medical care for these older people. We are taking care of 13,500 OAA and MAA recipients.

We have found in the past 18 months that there are some very real problems of providing care for these people, more than just the volume of service.

The physical limitations of these people and their difficulties in using usual methods of travel would normally prevent a great many of them from getting medical care at all. Our medical groups have had to set up special transportation systems for these people in order to get them to the medical centers.

This cost alone of transportation, taxis, and our own transportation systems we have developed for these people, are running between $5 and $7 per old person per year. That is just to get them to the doctor's office for office medical care.

It takes at least one-third more time for these people to go through a laboratory procedure or to have X-rays taken. They are old, they are infirm, they have difficulty in getting about, they have difficulty in giving their histories to the doctor; this is costly because to a doctor time is money.

Let me tell you about the cost of this experimental project. For office and at home medical care for these older people under welfare, the premium is now $72 per year, and for those who reside in nursing homes, the premium cost is now $96 a year. And these amounts are adjustable every 6 months, up or down, depending on experience. If we were to provide for their medical care in hospitals as well as in their homes and in doctors' office, the annual premium would be at least $130 a year.

Our most recent estimates for hospital insurance for these older people on welfare would be at least $300 a year in addition to the $130 for medical insurance.

In relation to this welfare program I would like to mention this one rather dramatic savings in costs. I told you we are taking care of 1,300 of these older people in nursing homes; that is about onefourth of the people in nursing homes receiving aid from the New York City department of welfare.

A study reported last week showed that the cost of prescribed drugs in the nursing homes in which HIP provides medical care was 50 percent less than it was in the homes where the patients were being taken care of by sole practitioners under a fee-for-service system. This is a very interesting finding.

Also, we were told by the welfare department that its cost of administration had gone down for our part of its program.

Now, I wish to discuss the costs of insuring people who come into insurance before they are 65 and after they are 65.

The present HIP annual premium rate for its medical care program for a person enrolled prior to 65, is $57.80 and the Blue Cross insurance is $55.80. If that person then remains in HIP-Blue Cross, he pays an annual premium after 65 of $113.60 in order to have both medical and hospital coverage. Now, let me make it clear, these are community rates, and reflect the average costs of young people, middle age people, and old people.

But, the present Blue Cross rates for a person coming in after he is 65, jump up to $129.60 a year. That is Blue Cross alone and is

available only if that person is found medically acceptable. Blue Cross does not take them all, they take a few.

We do not even enroll them. I will come to that later.

I am certain, though, that if we did decide to open up enrollment for people coming into HIP for the first time after age 65 on an individual basis, that our premium rate for medical care would be as high or higher than the $129.60 charged by Blue Cross for hospital care. For a total of at least $260 a year for both coverages.

This cost is beyond the means of most elderly people, and I believe it is going to be beyond the means of practically all of our elderly people.

Here is a good example of it.

We have many enrollees who upon attainment of age 65 become ineligible to continue under group enrollment and no longer have part or all of their premiums paid by an employer or welfare fund. We urge every one of these people to keep their insurance, that this is the time they need it most. Yet at this time, when they need it most, two out of three of these people drop their health insurance. They simply cannot afford to go on at a time when their income is reduced, to pick up the full cost of health insurance which previously had been paid for all or in part by an employer. This really is tragic. Perhaps we should call these people medically impoverished.

The sensible way would be to pay the hospital costs for the aged by providing for regular contributions during their entire working years. Hospital coverage, if financed through social security, as proposed by the administration, would enable many, if not most of these elderly people who now drop their medical care insurance to continue it through their years of retirement.

Thank you very much.

Senator MCNAMARA. Thank you very much for this very helpful testimony.

Has your experience been largely or exclusively in the city of New York?

Dr. DAILY. For the past 15 years; yes, sir, New York.

Senator MCNAMARA. That is what I am talking about, what you are describing here today?

Dr. DAILY. Yes.

Senator MCNAMARA. We often hear the statement that every one who needs medical care gets it. Is that statement true with respect to the older people in your experience?

