Page images
PDF
EPUB

BLUE CROSS AND OTHER PRIVATE HEALTH

INSURANCE FOR THE ELDERLY

MONDAY, APRIL 27, 1964

U.S. SENATE,

SUBCOMMITTEE ON HEALTH OF THE ELDERLY

OF THE SPECIAL COMMITTEE ON AGING,

Washington, D.C.

The subcommittee met at 10:10 a.m., in room 4232, New Senate Office Building, Senator Pat McNamara (chairman of the subcommittee) presiding.

Present: Senators McNamara, Williams, Neuberger, Muskie, Dirksen, and Fong.

Present also: Jay B. Constantine and Frank C. Frantz, professional staff members; Patricia Slinkard, chief clerk; Toby Berkman, research assistant; and John Guy Miller, minority staff director.

Senator MCNAMARA. The hearing will be in order.

Unfortunately, we have to start with an apology, because there was a quorum call the first thing and several of the Senators will be here in the next few minutes, we hope. They are responding to the live

quorum.

This morning, we begin 3 days of public hearings on a matter of great interest and importance both to the public and the Congress, the health needs of the 18 million Americans who are 65 years of age or

over.

Actually, the hearings will focus on just one phase of this broad problem. We will be concerned with the cost, coverage, and benefits of health and hospital insurance protection available to the elderly from private insurance companies and the Blue Cross plans.

As everyone here knows, there is a continuing public discussion over the need, or lack of it, for a social security-financed system of hospital insurance for the aged.

On the one hand, there are those who say the private insurance industry, plus existing Federal, State, and local programs, can do the job adequately. On the other hand, there are those who say they can't, and that additional legislation is necessary.

It is important, I believe, to a fuller understanding of this public issue, to define as precisely as possible, the present and potential role of the private insurance industry, and Blue Cross, in meeting the health needs of the elderly.

A number of serious questions have been raised in recent months over the ability of the private insurance industry and Blue Cross to meet these needs. Doubts have been concentrated in three major areas, the actual number of older persons who have some form of health insurance policy; the quality of that coverage in terms of benefits, and the cost of the protection.

1

A fourth area we hope to explore is the availability of this protection to those who do not now have it.

Finally, we hope to develop enough factual information, so that interested persons, including the Congress, can make objective judgments on the central question, which is:

Is there adequate health insurance protection available from private sources for people over 65 at a price they can afford?

To that end, the Subcommittee on Health of the Elderly has invited the major health insurance companies in the field; the industry's associations; officials of the Blue Cross plans; representatives of appropriate Government agencies, including experts on medical economics; representatives of labor and consumer groups; and other interested and knowledgeable persons to testify.

It is a pleasure to note that all of those invited have accepted, and have stated their intention to cooperate with the subcommittee in developing the necessary information.

This includes not only the formal testimony being presented today, but also answers to questionnaires submitted several weeks ago to several of the largest insurance companies offering special policies to senior citizens.

We have asked all of our witnesses to limit their oral testimony to about 5 minutes, which will be a summary, with the understanding that the full text of their statements will be placed intact in the permanent record of these hearings.

We are doing this so that members of the subcommittee, who have had an opportunity to study the statements in advance, will have more time for questioning, to develop additional pertinent information.

Our first witness this morning is a representative of the Social Security Administration, Dr. Ida C. Merriam, Director of the Division of Research and Statistics.

Senator DIRKSEN. Mr. Chairman.

Senator MCNAMARA. Senator Dirksen.

Senator DIRKSEN. At the beginning of the hearing may I submit a statement?

Senator MCNAMARA. Senator Dirksen has a statement to be submitted for the record, and without objection it will be included at this point in the record.

(The statement referred to is as follows:)

STATEMENT BY HON. EVERETT MCKINLEY DIRKSEN, U.S. SENATOR FROM ILLINOIS

It is our aim that medical care be available to all Americans under a system providing

1. Greatest possible freedom of choice;

2. Minimum financial burdens;

3. Optimum personal dignity; and

4. Maximum flexibility for continued efficient growth of the world's finest medical care.

In achieving this purpose, there is a role for government. Most appropriately it should give priority, in order, to local, State, and Federal assistance. The late President Kennedy noted this when he said "Effective public health measures and medical care depend, in the last analysis on action at the community level."

The role of government should be held to the minimum practical if the primary role of individual responsibility with freedom is not to be usurped. If excessive tax burdens are to be avoided, government's role should be limited to supplementation of private initiative, both corporate and individual. The role of the

individual and family, which years ago stood almost alone as the medical care bulwark along with voluntary charity agencies, remains preeminent.

That the freedom and dignity which are coadunated with individual responsibility should be destroyed is unthinkable to most Americans. During the last 30 years, however, we have seen emergence of a new force in provision of medical care voluntary health insurance. Its acceptance by the American people has given unparalleled evidence of their determination to continue exercise of intelligent, individual initiative wherever possible.

