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on the lobbying techniques employed by your organization in relation to those employed by AMA or any other group.

I do think that it is a subject, though, that the public would be very much interested in and I think that it should be examined sometime, but not by this committee at this time.

On this council of health organizations, I thought that was composed of professionals in the field.

Is that not true?

Mr. CRUIKSHANK. They represent some of the organizations.

Mr. CURTIS. So there could be another reason why the CIO-AFL would not be a part of that other than somebody trying to do something arbitrary. It may be that they wanted to confine it to professionals.

I do not know; I just throw that observation out for your comment. Mr. CRUISHANK. It is significant that they did not include the

nurses.

Mr. CURTIS. I thought they did include the nurses.

Mr. CRUIKSHANK. No; they included nursing homes, but not nurses. Mr. CURTIS. Do you think it is significant? Do you think that was deliberate?

Mr. CRUIKSHANK. I say it in view of the fact that the American Nurses Association has endorsed the Forand bill. It is at least something of a coincidence.

Mr. CURTIS. Was not the American Hospital Association part of the council?

Mr. CRUIKSHANK. Yes; it was.

Mr. CURTIS. I just do not understand that sort of reasoning, to be honest with you.

Maybe there is a motive, but I prefer to think that there are other reasons for these things. As far as I am concerned, I would rather devote my efforts to try and figure out what is the way to go ahead in this area.

Mr. CRUIKSHANK. That is exactly what we wanted to do. We wanted to sit with these groups. "Here we are, the consumers. You are the purveyors. Let's sit down together and work something out," and they said, "No, we don't want to hear from you people."

Mr. CURTIS. I am saying to you, sir, why not take that on the basis of a proper motive instead of impugning it as improper motive? It may be that their purpose was to get the groups of professionals together. I think your criticism as to why the nurses were not included is an apt one, but I do not mean that they were not included for some ulterior or mean motive. I prefer to find out what the reason is. These arguments get to be on the one side that it is socialism and on the other side that the people opposed are not interested in human welfare.

Mr. CRUIKSHANK. I didn't say that.

Mr. CURTIS. Well, I have heard the argument used many times, and it has been used and it gets down to that.

Frankly, I do not care one way or another on either argument. I do think it is proper to examine into such a thing as socialism. I certainly do think that there is such a thing as callousness and I think it is proper to examine into it, but to try to solve an important matter

like this by choosing up sides in generalities, in my judgment can only hurt in reaching the proper solution.

One thing I want to say is this, Mr. Cruikshank: I was sorry I did not get to listen fully to your statement. I have read most of it. I do want to compliment you on it. It contains, as your other statements have contained, a lot of very good information, fairly presented. I have noted over a period of years your testimony here has been of that sort, which is commendable and is contrary to the other line of presentation that I have been raising some objection to.

One thing I would appreciate. I presume your organization has evaluated the report of the Health, Education, and Welfare of April 3, 1959, on hospital insurance for OASI beneficiaries, and I believe in your statement you refer to the fact that in your judgment a lot of good information is there. I think it would be of value if your organization would prepare for this committee, unless you have already prepared it, an appraisal of this whole report that bears on this subject that you are interested in, because there are probably areas where you disagree and there may be some points that you may think there is incomplete information on or there might be further information.

In my judgment this is a good starting point, at any rate, and any criticism of this report, negative and constructive, I think would be very helpful to this committee.

Mr. CRUIKSHANK. We thought it was a very useful report; a very good, workmanlike job of collecting the facts. (The information referred to follows:)

2. STATEMENT BY AFL-CIO PRESIDENT MEANY ON THE REPORT OF THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, APRIL 13, 1959

We are delighted that the report of the Secretary of Health, Education, and Welfare on health benefits has been completed. The report was called for by the House Ways and Means Committee last summer when the Congress passed the Social Security Amendments of 1958 without including Congressman Forand's proposal to meet hospital and other health needs of social security beneficiaries. Secretary Flemming is to be congratulated on the thoroughness and objectivity of this report. It cuts through the fog of poisonous misinformation with which opponents have attempted to choke the Forand bill (H.R. 4700). Overwhelming statistical evidence now supports what our members have known right alongthat retired workers have incomes too low to meet the rising costs of medical

care.

The careful analysis presented in chapter 5 shows that hospital and nursing benefits for old-age and survivors insurance beneficiaries are entirely practical. Not a word there suggests that the Department could not successfully administer such a program.

