institutionalized and thus all of the aged. The first survey in 1952 found that 26 percent of the noninstitutional population 65 and over, had insurance.

The next survey 42 years later in September 1956, showed the proportion of aged with insurance had increased by two-fifths to 37 percent. To latest survey, 6 years after the second, shows the proportion of aged with some insurance against hospital expense again had increased by two-fifths. The latest period, of course, witnessed intensive efforts by the insurance industry and the nonprofit organizations to cover the aged.

But we should not overlook the opposite side of these data, that is the number of persons without insurance. Despite the increases in the number who have insurance, there remain between 8.3 to 8.5 million aged persons with no coverage.

It is estimated that 9.7 million aged, including persons in institutions, had no coverage in 1952. Thus, during the period March 1952 to December 1962, the number of aged persons without health insurance has dropped only about 114 million or 12 percent.

Our survey has one significant measurement of the effectiveness of the coverage in force for the aged. It has produced data on the percentage of hospital costs met by insurance for those couples and nonmarried men and women who have hospital insurance. I would like to stress that the figures I am giving you relate to people who have insurance.

These data suggest wide variance in the effectiveness of the coverage. For example, one-third of the insured married couples with hospital stays reported their insurance paid 90 percent or more of the costs. For one-fifth, their insurance met 75 to 89 percent of costs. In another one-fifth of the cases, insurance met 50 to 74 percent of costs. But one-fourth of the couples with hospital stays and with insurance reported their insurance paid less than 50 percent of the hospital

expenses.

The data for no.married men and women show a similar picture. It should be noted 10 percent of those with hospital insurance found that their insurance paid no part of their hospital costs. Previous extended illnesses may have exhausted their benefits, the specific situation may not have been covered by their policy, and in a few cases the insurance may have been taken out after the hospital stay.

Mr. Chairman, I have some figures here on hospital utilization, but in the interest of time perhaps I should not read those now. Let me read just one or two of the important ones.

The high cost of hospital care presents special problems to the aged because of the large bills they often face. Our survey discloses that the mean average cost of general hospital stays in 1962 was close to $600 for married couples and almost $540 for the nonmarried who knew the cost of their care and received no public assistance or other agency help. The total medical care costs of the hospitalized aged who received no public assistance or other help averaged $1,200 in 1962.

The average stay of aged persons discharged from general hospitals was 15.1 days. When readmissions were taken into account, the average was 17.7.

33-420-64-pt. 1--2

In addition to their high rate of utilization of short-stay hospitals, the aged fill most of the beds in long-stay hospitals and nursing homes. About 750,000 persons aged 65 and over received care in psychiatric, tuberculosis, chronic disease, and other long-stay hospitals and nursing homes in 1962. The average stay in the long-term facilities was 37 weeks.

When aged persons in short-stay and long-stay medical facilities in 1962 are combined, more than one out of every six aged persons in the United States still living at the time of interview was in some medical facility during 1962. The figures would be higher if we could include dependents.

Among the wealth of data from our survey is another statistic that may be meaningful in the context of your hearings. The statistic is this: we found that among all the aged married couples, more than two-fifths of the spouses were "nonaged." That is to say, they were under 65, although the husband, or occasionally the wife, was over 65. Frankly, we were surprised that the proportion was so high.

We assume that in a number of cases, hospital insurance coverage for the person aged 65 or over derived from the employment of the younger member of the couple. We know the income of such couples was higher because of the earnings of the younger spouse.

In conclusion, I would like to thank the committee for giving us an opportunity to present these results of the 1963 survey of the aged. The problem of aging is a many faceted problem. It is important to define its dimensions and to identify, as fully as possible, the special characteristics of the aged population.

I hope this brief presentation, and any additional information we can make available to you, will help the committee in its task.

Senator MCNAMARA. Thank you very much, Doctor, I am sure your presentation will be very helpful to the committee.

You use the term hospital insurance in your survey. How do you

define this?

Dr. MERRIAM. Hospital insurance is defined to include any insurance which pays all or part of the hospital bill for the hospitalized person. It does not cover the doctor's or surgeon's bill or the bill for special nurses, but normally includes the cost of other services, such as operating room, laboratory costs, as well as room and board. I think that is a fairly standard definition.

