Mr. KELLY. Yes; it includes benefits for miscellaneous ancillary services and surgery. Senator NEUBERGER. Any X-rays Mr. KELLY. Yes, ma'am. Senator NEUBERGER. Thank you for the moment. Senator MCNAMARA. Senator Fong? Senator FONG. Mr. Kelly, your company, the Bankers Life & Casualty Co. is one of the largest companies in this health insurance field? Mr. KELLY. Yes, sir. Senator FONG. You write approximately 11 percent of all the premiums written or policies written? Mr. KELLY. I could not answer that question offhand. Senator FONG. I understand there are approximately 9 million who are insured and you write about a million; would that be correct? Mr. KELLY. That would be on that basis, yes, sir. Senator FONG. And are you the largest? Mr. KELLY. No, we are the largest stock company. Senator FONG. I mean the number of policies written? Mr. KELLY. Well, I have not seen any data on it by policy, it is generally by premium. Senator FONG. How do you fare in the matter of premiums? Mr. KELLY. We are the largest stock company. Senator FONG. You are the largest stock company that writes this type of insurance? Mr. KELLY. That writes hospital, medical, surgical insurance. Senator FONG. When you compare your company to all companies, not only including stock companies, how do you rate yourself? Mr. KELLY. Well, I would believe we are in the top 10. The only figures I have, Senator, break down the companies on the basis of premiums for hospital and medical expense as to stock companies and mutual companies, and we would appear to be fifth among both categories. Senator FONG. When you say you are fifth, are you very far behind first? Mr. KELLY. Yes, sir, we are quite a way. If you include Blue Cross. Senator FONG. If you include Blue Cross you are far behind? Mr. KELLY. Yes, sir. Senator FONG. Where do you stand with other insurance companies if you eliminate Blue Cross? Mr. KELLY. Then we are second. Senator FONG. Whatever you do would have a very, very strong impact on this industry? Mr. KELLY. Yes, sir. Senator MCNAMARA. May I interrupt to ask, were you in business before the Blue Cross plan was born? Are you one of the oldest companies? Mr. KELLY. I said we entered the business in 1945. Senator MCNAMARA. Then Blue Cross was in existence by that time? Mr. KELLY. Yes, sir. Senator MCNAMARA. Thank you. I did not mean to interrupt. Go ahead. Senator FONG. You have this policy you call the guaranteed renewable. Mr. KELLY. Yes, sir. Senator FONG. How old is that policy? Mr. KELLY. Well, I believe it is about 4 years old. Senator FONG. Do you anticipate that there will be any radical change in the guarantee factor in that type of policy? Mr. KELLY. No, sir. Senator FONG. What I mean is this, does your company foresee doing away with the guaranteed feature of such policy? Mr. KELLY. No, sir. Senator FONG. So far as the industry is concerned, would you say that policy is here to stay? Mr. KELLY. Yes, sir. Senator FONG. How many other companies write that kind of a policy, guaranteed renewable policy? Mr. KELLY. I have no exact figures, Senator, but I am sure there are literally hundreds of them. Senator FONG. Mr. Foody indicates there are approximately 800 companies that are in the health insurance field. Would that be approximately correct? Mr. KELLY. I believe that is approximately correct. Senator FONG. And how many companies would you say write this guaranteed insurance? Mr. KELLY. I do not know how many write it, Senator. I think that there is a very, very large number that do, but I do not know. Senator FONG. Would you say the majority of them write it? Mr. KELLY. I would say probably the majority of them write it. Senator FONG. Then, so far as the guaranteed renewable feature is concerned, that type of policy will stay in the industry? Mr. KELLY. That is my opinion, sir. Senator FONG. The premiums may go up and they may go down, but the likelihood of that policy remaining so far as the insurance business is concerned is very good. Is that correct? Mr. KELLY. Yes, sir. Senator FONG. So, any person buying a policy today, from a reputable company, can expect that he will have it guaranteed him when he wants it? Mr. KELLY. Yes, sir. Senator FONG. Do I understand, Mr. Chairman, that we have the premium rates for various types of policies? Senator MCNAMARA. The staff has much information on that. Senator FONG. Would your actuary work out for this committee, Mr. Kelly, the cost that you could package the King-Anderson bill with the Javits modification as it was voted on by the Senate in 1962? Would you work that out for us? What would that cost an individual? Mr. KELLY. I would be happy to do everything we could to arrive at that, Senator. Senator FONG. I would like to have those figures if you could work them out for us. Mr. KELLY. Yes, sir, we will try to do that. Senator FONG. Thank you. (The information referred to follows:) BANKERS LIFE & CASUALTY CO., Chicago, Ill., June 2, 1964. Hon. PAT MCNAMARA, Chairman, Subcommittee on Health of the Elderly, Senate Office Building, Washington, D.C. DEAR SENATOR MCNAMARA: Reference is made to the request which Senator Fong made to me during the course of the subcommittee hearing as to the cost of hospitalization under certain specified plans. Attached hereto as table 1 is the 1966 estimated net annual claim costs for inpatient hospital services under the King-Anderson and Javits bills. These figures assume an average rate for hospital room and board of $23.16 per day, with maximum miscellaneous hospital benefit of $1,000. The 90-day plan assumes a deductible of $10 per day for the first 9 days (minimum deductible $20). The 180-day plan assumes a deductible equal to 21⁄2 days hospital care based on an average room and board cost of $23.16 with maximum miscellaneous hospital charges up to $1,000. The figures on table 1 do not reflect any additional charge for the expense of administering and paying claims, general company expense, taxes, or profit. The projected cost appearing on table 1 is based on our experience on underwritten