Perhaps I should add this, Senator. If I could say to you here today that hospital charges having risen 105 percent since 1947-49 is all over, that that is a product of the past and we are now on a new plateau, and therefore we should adjust to that, that would be fine. But every single study that I have seen that attempts to analyze these factors on hospital costs shows that hospital chages will continue to rise approximately 5 to 7 percent per year, at least for the next decdae. This is the reason why this is such an important problem for the aged.

Since the aged use 2 to 2-and-a-half times as much hospital care as people under 65, and since hospital charges are 105 percent higher than they were approximately 10 years ago and approximately 4 times higher than the general cost of living, and since the aged have lower incomes than other people on the whole, you can see that this problem presents a very great challenge to hospitals, to public and private enterprise in dealing with this whole picture.

The problem would be rather simply solved if all of the aged had hospital insurance, because this is, in the American way, the effective way of dealing with the problem of paying hospital costs. But about 60 to 65 percent of the aged people of this country do not now have hospital insurance. Putting it the other way, about 35 to 40 percent of the aged do have hospital insurance, but 60 to 65 percent do not. Senator MCNAMARA. Before you leave that subject, Professor; in addition to the labor costs is it not a fact that equipment and buildings cost much more today, too?

Professor COHEN. Yes, Senator, that is quite correct. Per hospital bed, the cost of building, and particularly the much greater scientific equipment that we have in hospitals and expect to have in hospital care, is much, much higher. The net result of that is that, of course, it all drives up hospital care expense, and we expect much more of hospital care.

My own personal feeling is that as the standard of living has risen in this country, you might say our standard of expectations of what we would get from a hospital today are much greater than they were 20 or 25 years ago. It is a product of the entire improvement in the standard of living.

There are ways, of course, to cut down on hospital cost utilization which this subcommittee might wish to consider.

HOSPITAL INSURANCE COVERAGE OF OASI BENEFICIARIES

Let us turn to chart 8 (p. 25), which deals with the hospital insurance coverage of people on social security.

Senator RANDOLPH. Senator McNamara, could I interrupt to ask Mr. Cohen one further question, relative to the point you have made? Senator MCNAMARA. Go right ahead.

Senator RANDOLPH. I do not want to appear trite, but we have never had in the Congress, either in the House or the Senate, the exhaustive study which you, Mr. Chairman, and the members of your subcommittee, intend to carry forward on this field. Mr. Cohen has indicated in his testimony that we are going to have a bigger problem than we had anticipated in the preliminary study of this subject. It is going to be a very genuine challenge not only to the membership of the Congress but the organizations and individuals who can help

CHART 8.-HOSPITAL INSURANCE COVERAGE OF AGED OASI BENEFICIARIES [Married couples having hospitalization insurance]

us in at least partial solutions of these rather tragic situations in some instances, and also to face the perplexing problems in others.

I feel that this subcommittee must go into this matter very, very thoroughly, and I know it will do just that. Pardon me, Mr. Cohen. Senator MCNAMARA. Thank you, Senator.

Professor COHEN. The top bar depicts the proportion of hospital insurance coverage that all married couples have who are receiving social security; roughly 46 percent. But when you begin to analyze that by their total income, you can see that for those married couples seeking social security who have a total income of under $1,200 per year, only 21 percent had some type of hospital insurance. This increased very steadily with income, so that for the group receiving between $1,200 and $1,800 a year they had 35 percent coverage, between $1,800 and $2,400, they had 44 percent; and when you reached the group between $2,400 a year and $3,000, a little over half, 55 percent, had coverage, reaching a total of 65 percent when the income was $5,000 and over.

The conclusion to be reached from this chart is that probably the people who needed hospital insurance coverage the most had the lowest proportion of protection.

These are the people who, as they need hospital care, even though they are receiving social security, must ultimately apply for public assistance to supplement their social security to pay for their hospital care, or not receive hospital care, or borrow money, or receive it from relatives or friends, or get free care from some way fom the communities.

REASONS FOR NOT HAVING HOSPITAL INSURANCE

Why are the social security beneficiaries who are not covered by health insurance not covered? In an inquiry of them (see chart 9, p. 27), of this 54 percent who did not have any private hospital insurance, one group had had a policy but had dropped it. That represents 36 percent. They dropped it, according to their own statement, because 40 percent of that group had it canceled by the company that .carried it.

This is, of course, one of the great issues, that there are a very large proportion of people prior to 65 who have voluntary protection, but after age 65, when the need begins to become the greatest, because they have 2 to 212 times as much need for days of hospital care, it is canceled by the company that they have held the policy with.

A very large group of people, about another 40 percent, once they had retired and were on a lower income, felt they could not afford to continue their policy and meet their maintenance expenses, so they dropped it. This gets us into the whole question of how to provide protection to people at a cost they can afford. One small group said they were not interested, and another group had other reasons for not keeping their hospital insurance.

For the group that never carried health insurance at all, a large group of 36 percent said that they could not afford the premiums. Twenty-two percent said that they were turned down by the company to which they applied. Twenty percent said that they did not approve of health insurance in its present form, either because it cost too much, it was too inadequate, or they did not believe in the principle of health insurance, or they could carry it themselves, and a

43350-59-pt. 1—3

large group of people never thought much about it-which represents a very important point in our whole discussion, because we find through various studies that there are a large number of people who do not adequately prepare for the economic and social problems that are involved in retirement.

Senator MCNAMARA. Before you leave that last chart, Professor, does your statement include all types of insurance, not just adequate insurance?

Professor COHEN. That is correct, Senator. When we start on the 46 percent here that have hospital insurance, that includes any kind of hospital insurance, whether it is for $10 a day for 20 days, or for 60 days, 90 days, 120 days, or 365 days. We have not tried to measure the adequacy here. This is to say they have some protection.

If you wish to have an overall measure of the extent to which voluntary hospital insurance at the present time on the whole meets hospital costs for aged people, voluntary insurance is only paying today about 20 percent of the total hospital costs of all aged people.

One can see that, since there are roughly only 46 percent that have any kind, many have insurance which does not pay their full hospital costs, and it would bring the total down to certainly between 20 and 25 percent.

CURRENT PUBLIC SUPPORT OF MEDICAL CARE FOR THE AGED

I will touch on only one or two other points in my prepared statement. One significant fact is that we are now spending a large amount of public funds already for medical care of the aged for those who would define socialized medicine as government financial responsibility.

Through public funds, then, we already have by that definition a large measure of socialized medicine for our aged. Public outlays for medical care for civilians of all ages in 1956, including tax-saving subsidies, were about $4.4 billion. Of this amount $900 million was spent on the aged. This represents 20 percent of all public funds for medical care.

Recall that there are only 8.6 percent of the population who are aged and 20 percent of all public medical care funds are being spent on the aged. Thus, there is a very large measure of public funds already being spent on the aged.

In private expenditures for persons for medical care of all ages, the amount expended was $10.5 billion, of which $1.4 billion, or 13.7 percent, was for the aged. So the same fact is demonstrated for private funds; namely, medical care for the aged is taking and will continue to take a disproportionate share of all medical care costs, public and private.

I will touch only briefly on the fact that old age assistance varies widely by States. I would like to insert in the record, Senator, the amounts paid by the States for old age assistance and the proportion of recipients by States, which indicate that of the 211⁄2 million people in the United States, there is a wide disparity in the amount and proportion of assistance that is given.