The influence of custodial home thinking on Federal Government action indicates the impact of this type of pressure. There are 500,000 people out of 15 million older individuals in the United States in approximately 25,000 various custodial facilities. Although only 32 percent of the aged or less than three per thousand of the complete population are involved, custodial home thinking and planning tend to dominate many approaches to medical care of the aging. Although not justified, it has been made to seem as if this were the greatest need of the aged in the Nation. There is an obvious need, a short-term essential, for this relatively small group. This should not be permitted to be a lever by which all aspects of health care in an aging population can be forced into a new and illogical mold. This is only one, although an important one, of the factors blocking the concept of a comprehensive financial arrangement for the medical care of the total aging and aged population. It will take a generation to resolve the splintering of thought and the compounding of economic errors that derive from such welfare viewpoints.

The commission on geriatrics of the council on scientific advancement of the Medical Society of the State of Pennsylvania hopes that its proposal will be offered for consideration to the appropriate body of the American Medical Association. It is basic in this presentation that there be a distinct understanding of voluntary methods of insuring medical costs after age 65 in a comprehensive fashion and the method of collecting the money with which to pay such costs. Methods of health insurance in the United States must be in the context of a free enterprise system. Money for such policies can be collected in an equable fashion through a worker's productive years. Costs of medical care, anticipated and saved for through this span, could be established at a lower annual figure, permitted to accumulate productively to establish capital, and become a normal part of lifetime planning.

C. PROPOSED RESOLUTION

Whereas the proposal of the commission on geriatrics of the Medical Society of the State of Pennsylvania is based on methods of collecting money during the normal working life of 45 years for comprehensive medical coverage after age 65; and

Whereas these financial arrangements will support the normal methods of private medical insurance for all health costs after retirement; and

Whereas no comprehensive method of financing medical costs after age 65 that has been proposed is deemed to be adequate in comparison with this plan; and

Whereas medical costs by definition are matters primarily of finances; and Whereas the plan of old-age and survivors insurance is an integral part of the economic system of the United States; and

Whereas medical insurance costs for the retirement years can be based on actuarial levels lower than those based on past age 65 figures:

Therefore it is proposed:

(1) That the American Medical Association review the proposal whereby an individual from the start of his working life, upon the receipt of a social security number, be permitted to assign an extra one-half of 1 percent of his income up to the maximum permissible under OASI, matched by an equal amount by his employer, collected by a special section of the OASI system, in an earmarked fund for his total medical costs after retirement. This voluntary preretirement postemployment method of preparation consists of a prepare plan based on the folowing:

Pre retirement elective plan of acquiring resources for expenses of retirement medical costs the PREPARE plan.

The mechanics of the plan is to use the clerical and bookkeeping structure of the OASI. This agency would serve as a nonpolicy making, banking repository of the collected funds without administrative privileges in the collection or disbursement of the health funds.

(2) That the worker who does not choose to utilize the mechanism of the old-age and survivors insurance arrangement might be afforded the opportunity to buy health bonds. These bonds in the same amount as the OASI deductible figures and matched by an equal amount by the employer would be redeemable for premiums of health insurance only on retirement. The method of funding these bonds could be determined by a new Presidential Commission or by joint or several action of private insurance companies, banks, or even through the postal system.

(3) That such moneys or bonds shall be available for

(a) comprehensive health insurance;

(b) hospital costs exceeding amounts afforded by Blue plans or hospital policies;

(c) general medical office fees, including all forms of surgical and medical charges;

(d) diagnostic charges;

(e) restorative convalescent care;

(f) supervisory home care;

(g) auxiliary medical costs, such as premiums for catastrophic health insurance in which the basic health insurance would be responsible for the initial amount and the special policy for the difference up to the greater amount.

(4) That if survival does not occur to retirement age or if decease occurs before the accumulated funds have been utilized, the balance shall become a normal part of the decedent's estate.

A PROFILE OF DATA FOR THE PREPARE PLAN

In a population in excess of 175 million in the United States in 1959, more than 15 million or about 8.5 percent have reached the age of 65 years.

There are 34 births per 18 deaths annually.

World population is increasing at a rate of 5,000 per hour.