Senator MCNAMARA. Thank you.

I see your survey indicates 9 million aged have some form of hospital expense insurance at the end of 1962. Now, the health insurance companies show a total of 10.3 million, I believe, covered at the close of 1962.

Do you have any explanation as to the cause of the difference in these figures?

Dr. MERRIAM. Well, I do not think any one knows all the reasons. We would be the first to say that in any survey there is a question of sampling variability. However, there are 9 chances out of 10 that if we had a complete count of all the aged, the figure would not vary more than about 250,000 above or below the 9 million-it could be below as well as above.

So far as the insurance industry figures are concerned, I believe the estimate is based on reported data for companies which cover certainly

less than 100 percent, something like 70 percent of the business. However, the great unknown really is the extent of duplicate policyholding. All any one company can report is the number of policyholders and I believe that the estimate of duplicate policyholding used by the industry is based on a relatively limited number of cases in a study made several years ago.

It is really difficult to get accurate figures on this. We have thought of trying to do it and wondered how it could be done better. That is one reason why we think that the more important figure rather than the number covered is the proportion of the medical costs covered by insurance.

Senator MCNAMARA. Thank you very much.

Do you have any comments or questions, Senator Dirksen?
Senator DIRKSEN. No, sir.

Senator MCNAMARA. Senator Muskie?

Senator MUSKIE. Dr. Merriam, there has been a great deal of discussion about the quality of hospital insurance coverage and particularly for the aged. If you were to discuss the quality of coverage, what elements would we be interested in?

Dr. MERRIAM. Well, by quality of coverage, I think one means essentially, what proportion of the bill would it meet? I mean, a policy paying $5 a day for 20 days is low quality simply in the sense that it is not going to meet the risk.

That is why I gave the figures on the proportion of the bill that is met as being, I think, the best measure.

Senator MUSKIE. We would be interested in the length of stay covered by the policy, the amount per day payable by the policy.

Dr. MERRIAM. That is right, and I think you would be interested in the cost as well, although the better the quality the higher the cost inevitably.

Senator MUSKIE. I see, and this combination which is part of quality, that is the cost and the amount of service that is provided, the combination of these two elements is likely to hit the group which is not covered the hardest.

Dr. MERRIAM. The group which is not covered will not have any. There is a relation between high income and adequacy of protection. Those with higher incomes are more likely to be covered, and more likely to have more extensive coverage than those with low income. The latter are unlikely to be covered at all, but if they have health insurance they are likely to have a less adequate type of coverage.

Senator MUSKIE. In other words, in your statement you said that the least likely are those who are in poor health, the very old, those not employed, and those with low income.

Dr. MERRIAM. In general they have no coverage.

Senator MUSKIE. But to the extent that they or the group just above them have coverage, the quality of the coverage is likely to be low, because of these very factors?

Dr. MERRIAM. By and large, yes. There will be some who are in fortunate circumstances.

Senator MUSKIE. Have you had occasion at all to examine bankruptcy records to evaluate the impact that health costs have upon bankruptcies?

Dr. MERRIAM. No; we have not.

Senator MUSKIE. I would like to recommend it to your attention. We have had some casual look into this problem in the Maine bankruptcy records and it is quite clearly evident that medical costs by and of themselves are the factor often which tip a person into the bankruptcy courts, and very often because of the health costs of dependents and of aged dependents.

I think that the total social cost of medical care ought to include a study of this particular factor.

Dr. MERRIAM. Our Bureau of Federal Credit Unions has made several studies of the reasons why people have to borrow from the credit unions and medical care always stands out. I do not remember the precise figures, but it is always a very important factor there.

Senator MUSKIE. Does your survey give us any late data on the income of the aged?

Dr. MERRIAM. Income of the aged? Yes; we do have data, and I would be glad, if you would care to have it in the record, to submit the article which gives great details on income.

For the entire aged population, the average median total money income for married couples was $2,875 and for nonmarried, it was $1,130. We have this broken down separately for those who are beneficiaries of old-age survivors and disability insurance and those that are not.

