blue Cross, the Blue Shield, and the others that have made an important contribution to this problem. But its place is to supplement the basic protection afforded by a Government program of social insurance.

This is a very brief summary, Mr. Chairman, and I thank you for the opportunity of presenting it.

Senator MCNAMARA. Thank you very much, Mr. Cruikshank. We appreciate your brevity and we know you could go on at great length. We are sorry the time has caught up with us. You concluded by indicating support for the King-Anderson plan.

There is before the Congress now some thought of increased social security benefit payments. Will these increases that are contemplated, in your judgment, be adequate so that people could buy proper health insurance protection under the private plans now available?

Mr. CRUIKSHANK. Well, if cash benefits were increased, of course, Senator, it is obvious that there are a lot of things retired people could buy. There has been no increase in cash benefits since 1958 and there should be some increase in cash benefits in social security, but this is not the best way to provide the health insurance that is needed, primarily because most of these people would have to buy the individual policies that are available and these are the most wasteful and the most extravagant and the ones that give the least return for the dollar.

The insurance industry itself points out in their publications that these individual policies yield only about 50 cents on the dollar in benefits paid, so this is not the way to meet the problem. The elderly need the improved cash benefits but they should not have to spend them for this kind of wasteful and extravagant insurance.

Senator MCNAMARA. These increased benefits would catch up with the increased cost of living to some degree. So it would be less than what is required to do that. Is that your judgment?

Mr. CRUIKSHANK. I am not quite sure I understand you, Senator. Senator MCNAMARA. Actually, you say we have not had an in

crease

Mr. CRUIKSHANK. In the cash benefits in social security, I do understand you now. Yes, we do need those to catch up with the increase in the cost of living; yes, sir.

Senator MCNAMARA. This probably would not even do that, the proposed increases now before the Congress.

Mr. CRUIKSHANK. There are various proposals. Let us assume for the moment that the increase was commensurate with the rise in the cost of living, then you would have barely kept pace with the real benefit that you had in 1958.

Senator MCNAMARA. You cite some figures in this study that recently came out. We have instructed the staff to see that they get a copy of it as it applies to private employers.

Senator MCNAMARA. Now, is it not true also that Government plans generally reduce the benefits after retirement as well as in private industry? You pointed out that under private companies the benefits are reduced after retirement. That is also true in Government plans, is it not?

Mr. CRUIKSHANK. Well, the Government plan for the retired employees is a different plan basically.

Senator MCNAMARA. Yes, it is a different plan, but they also face the same reduction upon retirement that you made reference to under the private plan? I mean if somebody works for a U.S. Senator, or the Senate, no matter what their level of employment is, when they retire their health insurance benefits are reduced, too.

Mr. CRUIKSHANK. The health insurance program covering those Federal employees that were already retired when Federal employees health insurance legislation was enacted, provides more limited benefits than does the program for actively employed Federal work

However, Federal employees who have retired from active employment since that time continue to draw the same benefits and make the same contributions as they did while they were working.

Senator MCNAMARA. I see. Now, we are going to ask the members of the committee, in view of the hour and the patience that has been displayed, to be as brief as possible.

Mrs. Neuberger, do you have any questions?

Senator NEUBERGER. This is somewhat of a comment, but through these last three witnesses it was indicated that the best buy for the insured was to buy a deductible policy, and one suggested a $500 deductible with a much smaller premium. I was thinking that actually the fellow who can afford a $500 deductible is the one who is really able to pay a greater premium, and you constantly put the emphasis on the low-income family. In your statement, which you did not read verbatim, you have a point that always bothered me with the private insurance companies, and that is failure to meet the premium.

You say here on page 9 that according to a survey nearly one-third of the persons without insurance who were formerly insured had to drop their coverage because they could not afford to make the payments or found them too expensive. This is the x factor in all these private insurance companies.

We do not know how many people signed up and just could not meet the $9 a month payment or whatever it was. This is, of course, the value of social security being deducted during working years before retirement.

Mr. CRUIKSHANK. The social security approach in effect gives them a paid up policy at the time they become eligible.

Senator MCNAMARA. Thank you, Senator Williams?

Senator WILLIAMS. Just one question, Mr. Chairman. Have you heard reports from people complaining that the coverage they get, in fact, is not equal to the coverage they thought they had bought?

Mr. CRUIKSHANK. Yes, Senator; we have complaints, people write us letters saying that they are oversold, that they thought the policy

covered more than it did.

I do not know that we have had any complaints that people did not get the coverage that was actually in the policy, but they have been oversold in these policies. They have been presented as meeting the problem and people buy them and then they find that there is some fine print in the policy.

Senator WILLIAMS. Is this widespread, do you know?

Mr. CRUIKSHANK. It is hard for us to judge. I would say that we have not had a volume of mail and complaints about it that would indicate that there is any great tidal wave of objection. We get a considerable amount of complaint on this kind of thing, but I do not know that you would call it widespread.

The greatest number of complaints we have had relate to the fact that people carry these policies for years and pay premiums on them for a long time, then when they get ill for the first time and make a claim for benefits, the company cancels the policy. This is widespread. Senator WILLIAMS. Thank you.

Senator MCNAMARA. Thank you very much.

We appreciate your help and I am sure the information you have furnished us will be of great help to the committee.

I want to announce that tomorrow morning we will open the session at 10:15 to give us a chance to answer the first quorum call which we will expect will be the same as today. We will meet in this room. (Whereupon, at 1:10 p.m., the hearing was recessed, to reconvene at 10:15 a.m., Tuesday, April 28, 1964.)