The aging increment in the United States is increasing at a rate of 1,000 daily of whom 550 are women and 450 men. The proportion of females is rising due to the fact that there are 137 male deaths for 100 female deaths.

1

The world population at the start of the 20th century was a little more than billions. This had risen to 2.7 billion by the midcentury, and is expected to be 5 billion by the end of the present century.

In 1900, life expectancy at the age of 40 was 25 years, and the number of years of survival on the average after retirement was 21⁄2 years. Although there has been only a slight average increase in life expectancy after age 40 in this half century, retirement survival after 1940 had risen to 5 years by 1960, close to 10 years. This quadrupling of retirement prospects is a combination of longer survival and average earlier retirement.

Of the older individuals about one-third of the women are married, 70 percent live with families, and approximately 5 percent are employed. On the other hand, two-thirds of the men are married, 80 percent live with family, and over 40 percent are working.

About 1 million older persons live in institutions, hotels, or roominghouses. The large majority of individuals receiving old-age and survivors insurance are past the age of 65. Approximately 10 million people by 1960 will be receiving these insurance benefits and the number is increasing at a rate of 50,000 per month. "OASI beneficiaries comprising as they do such a large proportion of the total aged of the United States, can be considered representative of all the total aged and retired persons; their health problems are the health problems of the aged in the years of retirement." Whereas there is and will continue to be a rise in the number of individuals on OASI, there is little change in the number of people on welfare funds, OAA, or old age assistance. The former is replacing this welfare program in a sound economic fashion. One in five people on OAA is receiving supplementary aid in addition to the OASI payment presumably because coverage under the latter had not had time for maximum payments. The characteristics of relief-supported individuals generally are different than those who have prepaid their economic costs in full OASI coverage, and such OAA recipients must be handled in a separate category. People on OASI reflect the general nature of the aged population. This indicates that data based on these people is valid for the entire group, and suggests that their method of economic provision may be a method whereby comprehensive medical costs in the same years can be achieved.

Chronic impairments of health of variable degree is an accompaniment of longer survival. Below age 50, about 100 out of every 1,000 persons has a chronic disease. Above the age of 65 approximately 363 people per 1,000 have a chronic gross handicap on the basis of health. The incidence of chronic diseases (which are not necessarily a complete limitation on independent existence) is 20 percent in those under age 35, 40 percent in those under age 45, and up to 60 percent in those who have reached the age of 65. Generally, 1 person in 14 under age 65 has a chronic disease whereas 6 out of 10 people over age 65 have an identifiable chronic disease. At the extreme limits of life,

in the very aged years, practically 100 percent of individuals have physiologic limitations identifiable at pathologic conditions.

One bed out of four in hospitals in the United States is occupied daily by an individual over age 65 despite the fact that this group comprises one-twelfth of the population. In various custodial facilities, 85 percent of the patients are older individuals. Out of more than 12 million hospital beds occupied on any one day in the United States, 300,000 will be older patients. In other words, 2 percent of the aging population in this country is in a general hospital on any one day. These figures do not include those in special facilities such as custodial homes, mental hospitals, and the like. In another figure, 1,000 per 100,000 population of all ages occupy general hospital beds whereas in those 65 years and over, the occupancy rate is 2,000 per 100,000. About 5 people per 100 of the general population are unable to work on any one day due to illness. In those 65 years of age and over 15 per 100 are incapacitated.

Although the aging generally enter a hospital facility less frequently than the general population, once admitted, average stay is more than twice that of the general population. The result is that whereas average hospitalization amounts to 120 hospital days per 100 people of all ages per year, in the aging there are about 175 hospital days per 100 people annually. In the use of medical commodities, men between ages 65 and 69 require about 5 medical visits a year as compared with 3.5 visits for individuals age 30 or less. Among visiting nurse facilities, over 50 percent of all calls are made on older individuals. Parenthetically, aging people who continue to work spend fewer days in hospitals than nonworkers, which is to be expected since the former probably have less illness, among other reasons. In addition, aged persons covered with hospital insurance enter hospitals more frequently but do not remain as long as those who are not protected. This has some bearing on what the situation would be if hospital costs were underwritten by the Federal Government. Not all hospital occupancy is due to old-age illness or incapacity. Some is due to the fact that the older individual has no place to go. The creation of specialized housing and convalescent units automatically will lessen this load, and reduce the demand for the building of expensive hospital beds with their higher maintenance costs.