risks and may not be entirely adequate to cover the entire population over age 65 without regard to individual medical history. We have not included any estimate of the cost of providing skilled nursing facilities or home health service, as we have no comparable experience upon which to base estimates. Neither have we included the estimated cost of outpatient services contemplated under King-Anderson. While some of our policies include certain scheduled outpatient benefits, we do not have sufficient data available at this time to be able to furnish an estimated cost figure for the outpatient services contemplated. We trust the attached information will be useful along whatever lines Senator Fong has in mind, as well as being helpful to the subcommittee in its study of problems connected with health care of the aging. If we can be of further service, please advise. Yours very truly, Enclosure. EDWARD J. KELLY, First Vice President. TABLE 1.-1966 estimated net annual claim costs for inpatient hospital services under the King-Anderson and Javits bills1 Senator MCNAMARA. Good. Senator Williams, do you have any questions? Senator WILLIAMS. One or two, Mr. Chairman. Mr. Kelly, when you were in the exchange with Senator Fong, you were talking about guaranteed renewable policies. Now, you have guaranteed renewables in age groups, at specific ages as well as guaranteed renewable for life. Is that right? Mr. KELLY. Well, the policies to which we were referring are guaranteed renewable for life. Senator WILLIAMS. How many of your many hundreds of thousands of policyholders do hold that guaranteed renewable for life? Mr. KELLY. I would say approximately 200,000. Senator WILLIAMS. Are most of your new policies that you now are writing guaranteed renewable for life? Mr. KELLY. Yes, sir; they are. Senator WILLIAMS. Most, not all. Mr. KELLY. Not all, but most of them. Senator WILLIAMS. I have some figures here on the standard monthly premium. Do these sound right? They range from $6.30 at age 65 to $9.15 at age 85? Mr. KELLY. Yes, those are the premiums, I believe, for one of our policies. Senator WILLIAMS. They are what? Mr. KELLY. That is the monthly premium rate for one of our policies. Senator WILLIAMS. Some States can go higher, though, than that. Is that true, depending on the risk? Mr. KELLY. On other policies; yes, sir. Senator WILLIAMS. What is the maximum premium that you have found necessary in some cases? Mr. KELLY. The very outside maximum, I would think, would be approximately double. Senator WILLIAMS. In other words, at age 65 it would be a little better than $12, at 85 a little better than $18? Mr. KELLY. Well, that would be the very maximum. Senator WILLIAMS. Under the guaranteed renewable for life, does the company have any protection within the policy to cancel for any cause at all? Mr. KELLY. The only provision of the policy is that rates can be changed as a class, not for an individual. Senator WILLIAMS. But no matter what, the policy cannot be canceled? Mr. KELLY. No, sir. Senator WILLIAMS. That is all I have. Senator MCNAMARA. Mrs. Neuberger? Senator NEUBERGER. Yes. It bothers me that you said a lot of people have policies that may only provide $4 or $5 a day toward hospital care. Of course, this is the fault of all insurance policies. You probably have a lot of people that have not even looked at the amount their hospitalization coverage pays, they are going to come up short some day and find $10 a day does not go very far in paying a hospital bill. That is not your fault. They bought it, but they are included in this class of people that seem to have coverage. On page 3 in your testimony, I do not quite understand the third paragraph. Thus an indemnity policy paying a flat rate per week to a hospitalized policyholder over 65 is much more likely to contribute directly to his hospital expenses. In other words, you evidently have a policy of supplementary coverage which pays the beneficiary like an unemployment insurance, is that it, while he is in the hospital? Mr. KELLY. We have a policy which provides a weekly benefit while confined to a hospital. Senator NEUBERGER. And that is separate from hospital insurance policy? He could have both, in other words? Mr. KELLY. Yes, he could. Senator NEUBERGER. So you could pay him to pay his own hospital bill, but if he were properly covered he would receive an indemnity payment along with hospital insurance? You would allow him to carry both? Mr. KELLY. Yes, ma'am. Senator NEUBERGER. And how much per month would that cost him for average hospital care, to have both? Now I am assuming he is over 65, how do you figure what his weekly benefit is. Mr. KELLY. $50 a week. Senator NEUBERGER. $50 a week? Mr. KELLY. Yes, ma'am. Senator NEUBERGER. All right, he is in the hospital 2 weeks, he would get $100? Mr. KELLY. Yes, ma'am. Senator NEUBERGER. And then if he had another policy paying $10 he would have an additional $140 Mr. KELLY. Or to say it another way, he would have $17 a day. Senator NEUBERGER. Yes; so that would still make him $3 short on paying the average hospital room and board bill, would it not? Mr. KELLY. Well Senator NEUBERGER. But how much does this cost him in premiums? To carry both of those that would pay him $17 a day? You told me awhile ago $60 in premiums about paid the $10. Mr. KELLY. Well, it would cost approximately $6.78 or $7.60. Mr. KELLY. No Senator NEUBERGER. To get the $17 a day you just cited, how much a month would it cost him? Mr. KELLY. It would be $9.35. Senator NEUBERGER. $9.30, and you are still short $3 a day on the hospital room and board bill. Now, the other question I have really concerns me. It is reported that Bankers Life recently reported to the Health Insurance Association of America that you had over a million health insurance policies covering persons age 65 and over. Is that right? Mr. KELLY. The figure we had was 1,100,344. Senator NEUBERGER. Well now, did you not modify that later by subtracting some surgical-medical policies? Mr. KELLY. Yes, ma'am, we did. |