Necessitated by increasing complexities in society which have been more than matched by new developments in medicine, this new force is a product of American corporate initiative.

Health insurance, under consideration today with special reference to older people, constitutes a remarkable demonstration of the responsiveness of America's singular talent for corporate initiative, both profit and nonprofit. It will be interesting to review the way in which it is responding to the need of older Americans. Use of the present tense in reference to its effort on behalf of older people is especially appropriate because these are truly new developments.

Health insurance accomplishments to be reviewed during these hearings have almost all occurred in the last 5 to 10 years. Major experiments have been undertaken during the last year or two. More may be expected.

I recognize that the story which will unfold will reveal some mistakes. Blue Cross and the insurance industry can no more be expected to make progress without mistakes than can an individual.

They made mistakes 30 years ago. The voluntary health insurance system which evolved, however, has taken a permanent place in our national life. From what we already know, we may be sure the story of health insurance for older people will be dramatic. It will demonstrate again that when new demands develop, the American system responds effectively.

The willingness of the insurance industry and Blue Cross to appear here voluntarily reflects their desire to find answers to problems which are still emerging. This spirit of cooperation can only bode well for the Nation and its older people. Pursuing the facts in a spirit of good will should result in addition of important information.

I am confident all look forward to such a result with the hope that new knowledge will accelerate the magnificent beginning made by voluntary health insurance on behalf of older people.

Senator MCNAMARA. We are very glad to have you here this morning, Dr. Merriam. We would like you to proceed.

STATEMENT OF DR. IDA C. MERRIAM, DIRECTOR OF THE DIVISION OF RESEARCH AND STATISTICS, THE SOCIAL SECURITY ADMINISTRATION

Dr. MERRIAM. Thank you, Senator. I have with me, Mrs. Lenore Epstein, Deputy Director of the Division and the person who has carried the major responsibility for our 1963 survey of the aged. I am here to present data from that survey. This survey was undertaken by the Social Security Administration with the Bureau of the Census acting as its agent in collecting and tabulating the information. This is the most comprehensive survey of the aged ever undertaken in the U.S. Government.

It utilizes a representative multistage area probability sample of the entire civilian aged population of the United States. Thus it covers both beneficiaries and nonbeneficiaries of social security. It includes the institutionalized as well as the noninstitutionalized.

Within the past 60 days, we have released the first of our findings, concerning income of the aged in 1962. The analysis of earnings and work experience in that same year has now been completed and we are preparing to release this material within the next few days.

Your committee staff has asked me to focus these remarks on our findings with regard to health insurance, hospital utilization, and medical care costs. We have completed a great deal of work in these areas and are prepared at this time to discuss what we have learned up to the present. Much work remains to be completed, however, and data from later tabulations will be analyzed and released over the next few months.

The basic result of the survey on the extent of health insurance is that about 9 million persons aged 65 and over, or 51 percent of the aged persons in the United States at the end of 1962, had some form of hospital insurance. Another 1 percent had coverage for other types of medical expense but without having hospital insurance. Fortythree percent had surgical insurance: But at least 813 million aged persons were without any type of health insurance protection.

The insurance coverage figures do not in any way reflect the effectiveness of the coverage. An aged person who has hospital insurance which would pay $5 a day for 30 days is counted along with the person who has insurance that would pay all of his expenses in a semiprivate room for 180 days. I shall return to this question of effectiveness of coverage in a few moments.

I am sure you are interested in knowing who among the aged have the insurance and who do not have it. Our survey shows those most likely to be covered are people in good health and with relatively high incomes; the least likely to have it are those in poor health, the very old, those not employed, and those with low income.

The chart to the far left shows the relationship of health status and health insurance coverage. It shows that, of persons 65 and over who say they are in relatively good health, 61 percent had insurance, and 39 percent had none. Of those in fair health, the respective proportions were 53 and 47 percent. Of aged persons claiming to be in poor health, only 37 percent had health insurance while 63 percent were unprotected.

Chart 2 shows the income and insurance relationship. In the upper income third of the aged population-we divided the aged population into three groups in the upper income group, 80 percent of the couples had coverage for one or both members of the family.

Among the nonmarried individuals in this income group-widows and widowers, the divorced, and the never married-64 percent of the men and 66 percent of the women were covered. But in the lowest income third, one or both members of couple families had insurance in only 42 percent of the case. For individuals, the proportion with insurance dropped to 31 percent for women and 15 percent for men. Between ages 65 and 72, inclusive, 58 percent had hospital insurance. At 73 and over, 43 percent were covered.

Among the 234 million aged persons who are still employed, twothirds had health insurance. Among the 1412 million not employed, less than half had insurance. One reason for this difference may be that many aged persons drop their previously held coverages when they stop working, perhaps because at a time when their incomes decline, their premium costs increase if they must convert to an individual policy or if the employer's contribution is terminated or reduced.

The present survey is the third we have made of the extent of health insurance coverage of the aged but is the first to include the

« PreviousContinue »