Three out of four individuals who enter hospitals stay less than 30 days. This emphasizes the fact that in the fourth person, a special "catastrophic" insurance policy which meets the difference between costs covered by the prepayment arrangement and unusual costs far in excess of average hospital charges is one of the most important, and most neglected types of geriatric insurance.

Although the average older person visits a physician one or more times annually (true or 75 percent), 1 in 10 requires hospitalization annually. In this light, health insurance limited to part of the hospital costs falls short of the needs of total medical accommodation. It can be assumed that better office and home care facilities will lessen the need for hospitalization. Entrance to hospitals often serves as a compensating mechanism for other inadequacies in planning for the health care of the elderly.

Average national expenditures for medical care amount to about 5 percent of the national income. Older individuals with reduced income are more likely to be the recipients of adjusted charges, family support, and other forms of medical care supplementation. When all of these are added up, most older people are fairly able to meet their routine medical expenses. Whether or not they are getting the degree and type of medical care required is less certain. It is reasonable to assume that if there were extensions of prepaid health insurance to the retirement years, more older individuals would seek medical care, and if funds were available, would receive it in larger measure. "Although older persons are more frequently ill than others in the population, they have less money to buy medical care and fewer opportunities to obtain such care on a prepaid basis." Not only is there a lessening of their status as active members of the social community in which pay-as-you-go is normal, there are hindrances inherent in older age which tend to bar receipt of a full measure of modern medical attention. In addition, in a large number of instances, the older person who becomes delinquent in medical payments may find it impossible to catch up. Two possibilities would eliminate these several possibilities. One is that an older individual be afforded the opportunity of prepaying medical care for his postemployment years. The second is that forms of insurance, regular and catastrophic, be available in working and retirement years with which medical indigency can be avoided. Failure to appreciate this fact has forced the following conclusion, published in "The States and Their Older Citizens": "The chief reliance of older persons for support outside of

their earnings is less on their savings, property, and children, and more upon Government through social security legislation, veterans' pensions-and upon employers-through public and private pension plans. Adult children per family are fewer in number and less able and willing to assume support of their parents." In addition the reduction in capital savings by the need for high taxes of every variety lessens the possibility of creating an adequate income-producing structure for older years. The forced savings of the OASI are coming to substitute for former volitional savings.

For

In the United States an increasing number of individuals 65 and over are covered by voluntary health insurance. As recently as 1952 only 26 percent were covered by voluntary noninstitutional types of medical insurance plans. In 1953, this rose to 31 percent; in 1955, 39 percent; and by 1959 had exceeded 40 percent. Major industries have played an important part in these trends. example, one steel company has the following arrangement: "Life insurance may be carried into retirement at the full amount, but not to exceed $25,000. The retired employee's monthly premium is at the same rate of 48 cents per $1,000. The retired employee and his wife also may have hospital and surgical benefits during the retired employee's lifetime. Such arrangements are judicious combinations of the volitional and compulsory and exceed the common types of average purchasable health insurance coverage.

There are some interesting medical figures. In 1953 average medical costs for women amounted to $80 and for men $51 annually. Persons over 65 paid 13 percent of the money spent for medical care in the United States. The total of all medical costs per annum in this country exceeds $12 billion annually of which about $5 billion is paid to physicians. The remainder takes care of hospital charges, health insurance, dentistry, orthopedic appliances, and the like. A study of people covered by OASI reveals that only 1 person in 20 retires voluntarily because of the accession of fixed retirement age of 65. Forty percent have such limitations of health as to require retirement. The remaining 55 percent generally would like to continue working although 20 percent could be eliminated from their customary job because of physiologic impairments.

