CONTENTS CHRONOLOGICAL LIST OF WITNESSES Edwin F. Daily, M.D., Group Health Association of America, Inc.; ac- companied by Dr. W. P. Dearing, executive director; Louis L. Feldman, Walter R. McBee, executive director, Blue Cross-Blue Shield, Dallas, Tex.; accompanied by Walter F. Hachmeister, assistant controller; and E. W. Aune, assistant director of administration__ Robert T. Evans, president, Blue Cross Plan for Hospital Care, Hospital Service Corp.; accompanied by Robert M. Redinger, vice president__ Walter J. McNerney, president; accompanied by A. G. Singsen, vice presi- 210 221 STATEMENTS Daily, Edwin F., M.D., Group Health Association of America, Inc., and 190 BLUE CROSS AND OTHER PRIVATE HEALTH INSURANCE FOR THE ELDERLY WEDNESDAY, APRIL 29, 1964 U.S. SENATE, SUBCOMMITTEE ON HEALTH OF THE ELDERLY Washington, D.C. The subcommittee met at 10:15 a.m., in room 4232, New Senate Office Building, Senator Pat McNamara (chairman of the subcommittee) presiding. Present: Senators McNamara, Williams, Moss, Neuberger, and Fong. Also present: Jay B. Constantine and Frank C. Frantz, professional staff members; Patrica Slinkard, chief clerk; Toby Berkman, research assistant; and John Guy Miller, staff director. Senator MCNAMARA. The hearing will be in order. The first witness this morning is Dr. Edwin F. Daily, vice president and medical director, Health Insurance Plan of New York, representing the Group Health Association of America. Doctor, will you identify your colleagues for the record? STATEMENT OF EDWIN F. DAILY, M.D., GROUP HEALTH ASSOCIATION OF AMERICA, INC.; ACCOMPANIED BY DR. W. P. DEARING, EXECUTIVE DIRECTOR, GROUP HEALTH ASSOCIATION OF AMERICA, INC.; LOUIS L. FELDMAN, CONSULTANT, GROUP HEALTH ASSOCIATION OF AMERICA, INC., AND UNDERWRITER, HEALTH INSURANCE PLAN OF GREATER NEW YORK Dr. DAILY. On my left, Dr. W. Dearing, executive director of the Group Health Association of America; on my right, Mr. Louis L. Feldman, underwriter for Health Insurance Plan in New York. Senator MCNAMARA. You may proceed in your own way, Doctor. Dr. DAILY. Thank you, Senator. I am very pleased to be here. From the reports of your hearings I have been reading, I gather that the over 65's find themselves in what might well be called a state of medical poverty. The testimony seems to indicate that medical and hospital care are available to the oldsters, but the vast majority of them can afford to buy or insure themselves for only small pieces of it, if any. The two organizations I represent here today, Group Health Association, GHAA, and HIP, are both dedicated to the provision of prepaid comprehensive medical care through group practice. 179 These plans have shown one great difference between themselves and other types of health insurance. This is most clearly demonstrated in the report of the U.S. Civil Service Commission analyzing the hospital experience of almost 6 million Federal employees and their dependents in 1962. This report showed that the persons cared for by the prepaid group practice plans had a hospital admission rate 40 percent less than the participating plans offering the fee-for-service type of health benefits. A similar remarkable difference in the hospital admission rates like this has been demonstrated over and over for the persons covered by group practice programs. It would appear that in medical groups where the physicians have modern diagnostic equipment available, have ready access to specialist consultation in all fields, and are paid on a salary basis without the incentives of a fee-for-service system, they hospitalize their patients much less often than do doctors in solo fee-for-service practice. This 40 percent, Senator, if it could have been applied to all of the Federal employees in 1962, would have achieved a saving of 1,800,000 hospital days. As a conservative estimate of $30 per hospital day this would mean a potential overall saving of $54 million in 1962 to employees and to the Government. I believe the economic advantages of group practice merit the adoption of legislative measures to stimulate its development. Now, turning to HIP which provides medical care to almost 700,000 people through its 32 affiliated medical groups. The program provides for comprehensive medical care-home, office, in-hospital, preventative, and curative. It also covers injectible drugs, immunizations, biologicals, home visiting nurse service, ambulance service, some appliances, all of this without any charge to the patient beyond the premium charge. We now have 45,000 people in HIP over the age of 65. We have had considerable experience in providing medical care to elderly people. Some 16,000 of the over-65 subscribers pay their premiums for medical benefits directly to HIP and for the most part are also paying premiums to Blue Cross for hospital coverage. Another 13,500 have their premiums paid by the New York City Department of Welfare and the remainder of the 45,000 come under group enrollment provided by employers or union welfare funds. It has been our experience that these older people need more medical attention than the other age groups; they have to be seen by doctors much more frequently, and more important than the number and nature of the services provided is the additional time that doctors and their skilled assistants need to care for elderly people. Medically they need more laboratory procedures, they need more X-ray and more physiotherapy. For example, our over 65 enrollment needs to see doctors at the medical centers and offices about twice as often and in the hospitals three and a half times as often as they did between the ages of 25 and 45. We care for 1,500 of people in nursing homes who are over 65, who receive an average of 20 doctor services per year. HIP and the New York City Department of Welfare are in the midst of an experimental project to learn how we can better provide |