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The CHAIRMAN. Is State Senator Martin, of Texas, present?

Senator Martin?

Apparently not.

That completes our calendar.

Mr. ALGER. Mr. Chairman, I ask unanimous consent that his statement appear in the record.

The CHAIRMAN. It will appear in the record, since he was listed, without objection.

(The statement of State Senator Martin, of Texas, follows:)

STATEMENT Of Crawford MARTIN, HILLSBORO, TEX., ON H.R. 4222

Mr. Chairman and members of the committee, my name is Crawford C. Martin. I am a State senator representing the 12th senatorial district of Texas, and I reside in Hillsboro, Tex.

I welcome this opportunity to present a statement on a subject of intense interest to me. For several years, I have been working actively in this field of growing concern throughout the country, and indeed, throughout the world. As chairman of the Governor's committee on aging in the State of Texas, I have shared this interest and concern with public-spirited citizens of all ages from every corner of our sprawling State. I might add that 5 of the 10 counties comprising my senatorial district are among the 12 counties in Texas having the highest population percentage of persons over 65 years of age.

Health and medical care for our older people are grave problems to be met in our State no less than any other in the Nation. And Texas is moving to meet the need. During the regular session of the Texas Legislature just concluded, I had the privilege of successfully sponsoring a bill to effect a vendor medical care program for old-age assistance recipients in our State the group of older people who have the greatest need. It is our initial step toward ultimate enactment of the full coverage offered the States by the Kerr-Mills law. With some 225,000 Texans-one-third of our total aged population-currently receiving old-age assistance, this new Texas law will have very considerable significance in coping with the problem of medical care for our needy aged. The vendor medical care program will be administered by our State department of public welfare, and will provide medical and health care to the aged who are in need. It provides complete free choice of doctor and hospital and its financing will not call for an increase in the deductions from take-home pay of Texas employees. Texans will begin to benefit from this program in January of 1962.

Of course, our next step is to provide for the additional elderly who are not on old-age assistance, but who nevertheless are financially unable to bear the strain of prolonged illness. I am confident that State legislation to this end also will be forthcoming to the end that Texas may take full advantage of the Kerr-Mills provisions. With implementation of the Kerr-Mills program, there is no reason to add medical aid to the benefits of those who are receiving social security checks.

In reviewing the findings of the Governor's committee on aging, and after evaluating testimony presented during the State hearings of my vendor medical care bill, it became obvious to me that health care was not the problem among the aged that I had been lead to believe. It is an important factor, yes, but no more so than housing, employment, recreation, and the overall attitude people have concerning our older citizens. Most older people do not like to be classified as having one foot in the grave, merely because they have reached an artificial barrier which has been established at the age of 65.

The fear of poor health is of great concern to the aged in our State. Nevertheless, it is not accurate to say that health and medical care is the No. 1 problem of those 65 and older. What the aged need more than any one thing is an active and productive role in society. The Texas Employment Commission has a special division which is helping to secure jobs for people over 65 who are willing and able to work. It also is working with business and industry in creating a more favorable attitude toward hiring older workers. The majority of the aged in Texas desire most of all the opportunity to take care of themselves. The majority of Texas' aged live in rural areas. In our survey of the needs of the aged, we found that those living in rural areas were usually well taken care of by their own families. Those who reside in metropolitan areas have 76123-61-pt. 2—14

the benefit of city-county hospitals and clinics. I would like to point out here the wonderful work which has been done by the medical profession in Texas. Texas doctors have given generously of their time and skills to provide the necessary medical care to all needy people, regardless of their age or income, and without any thought of payment for their services.

If given the chance, through the Kerr-Mills program, Texas' physicians, hospitals, and nursing homes can meet the health care needs of our aged who need and are entitled to the protection of a tax-financed program. If given the chance, private industry and personal initiative will advance further to meet the needs of the aged of tomorrow.

I respectfully urge you to vote against the enactment of the King bill for the foregoing reasons.

Thank you very much.

The CHAIRMAN. That completes the call of the calendar for the day and, without objection, the committee adjourns until 10 a.m., Monday. (Whereupon, at 4:40 p.m., the committee recessed, to reconvene at 10 a.m., Monday, July 31, 1961.)

HEALTH SERVICES FOR THE AGED UNDER THE SOCIAL

SECURITY INSURANCE SYSTEM

MONDAY, JULY 31, 1961

HOUSE OF REPRESENTATIVES,
COMMITTEE ON WAYS AND MEANS,

Washington, D.C.

The committee met at 10 a.m., pursuant to recess, in the committee room, New House Office Building, Hon. Wilbur D. Mills (chairman of the committee) presiding.

The CHAIRMAN. The committee will please be in order.

Our first witness this morning is Mr. Rietz. Mr. Rietz if you will identify yourself by giving us your name, address, and capacity in which you appear and, if you desire, to introduce those at the table we will appreciate it.

STATEMENT OF H. LEWIS RIETZ, PRESIDENT, HEALTH INSURANCE ASSOCIATION OF AMERICA AND FOR AMERICAN LIFE CONVENTION AND THE LIFE INSURANCE ASSOCIATION OF AMERICA; ACCOMPANIED BY M. R. DODSON AND W. N. SEERY

Mr. RIETZ. My name is H. Lewis Rietz. I am executive vice president of the Great Southern Life Insurance Co. of Houston, Tex. I am also president of the Health Insurance Association of America.

I appear today in behalf of the American Life Convention, the Health Insurance Association of America, and the Life Insurance Association of America.

With me at the witness table are Mr. M. R. Dodson, president of the Ohio National Life Insurance Co., of Cincinnati, Ohio, and chairman of the Joint ALC-LIAA Committee on Social Security and Health Care, and Mr. W. N. Seery, vice president of the Travelers Insurance Co., of Hartford, Conn., and chairman of the Executive Committee of the Associated Connecticut Health Insurance Cos.

