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needs of the aged. Many people aged 65 or older are receiving in addition to or independent of OASDI benefits in pensions from previous employment, income from investments, annuities, and some individual and group life and health insurance policies. Many have accumulated savings, own their own home free from mortgage, or have other assets" (J. F. Follman, Jr., director of information and research, Health Insurance Association of America).

Michigan, despite its temporary fiscal problems because of an anomalous tax structure is, paradoxically, one of the wealthiest States in the Union with tremendous economic resources. Its citizens are strong advocates of the selfhelp policy. Michigan leads the Nation in owner-occupied homes. According to the statistics compiled by the Institute of Life Insurance in 1958, the life insurance figurse in force in 1957 demonstrate the attitude of our population in providing protection through the mechanism of insurance for various needs including retirement and old age. There were in 1957 in force in the State of Michigan 3,786,000 of ordinary life insurance policies for a total of $11,262 million of life insurance in force. There were 2,354,000 group insurance certificates for a total of $8,053 million of life insurance in force and 3,859,000 of industrial type of insurance in policies for $1,544 million of insurance in force. In addition, there was $916 million of credit life insurance in force to help liquidate insured obligations arising from installment credit in the event of premature death of the policyholder.

UNIVERSITY OF MICHIGAN STUDY

There is now underway at the University of Michigan a comprehensive study of the major problem of hospital and medical economics, including hospital, surgical, medical, and major medical insurance in this State. This compre hensive study has been made possible by the very generous grant of $300,000 by the Kellogg Foundation of Battle Creek, Mich. When this study is completed, we will all have the benefit of a scientific, independent study, including the health care insurance problem as it relates to the senior population.

We all recognize that the matter of health insurance care of the aged is very much a matter of cost. But this problem is a social problem only to the extent that the older persons are indigent or become indigent as the result of serious illness. It has been estimated that some 18 percent of the aged are public welfare recipients under federally aided assistance programs and are eligible to receive health care. During the fiscal year 1957-58 the total of all forms of old age assistance expenditures by the State of Michigan accounts for $45,446,531, but the amount expended by the State in the same fiscal period for all forms of medical assistance through the counties, without regard to age, was $5,846,963. Traditionally, the financing of care for the aged indigent or other welfare cases is the responsibility of the local community with sound assistance from the Government.

Voluntary health insurers, long recognized as an industry affected with a public interest, are making tremendous strides in meeting the increasing demand for health care financing for the aged. According to the report submitted to the Committee on Ways and Means by the Secretary of Health, Education, and Welfare in April of this year, it is stated that voluntary prepayment of hospital and medical costs have won wide and increasing acceptance among both consumers and providers of medical service *** preliminary estimates for 1958 show just short of 121 million or 70 percent of the population at the end of that year having hospital insurance. Ten years earlier, in December of 1947, the 53 million persons with such protection had represented 37 percent of the total population.

The most recent developments of the voluntary health insurers with respect to persons over age 65 in the field of hospital and medical health insurance is significant. While actual statistics are not yet available, one Midwest insurer reports that it has sold during the year 1 million policies providing health care coverage for persons over 65.

Health care for the aged is only one of the many facets of financing the costs incident to the problems of older age. To what extent the taxpayers of the State of Michigan are prepared to support programs of additional hospital building costs, equipment, nursing homes, and trained personnel, in addition to any tax assessments for health care insurance, may be reflected in the lagging interest to provide urgently needed support for the growing needs of our educational facilities, mental health, and other basic services. State and Federal assistance for the indigent and economically uninsurable individuals may be the answer to the solution. Economically sound cooperation of the Government. working with private agencies and voluntary health insurers who have developed

and engineered this type of public service over the years to the point where knowledge, experience, and capacity, can now assure greater expansion and improvement of programs designed for the insured health care of the aged. There is an area in this field where the responsibilities of the Government in providing for the welfare of the people can be defined without making every person over the age of 65 a recipient or beneficiary of a governmental health care program. Such a program in its wider aspect, should include the abolition of discrimination in employment on the basis of age, improvement of the economic status of the older people, and the creation of public and private programs to meet educational, recreational, and housing needs of the older people.

Senator MCNAMARA. We are very fortunate in having with us today Mr. Frank Blackford, commissioner of insurance for the State of Michigan. Mr. Blackford, we know you have a great interest in this problem and your job puts you right in the middle on these things we have been talking about. We are glad to have you here, and I see you have a prepared statement. Has the recorder been given a copy of it? Mr. BACKFORD. Yes.

Senator MCNAMARA. We will be glad to publish it in its entirety in the record. You may proceed as you please.

STATEMENT OF FRANK BLACKFORD, COMMISSIONER, INSURANCE DEPARTMENT, LANSING, MICH.