Dr. DAILY. In my experience in the geographic areas that I know, medical care, doctors and hospitals, are there. The problem is to get patients to them. Often there will be a means test barrier set up between you and that hospital or that doctor and you cannot get to them, or maybe the rate of payment is set up at this height; you do not have that kind of money to pay for it; or even as I pointed out for elderly people, Senator, it could be just the matter of transportation. Unless there is some organized medical care program, those people are not going to get to see a doctor.

Senator MCNAMARA. In view of your long professional experience, what would you consider adequate and necessary benefits in a basic hospital insurance program for older people?

Dr. DAILY. Senator, I have carefully read several times the KingAnderson bill. That has been given a great deal of thought by experts in this field from all over the country. It is my impression that the benefits provided there for hospital care, for nursing home care, and for the out-patient diagnostic services in a hospital, are a good basic program. I would not suggest any changes in it at this time. I think after some experience with that program, there may be a desire to have adjustments up or down, but I think that is a very sound program to start with.

Senator MCNAMARA. We are quite impressed with your statement that two out of three subscribers drop their coverage when they reach age 65. They are given the right to convert from the group to an individual plan.

Dr. DAILY. Yes.

Senator MCNAMARA. You point out that this is primarily based on the fact that they are not able to continue to carry

it?

Dr. DAILY. This is what we have been told over and over again; remember, these were employed people retiring.

Senator MCNAMARA. Yes.

Dr. DAILY. And it is when they lose this employment and they lose their group coverage, income goes way down and then they see for the first time how much it is going to cost to pay the full cost of HIP and Blue Cross, which for years in the past had been a payroll deduction with at least half paid by the employer. All of a sudden this bill is in front of them and they say, we simply cannot afford this amount of money-2 out of 3—and that is tragic.

Senator MCNAMARA. We have had some testimony in the last few days that indicates that many older people become eligible for other group plans after 65. Do you find this to be true? Would not a person in the category that you have just described be looking for another group that he might become associated with? Are there such group plans?

Dr. DAILY. I do not know of such groups and I think it would be extremely difficult for a person to find such a group, and the cost, as I have presented to you, is going to be way, way beyond their means. If you become insured again after age 65, the costs are very high.

Senator MCNAMARA. This is largely due to the fact that they are compelled to take out an individual policy and are not able to get the advantage of a reduced premium that would be available if they had group plans for people over 65.

Dr. DAILY. There is just no question that the person after 65, paying the full cost of his medical or hospital care, which you do have to pay when you take an individual polícy, certainly cannot afford this.* It is certainly well over $300 a year.

Senator MCNAMARA. There are some groups such as teachers who do have a plan after 65, that is a group plan. Do you not find that to be true for retired teachers?

Dr. DAILY. We beg our retired teachers, we have thousands of teachers in HIP, we plead with these people to keep it after retirement. Some of them do. A third of them do, but two-thirds of them just feel that they do not have that amount of money left over.

Senator MCNAMARA. Even when there is a group plan available to them?

33-420-64-pt. 3——2

Dr. DAILY. They were in a group plan, any teacher in New York can be in HIP if they wish to be today. Many of them are. But when they retire and they have their chance to continue with HIP and Blue Cross, which are companion plans in New York, 2 out of 3 of them drop it, sir.

Senator MCNAMARA. Thank you very much. You can be sure the testimony you have given will be very helpful.

Now, Senator Fong, do you have any comments or questions? Senator FONG. Dr. Daily, you say you have 45,000 people who are enrolled in this plan over 65 years of age; is that correct?

Dr. DAILY. That is correct.

Senator FONG. I think yesterday we got testimony from the New York 65 that they had figures of approximately 120,000; is that correct? Do you know what their enrollment is for those over 65?

Dr. DAILY. I did not hear the testimony yesterday, Senator. Senator FONG. I think they have been in existence 18 months. The New York plan has been in operation 18 months. How long has your plan been in operation?

Dr. DAILY. Fifteen years.

Senator FONG. Then, the New York plan is a better plan than yours from the standpoint of lesser premium and more benefits?