At the conclusion of my testimony, Mr. Dodson will comment. briefly on an idea of possible tax incentives as a means of promoting the more rapid development of voluntary health insurance for the aged; Mr. Seery will describe briefly an insurance program developed in the State of Connecticut to further assist Connecticut residents 65 and over to acquire health insurance.

The Health Insurance Association is a nonprofit association of 282 insurance companies engaged wholly, or in part, in providing voluntary health insurance. The American Life Convention and the Life Insurance Association of America are associations of life insurers having a combined membership of 301 companies, most of whom also provide voluntary health insurance.

These associations include in their membership companies having in force approximately 90 percent of the voluntary health insurance underwritten by insurance companies in the United States and Canada.

I appear today to present testimony in opposition to H.R. 4222. It seems appropriate to refer to the philosophy and previous position of the insurance business in regard to social security. The insurance business did not oppose the establishment of the social security program, nor did it oppose the adoption of survivors benefits when they were added in 1939.

To the contrary, we have consistently cooperated in the creation, formulation, and improvement of this system. While we have not agreed with some proposals for change or extension of benefits, those proposals designed to make the system more effective within the framework of sound principles have had our active support. However, we have been and continue to be critical of those proposals which would unduly expand benefits as measured by the sound "floor of protection" concept or would extend the system into the fields of compulsory health benefits. We regard such proposals as contrary to the public interest.

The associations which I represent regard H.R. 4222 as highly undesirable and unnecessary in the light of the availability and continued rapid growth and development of voluntary health insurance, other presently existing private and public facilities, and the recent enactment of Public Law 86-778.

While the insurance business opposes H.R. 4222 for what we are convinced are sound social and economic reasons, the implication sometimes suggested that the insurance business opposes adequate health care for the entire aging population is erroneous. Nothing can be further from the truth. We favor the best possible health care for our entire population, including all of the older segment.

For some 25 years the insurance industry has devoted tremendous energy to the development of broad and effective means to provide for financing the costs of the best possible health care in the world. I am sure that is the objective of those who support H.R. 4222. Therefore, our differences arise only as to the means and the ultimate effect of the various means of accomplishing this purpose for our older citizens.

In testimony opposing H.R. 4700, introduced in the 86th Congress, which we presented in July 1959, there was set forth our reasons for opposing any OASDI approach to financing health care. In lieu of restating such testimony, we respectfully request that your committee consider that statement, along with our present testimony, when H.R. 4222 is considered in executive session.

We should now like to answer three major questions which have been asked of the insurance business in connection with matters such as are contained in H.R. 4222. These questions are as follows:

(1) What would be the cost of adding health care benefits for persons over 65 eligible for benefits under the OASDI and railroad retirement systems?

(2) What is voluntary health insurance presently doing and what can it do with respect to the financing of health care needs of the senior citizen?

(3) What is the proper role of the Federal Government with respect to financing such care for the aged?

The cost of adding health care benefits to the OASDI system: H.R. 4222 is a modification to the approach for financing medical care costs of the aged that was contained in H.R. 4700, 86th Congress, known as the Forand bill. That bill was rejected by your committee. It provided all OASDI eligibles and their dependents (no matter what age) with specified inpatient hospital services, skilled nursing-home care following hospitalization, and surgical services of a physician no matter where performed. Insurance actuaries estimated that a payroll tax of from 2.3 to 2.9 percent of a $4,800 taxable earnings base would be required to finance this proposal. In terms of dollars, we estimated a first-year cost of from $2.1 billion to $2.4 billion. We predicted an ultimate annual cost of from $6 billion to $7.7 billion.

H.R. 4222 is limited to OASDI eligibles and railroad retirees 65 years of age and older. Subject to the recipient meeting part of the cost, it provides for specified inpatient hospital services, skilled nursing-home care following hospitalization, and certain benefits for outpatient diagnostic services and care in the home.

In February, the administration estimated the cost of this proposal to be $1 billion during its early years, with an eventual annual cost of $112 billion. This was to be financed by a payroll tax of one-half of 1 percent on the first $5,000 of earned income.

Secretary Ribicoff's recent statement to your committee presented revised estimates which indicate an eventual cost of $22 billion to be financed by a payroll tax of one-half of 1 percent but based on the first $5,200 of earned income. On the basis of the present value of the dollar, insurance company actuaries have developed cost estimates as follows:

(1) Benefits provided under H.R. 4222 would cost $2.2 billion in 1963 as compared with the administration's estimate of $1 billion. In 1964, with the nursing-home provision available for the entire year, the total cost would rise to $2.5 billion. The administration's estimate for this year is again $1 billion.

(2) By 1983, the annual cost of H.R. 4222 would be $5.4 billion while the administration has estimated that by 1990 costs will reach only $212 billion.

(3) The level premium costs of H.R. 4222, as such costs are defined by the Social Security Administration, are 1.73 percent on a $5,000 taxable earnings base while the administration's estimate is only sixty-six one-hundredths of 1 percent. While it is not strictly comparable, the administration estimates this level. premium requirement would be satisfied with a tax of one-half of 1 percent on a $5,200 payroll basis. In our judgment, this is unrealistic.

As appendix A to this testimony, I am filing an analysis which develops the basis of our cost estimates for H.R. 4222. I urge your careful study of this material. The differences between our estimates and those of the administration arise because:

(1) Our estimates are based upon the actual claim experience of insurance company as well as Blue Cross and Blue Shield plans gathered by the New York State Insurance Department. Our long experience would indicate that this substantial actual data is far more reliable in predicting cost than is unverified data obtained from household interviews of a limited sample of the aged population.

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