Mr. BLACKFORD. Thank you very much, Senator. I believe the previous witnesses have covered to a very good extent the subject of my statement so therefore I would prefer to summarize it and then have some comments with respect to the testimony of some of the other witnesses before your subcommittee.

Senator, I would like to point out that since my entry into the State government some 10 years ago, I have held a number of positions which I think qualifies me to speak on this subject.

In 1951 as a member of Governor G. Mennen Williams' staff I was chairman of the interdepartmental committee on the problems of the aging, which went into this problem, as I indicated 8 years ago, and submitted a report in 1952 on this.

Senator MCNAMARA. Do we have a copy of that report for our records, and if we don't will you see that we get one?

Mr. BLACKFORD. I will see you have a copy of that because I think the observations in that report will be of help to your committee. Subsequent to leaving the Governor's staff, I became executive secretary of a number of State employees retirement system as well as being social security administrator for all of the public employees and in that position I came into contact with quite a few of our retirees, and since January 1 of 1959 I have served as State insurance commissioner and in that position I have involved myself in consideration of the various health programs being offered by the various insurance companies as well as the prepaid plan.

LACK OF PUBLIC AWARENESS ON PROBLEMS OF THE AGED

Senator, it seems to me that there is a lack of public awareness as to the importance of the problem of the aged. In fact it is my personal opinion there is no desire on the part of the public to become acquainted with the problem. Many of us because of our own personal circumstances become involved in the problem and become in

terested in the problem because of aged parents or grandparents, and it is only then that we really become aware of the significance of this problem, and I think your committee is to be commended for delving into this problem, so that we might alert the American public to this seriousness of the problem. Because of long public apathy and neglect, our treatment of senior citizens is only a slight improvement above the level of the solution practiced by primitive society, and I think you hit the nail on the head.

In my dealing with senior citizens here in this State I have found many, many occasions where children and other relatives have attempted to take away from the senior citizens their right to property and so forth. I have watched children attempt to put parents in State mental hospitals and other institutions, and certainly I think this is probably one of the most crushing blows that an aged person could have when one of his own flesh and blood attempts to take advantage of his age.

COMPULSORY RETIREMENT

Senator, I would also like to say to you, I don't know what the Federal employees retirement system has in the way of compulsory retirement but I certainly agree with Dr. Brink when he says compulsory retirement is a disgrace, and for your information, Senator, Governor Williams in his legislative message to the Michigan Legislature in 1960 has the recommendation-I have seen a draft of the legislative message has a recommendation that we eliminate the compulsory retirement age 70 in our State programs. In lieu of that, we are suggesting to cope with the problem mentioned by Dr. Brink, in lieu of that we are recommending that agency heads have the authority to request retirement of any person over 60, so if a person is not able to "cut the buck" the agency can request his retirement, but after this amendment, which I am confident will pass the Michigan Legislature, we will have taken a step forward in eliminating what Dr. Brink has accurately described as disgraceful.

HEALTH INSURANCE WITH DEDUCTIBLE CLAUSE PROPOSED

With respect, Senator, to our various hospitalization programs offered not only by the prepaid programs of health insurance but also those of our private carriers, I would have to point out that we are faced in the State department of insurance with a serious problem. We know that rate increases are not popular but here is a dilemma with which we are faced. We have an increasing public demand for extension of services offered by these programs. If you extend these services it is going to become more costly. We are aware of this and I would say to you that we in the State department of insurance have long kicked around this question of how we can improve the services and at the same time reduce the cost. We feel there is considerable merit in the idea of having a hospitalization program which would incorporate the same feature that we find so often in automobile insurance, that is a $50 or $100 deductible feature. Now this has not been thoroughly explored although I understand companies have experimented with this to a limited degree in the past but it seems to me that if we could say the first $50 or the first $100 of the hospitalization cost would be assumed by the individual citizen that this would do

much in the way of easing the pressures which would enable insurance companies and the prepaid plans to advance these programs which really should be designed to take care of a catastrophic illness rather than the routine physical examination which many of our citizens want to have defrayed by hospitalization costs.

I am in agreement with Dr. Brink that we have to do much more in the way of providing home care, visiting nurse programs and so forth which will cut down the utilization of the more expensive facilities.

I am not at liberty to disclose details at the present time but I can assure you, Senator, that with respect to some of our insurance programs that serious considerations are being given to some significant improvements in these that may help cut down the cost. I assure that my contacts and my association with the people in the insurance industry has convinced me that they are aware of the problem and are sincerely striving to do something about it.