Congress should at once move toward enactment of the Forand bill. The Ways and Means Committee should hold hearings at the earliest possible date. Our members want high quality medical services, both before and after retirement, and are willing to pay for them on a budgeted, prepayment basis during their years of employment.

High-powered advertising campaigns by private insurance companies are not going to give aged couples the $200 or more a year charged for very limited protection. Three-fifths of all people 65 and over had money incomes of less than $1,000 a year in both 1956 and 1957, as the DHEW report states.

Our members resent being told by spokesmen for organized medicine that those not covered by private insurance can, in case of need, turn to welfare agencies. Public assistance and other forms of welfare are based on the means test and are commonly not available before savings are nearly exhausted. Accompanying requirements too often affront the dignity of men and women who, through hard work and thrift, have built a modest home in which to enjoy their later years. Congress should help preserve such homes through making health benefits available under our social security system.

A Federal program can be shaped to encourage desirable goals in health care: the preservation of good health; high quality care in hospitals and less expensive nursing institutions; and a speedy return of the aged to their own homes and an active, constructive life.

The great majority of Americans would be protected regardless of where they work or whether they are able to continue doing so. Their contributions would help pay the costs, and benefits would be received as a matter of right. Administrative expenses would be smaller and workers would thus get the largest return for each dollar contributed. The annual cost for some time to come is estimated at only half the amount the AMA has been using ($1 billion instead of 2).

Mr. CURTIS. If you would care to, I would myself like to see a further critique of the report. Just one substantive thing, because we do not have much time here and I just regret that these are such short hearings that of course we cannot really get into the subject.

One thing that has troubled me in your presentation and in many presentations is the failure to separate two problems. There is the problem of the indigent which runs through all of these welfare programs.

I do not care whether it is housing, or whether it is food, or whatever. Its real basis is indigency and to me indigency should be treated as a complete problem.

I find too often in various programs, including this suggestion, that indigency is used as a vehicle to carry on a program that goes way beyond trying to handle the problem of indigency. I think particularly in this area essentially the people that your organization represents are not indigent. Is that not true?

Mr. CRUIKSHANK. Generally that is true; yes, sir. Sometimes they become indigent.

Mr. CURTIS. Sometimes they become indigent. Of course, indigency is a concern of all of us. However, as I view this problem, there are two things that we are treating with. One is the fact that we have in our society inadequate techniques, and inadequate facilities, and inadequate skills to provide for the bulk of our population who are not indigent and that is where we get into this area of trying to find out what kind of insurance programs and what kind of other techniques might take care of this job. I wish we could separate it from that angle, to see first whether or not we cannot adequately handle the basic problem in our society, which is not the indigent.

When we have set up a program or see a program is operating in that area, we should concurrently, because indigency is a serious problem, and at the same time, if you please, look at the problem of indigency, whether it is a matter of health, or whether it is a matter of housing, or whatever it is, and treat with that from this angle and not confuse the two, because I do not believe that the two can be handled in the same fashion.

That is an observation I would make in regard to the points that you have developed because much of your argument strikes me as being based upon the problem of the indigent rather than on the problems of those who can afford to pay.

One thing that is not mentioned in here, for example, is the fact that the bulk of our population now is building up great equity as they go through life, the fact that today 1 out of 3 workers own their homes, when formerly, 50 years ago, only 1 out of 5 did, and that is a continually improving situation.

The increased standard of living and wage scales has been a great thing which has created a different situation than we formerly faced as to who might become indigent, and therefore I think the emphasis in trying to solve this problem should be to deal with it only on a dual basis: One, those who are not indigent, and then those who are. Mr. CRUIKSHANK. I don't think you can ever quite separate them, Congressman.

Mr. CURTIS. I think you can.

Mr. CRUIKSHANK. This program is a program to prevent indigency. Of the 11 million people who are now on social security, drawing social-security benefits, a great many of them would be indigent if you did not have the social-security benefits.

Mr. CURTIS. You do not mean preventing indigency?

Mr. CRUIKSHANK. Yes.

Mr. CURTIS. No.

Well, it may be semantics. I do not believe that is what you mean, because if it were to prevent, there is only one way to prevent indigency really and that is to see that the people have adequate means to take care of them.

Mr. CRUIKSHANK. Or to insure them.

To insure them prevents indigency. You can either have a big pile of cash or you can be insured against contingencies. Either will prevent indigency.