As to Blue Cross, over 52 million people are covered, with the number increasing constantly. Such plans are having difficulties due to rising national costs of all kinds that are depleting reserves, as well as by the need to provide for the rising number of older individuals who can continue their premiums if permitted. Actually, less than 10 percent of people covered by Blue Shield are over 65. Some were never covered; some could not continue payments; and some were barred by age. This is a rapidly changing scene as the various Blue plans seek to extend their coverage to this segment of the population. As far as average health insurance, less than one-third of all medical costs are within the bounds of the average policy. Aside from Blue plans, there are commercial insurance plans, industrial retiree insurance, prepayment plans, union arrangements, private resources, as well as the continuation of a certain number of older people in adequate employment.

Average medical costs are not the issue; only 3 percent of the old will not see a physician because of medical charges. Of the rest, 80 percent can take care of their charges, and the remainder are treated free or under some adjusted form of medical consideration.

Preparation for medical costs in older age falls into three categories. The first is average medical care which is inclusive of medication, physicians' charges, hospital insurance, and various health accessories. The second is hospital care which consists not only of charges covered by the average type of hospital insurance that avoids depletion of personal capital, but also of catastrophic-type policies which protect against "medical" indigency. The third consists of posthospital requirements, which is a mixture of medical and custodial care. It is in this particular instance that the greatest breakdown of personal protection

occurs.

In the methods of meeting these categories there are several approaches. The first consists of individual savings. The second consists of the purchase of voluntary health insurance in the employment years that will carry over into the post-employment years. The third consists of the elaboration of health insurance that is purchasable after retirement. The fourth consists of an adequate number of noncalculable aids, such as families, friends, unions, private resources of various types, and others.

Over 5 million people in the United States are disabled longer than 3 months in any one year. The aged who comprise 1 in 12 in the population account

for 50 percent of these lengthy disabilities. As to custodial requirements, only 1 older person in 16 enjoys this permanent arrangement. Many of these people are totally incapacitated physically or prefer an institutional type of care. A preponderant amount of money and care is expended on this small percentage. It is questionable whether an equal amount is being expended on the remaining 94 percent who by choice, nature, or chance live independently. The impact of this type of care extends far beyond that justified by the numbers and represents an ideal arrangement only for a small number of the total. The pressure for adequate medical care with proper supplementation for all of the aging and aged that require them must not be gaged by the service supplied in ideal custodial arrangements which can be uneconomic and unreal to some extent.

STATEMENT OF DR. JOSEPH T. FREEMAN, M.D., CHAIRMAN, COMMISSION ON GERIATRICS, MEDICAL SOCIETY OF PENNSYLVANIA

Dr. FREEMAN. It is necessary to realize that in geriatrics, we are dealing with a rather unique group of people. We are dealing with people who are not generally subject to public health disciplines. They are often not subject to withholding and income taxes. They are not always subject to average group disciplines. They are not necessarily exposed to normal health procedures; and often they are not subject to union negotiations. More particularly, in certain instances, they have not even been subject to medical care from physicians with any particular training in the diagnostic and therapeutic considerations of the aging body. In brief, this section of the population, for better or worse, usually worse, tends to be outside many of the spheres with which we as physicians deal daily.

In 1954, the commission on geriatrics of the Medical Society of the State of Pennsylvania undertook a study of the financial costs of medical care of the aging. In my opinion as a physician, there are three fields in which a physician must be involved in geriatrics. One is medical education, which is inadequate. Second, is medical research, which has done only fairly well. Third is medical financing after age 65.

We are interested in the 95 percent of the elderly who are trying to maintain an independent form of existence. The remaining 5 percent, in some form of custodial arrangement, for one reason or another, are dependent. On the basis of the ratio of 95 to 5, we think the custodial home tail should not wag the geriatric dog.

The premise of our investigation is that medicine in the United States is practiced on a very high level. This is important to the economy of the country and to the natonal characteristics of the citizenry. This does not, however, mean a blind adherence to some ancient form of medicine. We view the needs with the understanding that there is a changing pattern of disease in an expanding population, and these changes and expansion require new medical situations to meet them. This realization should eliminate the compulsive and possibly impulsive demand for arbitrary discard of effective medical methods. A comprehensive plan of medicine is influenced by the many fold increase in the national income and the more than doubling of the national population in the last 50 years.

There are two qualifications that have to be faced immediately. The first is that the growing medical problems can be met by an expansion of traditional methods, such as private health insurance and additional health coverages. This is in sharp contrast to rising demands for comprehensive governmental health care.