An extremely important point was made at this stage of the discussion by Dr. Martin Cherkasky. He stressed that the figure of 43 percent of those covered by health insurance was misleading because it did not indicate how much coverage they were carrying. He pointed out that the problem of health coverage was really two problems: (1) involving those 65 and older and for them Federal support was absolutely essential; (2) however for those 55 and under some form of voluntary services or insurance plan with a noncancelable clause might prove more acceptable. Superintendent Thatcher pointed out that the cost of health insurance would be more than double if it had to include those 65 and over in any long-range program. The State alone could not carry this kind of cost and therefore a Federal subsidy would be essential. In his summary of the morning discussion, Senator Javits pointed out that there were alternatives to institutional care and that the need was primarily for intermediate care between the hospital and the home. He took note of the fact that the upstate (New York) hospital program had been accelerated by the Hill-Burton Act and also that its extension to cover nursing homes was inadequate. He reviewed Dr. Bourke's finding that at least one-third of those in the general hospital at present could really be taken care of at home or in nursing homes. At the same time he recognized the inadequate availabilities of present nursing homes. There was need for the Federal Government to get into the field of aid to the States and to help accelerate all medical programs. He pointed out the contribution of NIH and also the fact that there was pressure in Congress to help pay the beyond tuition cost of nongovernmental medical schools. Mr. George Bugbee was opposed to Federal participation in any health insurance program. He said that employers can pay more of the cost of health care, and he was not ready to accept the statistics, cited by Dr. Rappleye which placed one-third of the cost of care as the limit of the premium which the worker could afford to pay. Dr. Rappleye referred to the experiences in Europe with health insurance and pointed out that there was a decided shift in plans to cash indemnities rather than services. This is because cash indemnities resulted in relatively lower cost than services. He said that Blue Cross and Blue Shield were also shifting to the cash indemnity types of insurance. Dr. Steinberg, however, said that patients covered by Blue Cross still largely received services rather than indemnities. The conference adjourned for lunch. 3 The afternoon session opened with delivery of Dr. Steinberg's paper on plans and proposals for health insurance for the aging. Dr. Steinberg first described the American Medical Association's insistence on a voluntary prepayment type of insurance. Dr. Steinberg's point was that the voluntary approach alone without governmental help was not feasible. The cost for the aged cannot be borne entirely by lounger persons paying increased social security taxes, nor will strengthening Blue Cross alone provide the answer. The aged themselves, of course, cannot afford the full cost. An approach purely by the State and local governments based on need would call for a means test. Financing for the indigent by the Federal Government means that the cost would spiral anywhere up to $2 billion a year. It would be undesirable to attempt to get this fund out of the general revenue. Dr. Steinberg then described a proposal made in Colorado for statewide care which would be limited primarily to hospitalization. It was based on the fact that the aged can participate to some extent in financing the program, and the remainder of the program would be paid for out of the general fund. Dr. Steinberg made his own proposal which would earmark an increase in the social security tax for placement in a separate trust fund to provide hospital care for the aging in which the Federal Government would participate as it does now in the Hill-Burton Act. Under his proposal approximately 60 days of hospitalization would be provided, and those 65 to 70 years old would be eligible to participate. Dr. Steinberg explained that his approach differs from the Forand bill in that the Government does not pay for hospital service as such but purchases voluntary health insurance on an actuarial basis. However it does make coverage mandatory since the Government would buy Blue Cross insurance for the aged. Dr. McGuinness recommended that the cost for such program come out of general revenue or out of a compulsory tax. Dr. Rappleye warned against Federal participation and said that Dr. Steinberg's approach had been rejected in LaGuardia's administration. Dr. Bourke cautioned against the purely welfare approach to the problem and called again for an integrated community health program in which the contribution to the system would come out of the general revenue. Winslow Carlton proposed that a health program be developed in each State and the plan submitted to HEW. He would set a minimum level of benefits but make provisions for several types of care and would use the indemnity approach in preference to services. Anyone 65 or over would be eligible. Insurance would be contracted by the States from private carriers and the cost would be shared by those eligible to participate who would pay 8 percent of their income. This he estimated would cover approximately half of the cost. The remainder of the cost would be shared 50-50 by the State and the Federal Government. Mr. Carlton would earmark a tax on excises to provide the funds for the Federal share. Dr. Steinberg questioned whether the people would have the 8 percent and pointed out that it would be doubtful whether the States would do more in this area to cover cost than they are doing now. Dr. Bourke suggested adding a means test. Dr. Cherkasky said that only the rich would buy this kind of health insurance. The needy, he said, get such services as they need now from the general assistance. In his summary, Senator Javits