Mr. CURTIS. We are talking about insurance to a large degree and we have seen tremendous advances.

You do not regard it as tremendous, I guess. I do.

In very recent years, in going to these techniques, again I say, the people are capable of paying for it, because your own organization proposes that this be paid for through the technique of Government intervention, Government capital formation, if you please, so we are talking about paying for it.

I am suggesting that there are probably, when we are dealing in that area of people who are not indigent, better techniques than going to the Government. The indigency comes in when you say, "But they are incapable of paying enough to take care of the cost,' and there is where the cost of the indigent alters the program of the people could afford to take care of their own problems.

You say we cannot draw a line. I think we can. I think that a real line can be drawn and should be drawn. Otherwise, in confusing the two problems we do not do a good job in handling indigency nor do we do a fair or adequate job in taking care of or providing the techniques which enable those who are able to pay for their health problems to do so.

One final thing and then I will close, because, as I say, I am sorry we just cannot discuss and go into these matters the way I think we must if we are going to come up with the right answer.

One area where little has been done up to date where I think a great deal can be done is in catastrophic sickness insurance, health insurance. Actually it is the kind of insurance that costs the least, because it does not occur in too large a proportion of our population, and therefore it is the kind of thing that the insurance technique well lends itself to.

There is an area where a great deal could be done, in my judg

ment.

Has your organization considered that and gone to any of the private insurance companies to ask them or encourage them to do anything in this field?

Mr. CRUIKSHANK. It has been weighed in the balance and found wanting.

Mr. CURTIS. What do you mean, weighed and balanced; it hasn't existed.

Mr. CRUIKSHANK. We have analyzed those programs and we see there are many shortcomings, particularly to meet this problem.

Mr. CURTIS. There are not any; that is the trouble. There are very few programs. It is new. It needs new ideas and new thoughts.

You come before the Congress and the Federal Government with new ideas and I am glad you do. Why do you not come before these other groups in the private enterprise system with new ideas?

You say you found them wanting. Do you not have some constructive suggestions in the field of catastrophic health insurance? Mr. CRUIKSHANK. The whole approach is the wrong approach, particularly to this problem.

Mr. CURTIS. It is the insurance approach. It is no different.

The only difference is, you are asking the Federal Government to do the insuring and all I am saying is, Why can this job not be done, as far as the people who are not indigent, in the private sector? Mr. CRUIKSHANK. We can send you material that we have on this from our study of this catastrophic illness approach. (The following was received by the committee:)

1. COMMENTS ON CATASTROPHIC ILLNESS INSURANCE

We were asked to comment on the question "Why can this job [of providing health insurance to the aged] not be done, as far as the people who are not indigent, in the private sector *** [with particular reference to] the field of catastrophic health insurance."

"Catastrophic illness" or "major medical expense" insurance requires the insured to assume the full cost of a segment of health care and thereafter reimburses him for most of the cost of a broad spectrum of health services up to a maximum amount. It usually provides that the insured pays an initial amount which may range from $50 to $500, depending upon the policy. The insurance carrier then typically pays 75 to 80 percent of the remaining costs up to a fixed ceiling. The initial amount paid by the person insured is usually referred to as the "deductible" and the 20 or 25 percent of the costs above that paid by the insured person is known as "coinsurance." The deductible and coinsurance amounts together constitute the proportion of the cost for which the individual has no insurance protection. The coinsurance and deductible features are intended partly as a deterrent against the "overuse" or "abuse" of health services under the plan.

Insofar as the aged are concerned, this approach does not overcome the basic limitation of private insurance mentioned in our testimony, namely that the high cost of insurance of the aged would have to be borne by the aged alone. Premiums would be too costly for the majority of older people who have moderate or low incomes but are not "indigent." Most of them would therefore not obtain such coverage. They would still be confronted with harmful financial barriers to obtaining medical care, and they would still be subject to financial disaster in case of serious illness. Much of the burden of their care would fall on public assistance, which is a far less desirable mechanism than social insurance, for reason explained in our testimony.

The special limitations of major medical expense insurance were pointed out by the AFL-CIO Executive Council 3 years ago when this type of insurance was being offered increasingly under collectively bargained programs and when it was proposed as a basic feature of the administration's program to provide health insurance for Federal employees. The executive council concluded that catastrophic illness coverage may be valuable, but only when it supplements

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