Dr. DAILY. If you are speaking of the Blue Shield-Blue Cross New York plan?

Senator FONG. No, the New York 65.

Dr. DAILY. I believe this is backed by New York Blue Shield, Blue Cross-all right, the commercial groups.

Senator FONG. They have been in operation 18 months.

Dr. DAILY. I would say that the benefits of that plan are vastly lower than the benefits of the HIP plan I have been describing to you this morning, Senator.

Senator FONG. How does the premium compare with yours?

Dr. DAILY. I have not seen the premium of the New York 65 plan. Senator FONG. What accounts for the New York plan having 120,000 enrollees age 65 and above in a period of 18 months as compared to your plan of 45,000 in 15 years?

Dr. DAILY. Well, I would say that the main reason for this is that the benefits in most of those over 65's that I have seen are a small fraction of the benefits we provide in a combined HIP-Blue Cross coverage. Our coverage for our people is really fully comprehensive medical care, at home, in the office, and in the hospital, by specialists of all types, with all diagnostic tests, X-rays and other things provided; hospital care, full service hospital benefits for at least 21 days. I have seen nothing like such a coverage in any of these over-65 plans that you are describing.

Senator FONG. You stated that the commercial insurance plans are not sufficient to take care of the aged. I think everybody agrees with you there, that the aged need something more than private insurance, and I think they should receive help from the Federal Government, but there is disagreement as to whether the social security approach is the best approach or whether the Government should appropriate the money for the care of these people who cannot afford medical service. In the State of Hawaii I received the statement that anyone who needs medical care gets it.

Would you say that would be a fair statement for the State of Hawaii, for those who cannot afford it?

Dr. DAILY. In Hawaii?

Senator FONG. Yes. Anyone who needs medical care and is not able to pay for it, gets it?

Dr. DAILY. I have long heard that Hawaii is the paradise of the Pacific. I am delighted to find it is also a paradise for medical care. I have not had personal observation of it, Senator.

Senator FONG. This is the statement I got from the previous administrator of the health program over there.

Would you say that applied to the State of New York? If a person is medically indigent and is unable to provide for his medical bills and his hospital bills, does he or she get it in the State of New York?

Dr. DAILY. I would say in many instances, they do not get medical care; and in many more instances they get totally inadequate medical care, and this we have seen with our own eyes.

Senator FONG. Does the State of New York have a law which says that he is entitled to medical care?

Dr. DAILY. I think that our State has been very enlightened in its legislation endeavoring to provide medical care for the people in the State and in the cities.

Senator FONG. Does the law say that if he needs medical care and is not able to provide for it that he can get it?

Dr. DAILY. They try to legislate this, Senator, but I can assure you that you can have a Kerr-Mills type of legislation, for example, with a great deal of Federal money, more Federal money spent in New York State than was ever spent before for medical care, and it is my impression that not one additional person got medical care than before the Kerr-Mills bill was in existence. It merely meant a shift of money. People who were previously getting their medical care in nursing homes paid for by State or local funds, for example, were all shifted over on to the Kerr-Mills program, thereby largely relieving State and local government of their financial responsibility for those people. The thousands of other older people who also needed medical care were not able to get it under Kerr-Mills because of the means test. These people were not helped with that legislation.

Senator FONG. It refers to these medical indigents, I do not know what the definition of that is in New York. If a person is medically indigent as far as the medical profession is concerned, you understand that, can he or she get medical care free in the State of New York?

Dr. DAILY. With the greatest of difficulty in the areas that I know and I believe sometimes they would find it impossible to get it. Senator FONG. Why is that?

Dr. DAILY. There are people, for example, under the Kerr-Mills bill, that I am told that in order for them to get any benefit they must declare themselves in a charitable state. The sons and daughters and the other relatives must be also found in an impoverished state. And the people—the person who needs the care is not willing to have his or her relatives go through this demeaning process which is required by law in New York State, and therefore these people, and I am told this by the administrators of the medical care under the welfare department, that these people even though they need care, they will