gated under medical ethics to tell the patient that that happened to him?

Dr. DORRITY. Yes, sir, and so frequently to remove a tumor you have to remove the surroundings.

Mr. CORMAN. But the Peer Review Board wouldn't decide that that was wrong. I am asking you about the case where the peer review tissue committee, whoever it is that evaluates, decides that a mistake was made. Are they ethically obligated to tell the patient?

Dr. DORRITY. Yes, sir. In fact, I think the doctor is obligated to tell his patient.

Mr. CORMAN. Does the committee assume that responsibility to see that either the doctor tells the patient or they tell the patient?

Dr. DORRITY. Our physicians do it themselves in our area. We have not had to bring pressure on any physician to carry out his own duty. Mr. CORMAN. Have your various review committees discovered any mistakes that doctors have made to your personal knowledge?

Dr. DORRITY. No, sir.

Mr. CORMAN No mistake.

Mr. ULLMAN. Mr. Landrum?

Mr. LANDRUM. Doctor, I have read about this medical center that is located in Memphis, Tenn., and have seen many favorable writings and descriptions of it.

I wonder if you could briefly describe for the committee this medical center which I understand is such an excellent center and give us some idea of how it operates?

Dr. DORRITY. Well, I didn't intend to pull a chamber of commerce but I am proud of Memphis and the State of Tennessee. We have an excellent medical school. In fact, the reason I went to Memphis was because just before World War II the University of Tennessee was the only school in the country at that time on the quarterly system and I didn't want to waste my summers. So I went to the University of Tennessee. Duke put it in a little later.

I think we have excellent medical care at our medical center and we draw from all over the country. Mrs. Griffiths mentioned Mayo's. She could inst as well have mentioned Memphis because we have the tops in medical care, the tops in all specialties.

Mr. LANDRUM. Is this privately supported entirely?

Dr. DORRITY. The University of Tennessee is a State school.

Mr. LANDRUM. What about the medical center? Who supports it? Dr. DORRITY. We have Baptist Hospital, over 1,000 beds, Methodist Hospital, over 1,000, private institutions, the St. Joseph Hospital, a Catholic institution of similar size, and some of the smaller ones, and they are all within Memphis proper and draw from all over the country.

Mr. LANDRUM. Are there any public funds involved in the operation or maintenance or research or design of this medical center?

Dr. DORRITY. The medical school early in the history accepted Federal grants and many of the physicians were short circuited or detoured into the research area, became full time professors along this line and they learned to lean on these grants. I don't think that was good. Of course, the faculty was increased full time because of so many of these grants. Before this time a lot of the teaching was done by the men in the practice of private medicine.

Mr. LANDRUM. Were they paid or provided any stipend for their

services?

Dr. DORRITY. Some, the chiefs of the departments, some of them were. Some of them were full time. Some of them were allowed to practice on the side.

Mr. LANDRUM. Are they paid now?

Dr. DORRITY. Now the chiefs of the departments are but so many of those taught in the clinics on a voluntary basis, the men in private practice.

Mr. LANDRUM. Are segments or divisions of the center all tax exempt?

Dr. DORRITY. John Gaston Hospital which I didn't mention a while. ago is the one working within the university. This is a city and county owned hospital and it is tax exempt. Some of these others, the church sponsored hospitals, are tax free, some of the hospitals in that area had owned property unrelated to the practice of private medicine and those properties are taxed.

Mr. LANDRUM. Now, aside from that just a minute and to satisfy a question that is in my mind, I have understood that the medical center is arranged in not exactly a quadrangle but something of that nature where each of the elements of it may call upon the other and they are situated in close proximity, is that true?

Dr. DORRITY. No, sir, it is not that at all.

Mr. LANDRUM. It isn't?

Dr. DORRITY. No, sir, not on a quadrangle.

Mr. LANDRUM. I didn't mean necessarily a quadrangle, but I mean they are situated so that each element can call on the other.

Dr. DORRITY. We always do that, sir. The communication and cooperation is excellent among the staffs of all of these.

Mr. LANDRUM. It is all within a limited area of the Memphis City, is that correct?

Dr. DORRITY. Yes, sir. Well Memphis and Shelby County and they are building another now not too far north of the Mississippi line which is a branch of the Methodist Hospital. That is under construction now.

Mr. ULLMAN. Dr. Dorrity, thanks again for your testimony today. Dr. DORRITY. Thank you.

Mr. ULLMAN. Out next witness is an old friend of the committee and I know I speak for all the members of the committee when I welcome back Nelson Cruikshank for testimony here this morning.

Nelson, we welcome you before the committes. This has been a subject matter of long standing interest to you. We consider you somewhat of an expert in the field and look forward to your testimony. STATEMENT OF NELSON H. CRUIKSHANK, PRESIDENT, NATIONAL COUNCIL OF SENIOR CITIZENS

Mr. CRUIKSHANK. Thank you very much, Mr. Chairman. It is a pleasure to be here. I look back over the years that I have had the opportunity and pleasure of working with the members of this commit

tee.