said that there could be health coverage for the aged in which the Federal and State Governments would make some contribution as well as the individual concerned depending upon his income. Different plans for different States were indicated because of the widely different range of costs, standards, and available facilities. The Federal share in any plan might be covered by some form of tax, but appropriations out of general revenues-making the program voluntary for the individual rather than an added social security tax making it in effect compulsory-seemed indicated. Senator JAVITS. This seminar, Mr. Chairman, was a galaxy of the leading experts on geriatrics in our part of the country and from other parts of the country, and the consensus was that the most important single kind of service which could be given to those over 65 was physician's service, and that it was a great mistake to make them go to a hospital in order to get the benefit of a health plan for two reasons: One, you would overtax facilities, and second, it wasn't good for the older people themselves; there had to be a great concentration upon physician's care and that is what your plan seeks to do. It seeks to place emphasis on the fact that there is doctor's care. Now, to conclude, Mr. Chairman, the social security approach to medical care for the aged presents the serious problem as we see it, of providing mainly benefits of hospitalization and surgery rather than of adequate physician's care despite the fact, as I said, that as people grow older they need more care from the doctor. The overwhelming evidence of medical statistics shows that subsidizing hospital care to the exclusion of office and outpatient care is misguided and will tend to create critical situations in sections of the country where such institutional facilities are even now overtaxed and where any program of expansion will take years to put into effect. In that connection, Mr. Chairman, I would like to point to the McNamara proposal, which is entirely well intentioned. I think, I said a minute ago, it had certain things that broadened it over the Forand approach but I point out that this problem of medical facilities taxes even those who would take the most optimistic view of this whole situation. Under the McNamara bill it is necessary to defer certain aspects of the service for a period of years because facilities just have to catch up with what they might promise. For example, under the McNamara proposal you have five categories of service, the last two being diagnostic health, hospital services, and very expensive prescribed drugs-and there you have to wait until the Secretary of Health, Education, and Welfare can work this out with his advisory council over a period of time; and they don't promise that you are going to get any such thing until 1962-63. Now the reason for that is obvious, because-and I think the McNamara plan is a pretty optimistic plan, and no matter how you might try to meet this, the fact is you have to take account of what exists. An argument that has been made against our plan is that it depends upon action by the States, and there, Mr. Chairman, I understand the Secretary of Health, Education, and Welfare has also produced evidence as to 15 plans of various kinds, particularly in the health field, where action by the States was very responsive, and where it seems to me we are borne out by the fact that there ought to be State participation because this participation—in view of the enormous demand for this particular kind of improvement in our law-is bound to come. from the States. The States respond when their people want something, and that is best shown by the tremendous participation in such programs as the Hill-Burton Act for the development of hospitals, and other programs of that character, where there is Federal-State participation. I assume, that the Secretary of Health, Education, and Welfare put this schedule in? I would like, then, to put in a schedule as part of my testimony prepared by the Department of Health, Education, and Welfare as to the response to Federal-State grant programs, especially in terms of the promptness of the response, and to point out, for example, that in the Water Pollution Control Act passed in 1956, all the States came in the first year; in the National Defense Education Act, between 45 and 48 of the States came in in the first year. (The material referred to follows:) RESPONSE OF THE STATES TO FEDERAL-STATE GRANT PROGRAMS A review of State response to the various Federal-State grant programs of this Department shows that with rare exceptions the programs have found universal acceptance by the States. In a number of instances, the grant programs were adopted by all of the States within the first year of operation. Furthermore, the programs have almost universally called forth State expenditures ranging far in excess of that necessary to meet matching requirements. STATE FINANCIAL CONTRIBUTIONS In the public assistance area, 27 of the States, all of which have vendor medical care provisions, have contributed substantial amounts of money in financial assistance to the aged above that capable of being matched by the Federal Government. The remaining 23 States have not utilized Federal funds up to the maximum possible; 151 of these have vendor medical care provisions, and the other 8 make no provisions for payment of medical care under the old-age assistance titles of the Social Security Act. In the vocational education program, the State contributions have been four times the amounts called for by the matching provisions. In the health areas, all of the programs have evoked a response far exceeding that required by the matching provisions of the various programs. This resopnse ranges from contributions of more than twice the matching requirement in the Hill-Burton hospital construction program and the water pollution program to contributions of more than 17 times the requirement in the case of the cancer control program, 1 One of these will initiate its medical care