Senator MUSKIE. Do you have any judgment on what it would cost an individual over 65 to get reasonable quality insurance coverage? Dr. MERRIAM. That varies very greatly depending on the community. We do know that at the time we made a study last year of the special nongroup coverages for the aged which Blue Cross put out had a median cost of $112 a year per person. There was a substantial

range.

Senator MUSKIE. But what are the elements of the program that would buy?

Dr. MERRIAM. I am not sure I can attach a median cost to a median policy quickly.

Senator MUSKIE. I appreciate the problem. I am interested in getting it if you have it, but I am not interested in posing a problem here. Dr. MERRIAM. I suspect that what this came close to was, oh, say 70 days of hospital benefits, not necessarily a service benefit.

Senator MUSKIE. Seventy days of hospital benefits?

Dr. MERRIAM. Seventy days probably in a year, not necessarily of service benefits, but as I say, this is a little difficult. There are many different as you know, 77 different Blue Cross plans with 77 different sets of benefits, and when I give you the median dollar figure, it does not necessarily take into

Senator MCNAMARA. Will you yield?

Senator MUSKIE. I will be happy to yield.

Senator MCNAMARA. May we have a copy of the material you are referring to for the subcommittee record?

Dr. MERRIAM. Certainly.

Senator MCNAMARA. Will you see that it is submitted to the sta? 1

1 Blue Cross-Blue Shield Nongroup Coverage for Older People." research report No. 4. U.S. Department of Health, Education, and Welfare. Single copies available upon request of Publications Branch. Division of Research and Statistics, Social Security Administration, Washington, D.C., 20203. Copy on file with subcommittee.

1

Senator MUSKIE. One other question.
Senator MCNAMARA. Go right ahead.

Sentaor MUSKIE. To what degree are the policies available to the elderly cancelable or noncancelable?

Dr. MERRIAM. I am afraid I cannot answer that with great assurance. Many of them are cancelable, of course. I would assume the majority, but I do not have any facts on that.

Senator MUSKIE. That is all, Mr. Chairman.
Senator MCNAMARA. Senator Fong?

Senator FONG. Yes. Dr. Merriam, you stated that the cost of hospitalization in 1962 was $600 for married couples and almost $540 for the nonmarried, single persons. Is that the average mean cost?

Dr. MERRIAM. That was the average cost, yes, the mean. Let me emhasize that this was for people who knew their costs and who had no help from public assistance or any other agency. You see, if the public assistance agency pays most of the bills, then the patient usually does not know the cost. We left those out. These are the people who knew their costs and either they or their families or insurance paid the bill.

Senator FONG. So you found that for an aged person who was sick, at some time during 1962, it would cost him on the average around $600, is that right?

Dr. MERRIAM. That is right, the average hospital cost in the case of persons who went into short-stay hospitals. This leaves out the long-stay hospitals, those people were in 37 days on the average, as compared with 17 for the short stay. For short-stay hospitals this was the average.

Senator FONG. These are the people who went in and came out? Dr. MERRIAM. Right.

Senator FONG. Now, you have a figure of $1,200 for people who are hospitalized. Would you explain the difference?

Dr. MERRIAM. That is their total medical costs. The first figure was what they had to pay the hospital. The $1,200 includes what they paid for doctors, dentists, if they had any, drugs, and so forth.

Senator FONG. So, it would cost another $600 for the other costs, other than hospital costs?

Dr. MERRIAM. Right.

Senator FONG. So the total cost for an aged person who was sick in 1962 was an average of $1,200?

Dr. MERRIAM. For a person who was sick enough for a short hospital stay.

Senator FONG. Do you have any idea what it costs insurancewise to take care of a bill like that? What would the premium be for a year, so that the insurance company could make a profit, or break even?

Dr. MERRIAM. I do not think I could answer that, Senator. Maybe the insurance companies could. This would be a combination of a hospital plus a complete coverage; to cover the whole bill?

Senator FONG. Yes.

Dr. MERRIAM. You would have a hard time buying that much insurance.

Senator FONG. It would be a very high premium?