Mr. Chairman and members of the committee, I have a statement. which, in the interest of time, I will not summarize, but I would like to ask your permission that the entire statement be included. Mr. ULLMAN. Without objection that will be done.

(The statement referred to follows:)

STATEMENT OF NELSON H. CRUIKSHANK, PRESIDENT NATIONAL COUNCIL OF SENIOR CITIZENS

Mr. Chairman, Members of the Ways and Means Committee:

My name is Nelson H. Cruikshank and I am President of the National Council of Senior Citizens. Our offices are at 1511 "K" Street, N.W., Washington, D.C. 20005.

I welcome this opportunity to appear before you today as President of the National Council, testifying on behalf of nearly three million members of our affiliated clubs and councils.

On many occasions during past years, I have had the privilege of testifying before this Committee as Director of the Social Security Department of the AFL-CIO. During the long years of the evolution of Medicare, the AFL-CIO representing working people was a most wholehearted supporter of proposals for social security financing of health costs for the aged-those most in need of protection and least able to obtain it privately. Today, the National Council of Senior Citizens testifies as an equally wholehearted supporter of National Health Security for the total population, as proposed in H.R. 22 by five distinguished members of this Committee: Mrs. Griffiths, Mr. Corman, Mr. Burke, Mr. Vanik and Mr. Green.

Medicare has relieved older people of much of the heavy burden of medical costs, lessening the need to turn to family or welfare for help in meeting crushing costs. Our members now want the same relief for their own children and for their grandchildren in the years ahead.

EXPERIENCE OF THE NATIONAL COUNCIL OF SENIOR CITIZENS

The National Council of Senior Citizens was born out of the long struggle for Medicare. We were originally established in July 1961 as the National Council of Senior Citizens for Health Care through Social Security. Our beloved first President was the Honorable Aimé J. Forand, formerly an esteemed member of this Committee and sponsor of the legislative proposals from which Medicare evolved.

Over the years, the National Council has greatly expanded its concern. Our goal is to improve life for all Americans, including the elderly, and we want to be sure that the better life for the elderly is in harmony with the total national interest.

The National Council's support for National Health Security is firmly grounded on our members' day-to-day experience with Medicare. They know what a great blessing the program has been; they also know all to well its deficiencies. I personally, having served on the Health Insurance Benefits Advisory Council since the program's inception, am intimately acquainted with all its strengths and weaknesses.

If there is one thing above all others out of this experience that I believe can be of value to this Committee, Mr. Chairman and members, it is a fervent plea that as you struggle with the difficult task of developing a program to meet the health needs of the nation, you base your deliberations on a thorough examination of the great experiment called Medicare that was hammered out right in this Committee. By definition an experiment is "a test or trial; a tentative procedure an operation for the purpose * ** of testing a principle." Inherent in such a testing is the discovery of both successes and failures. The disclosure of weaknesses or mistaken ideas in such a testing of principle can be just as valuable-sometimes even more valuable-than the proving of success.

What has Medicare accomplished and where has it fallen short? It has succeeded brilliantly in these major areas:

(1) Most of the 20 million older Americans have been relieved of the major part of the crushing burden of the cost of medical care and the dread fear of financial catastrophe resulting from an acute illness.

(2) It has for the most part overcome the administrative complexities that could have thwarted the main objectives of the program. However, it must be noted that the procedures still seem unnecessarily complex to the ordinary beneficiary.

These are no mean achievements.

Medicare has not lived up to expectations in these respects:

(1) Preventing a dangerously rapid increase in the cost of medical services. (2) Making the changes in the health delivery system necessary to improve the quality of care.

(3) Meeting the needs for long-term care on the part of the very old and the chronically ill.

The reasons for these shortcomings may be many and complex, but I suggest there are some that are basic and few in number.

First, with respect to the rising costs. Much has been said about the failure of early Medicare planners to anticipate these increases. I submit that the mistakes that were made were not so much in the areas of utilization and the estimates of need but in the basic concept incorporated in the Medicare law that the limit to the liability of an insurance scheme could rest on the notion of "reasonable cost" and "reasonable charge." Five years experience has shown that many of the so-called "reasonable costs" under Part A are simply cost-plus operations of an uncontrolled and unplanned hospital industry. The "reasonable charge" approach under Part B opened the way for charges often having little relationship to past practices limited by customary charges, as it turned out no one really knew what customary charges were. The result was in all too many instances "reasonable charge" in practice became all the charge the traffic would bear. Many providers followed the long established practice of considering the fact of a patient's being insured a factor in his ability to pay and proceeded to add charges above the allowable amounts. After two years of experience the Social Security Agency finally got around to limiting the allowable amounts payable under Medicare but the net result in all too many cases was a decrease in the proportion of the total cost of medical care covered by the program. As if this weren't bad enough, the decrease in the coverage was accompanied by steadily rising costs of premiums.