provisions early in 1961. and to more than 20 times the matching requirements in the case of the general health grants program and the mental health grants programs. NUMBER OF STATES PARTICIPATING With respect to health programs in which the Federal Government has administered grants to the States with matching requirements, an impressive number of these programs won participation by all of the States beginning with the first year of the program. Such programs as the hospital and medical facilities construction program (Hill-Burton), the water pollution control program, the tuberculosis control program, and the general health grants program were adopted by all of the States in the first year of their inception. In the case of the cancer control program, only one State did not join the program in its first year. In the case of the heart disease control program, only two States did not join the program in its first year. In the case of the mental health grants program, all but five States joined the program in the first year, and those five joined within the first 3 years of its operation. In the case of the maternal and child health services program, all but three States adopted this program during its first year, and those three States joined it the following year. In the crippled children's services program, 37 States began participation in the first year, 7 States in the second year, 5 in the third, and 1 in the fourth. In the field of education, the vocational education program was approved by all of the States in its first year. The program of grants to the States for library services was approved by 49 States within the first 2 years. The new National Defense Education Act, which has four titles establishing State grants, has gained participation of from 45 to 48 States in all of these titles. The promptness of State response to the seven grant programs in the welfare and rehabilitation fields has been phenomenal, considering that many of them required substantial dollar outlay and extensive new administrative structure. More than 30 States adopted four of these program within the first year of operation. Within the first 3 years of operation, more than 40 States had adopted five of the seven programs, and more than 30 States had adopted the remaining two programs. The extent of State acceptance of the seven grant programs in the welfare and rehabilitation fields is indicated by the fact that all States are currently participating in all but two of these program. In one of these, aid to the permanently and totally disabled, only four States (Alabama, Arizona, Indiana, and Nevada) have not yet participated. In the other extension and improvement of vocational rehabilitation, only three States (Idaho, Louisiana, and Maryland) have not yet participated. Extension and improvement of vocational rehabilitation services, 1955. Senator JAVITS. Now it seems to me, Mr. Chairman, that if you are dealing with such orders of magnitude, the argument that the States won't come in is not a very good one. Mr. Chairman, one last word: I think we have to watch one thing and that is how unfortunate and disillusioning it would be especially in view of the widespread demand for a bill for medical services or care for those over 65, if we pass such a bill and then the beneficiaries face the breakdown in its operation because facilities are inadequate to the demand. I hope very much that these fundamental principles to which I have tried to address myself will be borne in mind by the committee, and I express the hope finally, Mr. Chairman, that this committee will come out with a bill; that it will screen all of this evidence and information, all of these bills, and will come out with a bill which will go further than the bill which came over from the House. I would like to put myself in accord with those, including the Secretary of Health, Education, and Welfare, who feel that a more comprehensive method of dealing with this admittedly great problem must be understood by the Congress than the one which was sent over to us from the other body and which confines itself essentially to medical indigents is not enough. Thank you, Mr. Chairman for this opportunity. The CHAIRMAN. Thank you, Senator Javits. Senator Gore? Senator GORE. I would like to ask one question, if I might. I have seen in the paper that Governor Rockefeller has presented a plan to the Governors' conference. Have you had an opportunity to review his plan or is his plan similar to your plan? Senator JAVITS. Well, Senator Gore, I saw his plan on the ticker, and of course I have talked with Governor Rockefeller, and I am well aware of his views on this subject. He feels essentially that-from the ticker story, I gathered that his plan is partially a social security plan and partially a plan like ours-social security to take care of those who are under social security, but a plan like ours, which is at a minimum a straight general revenue plan and as you go up higher, a contribution or subscription plan. This is what he seems to have in mind, judging by the ticker report, for those who are not under social security. As you know, and as everybody knows, I am a very ardent supporter of my Governor and his ideas, on the overwhelming majority of subjects to which he is addressing himself in terms of national policy, I find myself in agreement with him. He and I don't see eye to eye on this social security question in terms of medical care for the aged, including that part of it which he wants to put under social security. We do see eye to eye-as I imagine I do with you and Senator McNamara and our other colleagues as to the fact that there ought to be and must be legislation in this field, if humanly possible at this session. Senator GORE. Do you agree that it would require some considerable time for both the committee and the Senate to arrive at a proper solution to this problem with which we must deal? Senator JAVITS. Senator Gore, I am one of those who is very unhappy about this recess, and I don't think that it would take all that |