In conclusion, Senator, I would like to take this opportunity to not only express my appreciation for the opportunity of appearing before the subcommittee but also to leave you with this thought. The history of our country demonstrates that progress in the solution of public problems never takes place unless it is accompanied by an aroused public opinion. To accomplish this, our aging need leadership such as William Lloyd Garrison and Charles Sumner provided in the abolitionist movement, and Lucy Stone and Susan B. Anthony provided for the suffragette movement.

It is my hope, Senator, that you, Senator Patrick V. McNamara, can provide that leadership that is so badly needed.

Senator MCNAMARA. Commissioner, that's a rather big order but we will do our best along the way, you may be sure.

You mentioned many things about-I think this is a very interesting observation about the hundred dollars deductible. I think this would in a measure reduce the cost to some degree. To what degree, I don't know. You know much more about it than I do. Perhaps it would be substantial enough so it would at lease relieve some of the anguish that is involved in this insurance picture.

Mr. BLACKFORD. It is the concept the American public has accepted insofar as auto insurance is concerned and I think the transfer could be made much easier.

Senator MCNAMARA. Mr. Commissioner, do you think it would be much cheaper to have insurance cover preventive health service than just hospitalization?

Mr. BLACKFORD. I think it has to cover all, in the long run, to keep costs down.

Senator MCNAMARA. Thanks very much. Your testimony has been very helpful. We appreciate your being here.

(The prepared statement of Mr. Blackford follows:)

PREPARED STATEMENT OF FRANK BLACKFORD

Mr. Chairman, members of the committee, since my entry into the State gov ernment some 10 years ago, I have held a number of positions which have acquainted me with the subject matter being considered by your subcommittee. As a member of Gov. G. Mennen Williams' staff, I served for several years as chairman of the Interdepartmental Committee on the Problems of the Aging. Later, I served as executive secretary of a number of State retirement programs

and as State administrator for social security for all public employees and, as of January 1, 1959, I have served as Insurance Commissioner for the State of Michigan.

I recite this work experience only to establish my familiarity with the subject matter under consideration and to provide background for some observations I would like to present.

It seems to me that there is a lack of public awareness as to the extent of the importance of the problems of the aging. In fact, it is my personal opinion, there is no desire on the part of the public to become acquainted with the problem.

Because of this public neglect and apathy, our treatment of senior citizens is only a slight improvement above the level of the solution practiced by primitive societies. As you know, the solution advanced by some of our more primitive societies was to cast the older person out to perish in the elements or as legitimate prey of wild beasts.

I wish to commend this subcommittee for their attention to this important public problem and to express my sincere hope that through your efforts a greater awareness will be focused on it.

As I see it, there are three critical areas affecting our aging population. Those areas are income, health needs, and housing. At this time, I shall limit my comments to health needs and leave for other witnesses the areas of income and housing.

I am happy to report that some progress has been made in assisting older people to cope with the problem of health needs.

Recently, some insurance companies have recognized the problem of providing insurance for persons of older age, and therefore, have designed individual contracts specifically for persons age 65 and over. In addition to commercial insurance companies providing benefits at a reasonable rate within the last 2 months, the Blue Cross-Blue Shield plans have designed a new certificate for this class of persons, which while not providing complete care, does afford persons desiring this coverage some degree of protection.

Some of the policies of commercial insurance carriers as well as certificates provided by prepaid plans are sold during an enrollment period, usually lasting for 30 days. During this period applicants age 65 and over may purchase the insurance regardless of their condition of health, with the company exercising no right of selection. The policies are written with a common effective date and fixed amount benefits.

In addition to the so-called senior security policies now being issued by insurance companies and prepaid plans, many companies are now permitting retired employees to continue their insurance under existing group contracts at the same premium and with the same benefits as when they were actively employed. Some companies issue group contracts containing a conversion privilege which permits the employee upon retirement to convert to an individual policy, usually with more limited benefits, regardless of condition of health.

I am deeply appreciative of the opportunity to appear before this subcommitte. I should like to leave you with this thought. The history of our country demonstrates that progress of the solution of public problems never takes place unless it is accompanied by an aroused public opinion. To accomplish this, our aging need leadership such as William Lloyd Garrison and Charles Sumner provided by the abolitionist movement, and Lucy Stone and Susan B. Anthony provided for the suffragettes.

Senator MCNAMARA. I have just received a wire from one of the members of our committee who expresses his regrets he can't be with us here today, although he planned to try to be here, Senator John F. Kennedy of Massachusetts. He expresses great regret he couldn't be here and meet the people of Grand Rapids, under the circumstances that we have here today. He has a great interest, you can be sure, as do other members of the committee, in the problem we are working

on.

The next witness, Mr. Rupert Kettle, Kent County Welfare Department, Grand Rapids. We are happy to have you, sir. Does the recorder have a copy of your proposed statement?

Mr. KETTLE. Yes.

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