In 1965, the public and the Congress relied mainly on two factors to limit the liability assumed by the Medicare program:

(1) Self-restraint on the part of the medical professions, and (2) The controls exercised by the carriers and intermediaries. Neither was completely lacking, but both proved woefully inadequate. I'm citing these well-known facts, not in criticism of the program itself or even of the providers, many of whom have done a conscientious job of carrying out the basic purposes of the program. What seems to me most important is the lesson to be drawn from the experience; namely, that it is not possible simply to provide a method of payment that will greatly increase the effective demand for a limited supply of health services without also providing some control over the economic processes of the health care industry and without taking major steps to increase the supply.

Let me turn now to the second major shortfall of the Medicare program; its failure to make basic changes in the health delivery system. It is hardly fair to refer to this as a "failure" because the program never attempted to alter the system and it didn't try simply because the law specifically forbade it to do so. Back in the days when Medicare was being formulated all of us, the proponents of the plan and our representatives in Congress were constantly assuring the medical profession, the hospitals and indeed the public that we were not altering the system in any way at all. We were simply providing a method of pay ment for health services within the existing system. I'm convinced the public as well as health care providers wanted, even demanded, such assurances in 1965. But times have changed. Public opinion has changed. In the light of our present experience, not only with Medicare, but with Medicaid, and with a multitude of private health insurance schemes, the public is now convinced that there must be some major alterations in our health care system. The demands of the public in the 1970's in this respect are just the reverse of what they were in the early 1960's.

The consciously accepted limitations of the program also apply to the third major area of the public's dissatisfaction with Medicare; namely, the lack of provision for long-term care of the very old and chronically ill. Again, in 1965 we were attempting no more than to provide for the elderly the protection the

great majority of people still in their working years enjoyed. Medicare was modeled on Blue Cross and Blue Shield, and these plans were also deficient in the area of long-term care. But here too, public attitudes have changed.

Against this background of experience, then, the National Council of Senior Citizens has assessed the various proposals for national health insurance now under consideration by this Committee. We are firmly convinced that only the proposal for National Health Security can do the job that so badly needs to be done. The time has come for us to leave off thinking primarily about insurance programs to meet costs incurred under the system as it now exists and to think in terms of planning a health care system that assures all Americans equal access to comprehensive and continuous health services of high quality at economical cost.

REASONS WHY NCSC SUPPORTS NATIONAL HEALTH SECURITY AND NOT ADMINISTRATION PROPOSALS

That our health system needs reform is widely recognized. The hearings your committee is now holding is clear recognition of the urgency of the problem. The needs are amply documented in your committee print, "Basic Facts on the Health Industry."

I need not detail the evidence of the chaotic state of the present system, marked by both fragmentation and wasteful duplication of services, with overemphasis on costly hospitalization and with incentives for unnecessary services. But I do want to identify the reasons why the National Health Council of Senior Citizens firmly believes that only National Health Security can achieve the orderly and effective reorganization that assures universal access to comprehensive health services of high quality at economic cost. In so doing, I identify the reasons why we believe--just as firmly-that the administration proposal would fail to achieve our objectives.

(1) National Health Security provides the leverage the financial muscleneeded for real reform. The Administration's proposal accepts the inevitability of the present "nonsystem" and merely pours in more health dollars without disturbing the status quo.

(2) National Health Security gives more than lipservice to our basic premise that good health care is a right of every American. It guarantees this right through a single universal system, without using a means test and with the same benefits for all, rich and poor alike. In contrast, the administration proposal uses two types of health insurance, perpetuating invidious distinctions in health care based on income, and even so falls far short of universal coverage.

(3) National Health Security removes all barriers to timely care by eliminating deductibles and coinsurance and by assuring the patient of no billing by the doctor. (I stress the importance of "no billing by the doctor" because our members who have found Medicare such a boon have also known the bane of uncontrolled medical bills from doctors unwilling to take assignment.) The Administration proposal relies heavily on deductibles and coinsurance-made more palatable in actual practice by the euphemism of "cost sharing"-thus inevitably causing the patient to postpone needed care.

(4) National Health Security is the only real answer to the economic delivery of health services and control of skyrocketing costs. It does this by providing health care directly at the lowest possible cost, with no waste of health dollars on private insurance carriers as middlemen, and by using advance budgeting to assure effective controls on all health costs. The Administration proposal, on the other hand, would perpetuate rising fees and would be a bonanza for the insurance industry.

The reliance placed by the administration on commercial insurance carriers for the operation of their plan is nothing short of shocking to anyone having experience in this whole field from the consumers point of view. On two different occasions during this year in discussions with the Secretary of HEW, I personally challenged this approach only to be assured that the administration was aware of the problems inherent in commercial insurance and their plan when completed would include adequate controls of the insurance industry. What was my amazement on reading the Secretary's statement of October 19 before this Committee to find that for such admittedly necessary control reliance was to be placed on state legislation! Anyone acquainted with the role of commercial insurance in the health field beginning as early as 1908 in State workmens compensation laws and continuing through the era of negotiated health and welfare