I would like to point out that in my home city I can personally testify that for the last quarter of a century no individual in the city, young or aged, has been refused hospital care when ordered by a doctor because he was unable to pay for it. I can testify to that because I ran the hospital myself for most of that period.

Although these data do not conclusively show that the present scale of benefits is not providing a floor of protection, the committee might conclude this to be true.

However, this will not be the first time the Ways and Means Committee has regarded the prevailing scale of benefits to be less than a floor of protection. In 1950 and in 1958 this committee held extensive hearings, and in consequence decided that the benefits should be increased in order to continue having social security provide a floor of protection income.

In 1952, without any hearings whatsoever, Congress took similar action.

In each case, this action by Congress reflected its view that social security benefits by and large were not enough to enable the beneficiaries to buy the necessary food, clothing, shelter, and so forth to prevent them from being in want.

If this committee should conclude that today's social seurity benefits are not providing a floor of protection sufficient to buy the necessary food, shelter, clothing, and health insurance protection, we believe that the solution is obvious, to raise the total benefit.

However, we wish to refer again to the small and continually declining percentage of aged social security beneficiaries who have had to seek old-age assistance and we therefore believe that by and large the scale of benefits today is providing a floor of protection. Thank you very much.

The CHAIRMAN. Thank you, Mr. Marshall, for bringing to us the views of the Chamber of Commerce of the United States on this legislation. We appreciate your statement and your presentation of it. Are there any questions of Mr. Marshall?

Mr. Forand.

Mr. FORAND. Mr. Marshall, on page 12 of your statement you refer to a minimum budget for an elderly couple which was once developed by the U.S. Bureau of Labor Statistics. Did not the Bureau of Labor Statistics stop pricing that budget years ago because it was so badly out of date?

Mr. MARSHALL. Can you answer that question, Mr. Schlotterbeck? Mr. SCHLOTTERBECK. No; but I would like to find out. It was repriced in connection with a conference held by the State of New York.

Mr. FORAND. By the State of New York, but not by the U.S. Bureau of Labor Statistics?

Mr. SCHLOTTERBECK. No; that is correct. I don't know why they haven't repriced it.

Mr. FORAND. Because it was so badly out of date. That is why they have not.

One recently advertised policy for people over 65 costs $13 for a couple a month, or $156 a year. Another costs $17 a month at $204 a year. Yet, either one would pay for only a small part of the total medical services that may be needed.

How much more than $204 a year do you think an aged couple would have to pay for voluntary insurance that would protect them against the cost of comprehensive care, including home, office care, and drugs, and so forth?

Mr. MARSHALL. I would suggest, Congressman, that that question be asked of the representatives of the insurance industry because I think there are many lower cost policies than that in effect for older people at the present time.

Mr. FORAND. Lower cost and less coverage?

Mr. MARSHALL. Some of them have less coverage, and I am not too sure that I am competent to cover all the different policies that are offered by all the insurance companies of this country.

You must remember there are literally hundreds of them that are now in this business of offering this type of insurance protection of many different kinds and qualities.

My own opinion, Congressman, is that the medical care of the aged is not a national problem. I think that the medical care of the aged is pretty much a function of the community in which the aged live. I would like to respectfully make a suggestion that we don't test this problem by taking a sample of 6,000 out of 9 million scattered in various communities, but that we test the problem by looking at several sample communities; that we look at everybody over age 65 in different typical communities throughout the United States and try to determine if those individuals in that community are receiving better, worse, or the same medical care as the other segments of the population in that given community.

I would suspect-and I am pretty sure it is true in my own community that the aged are receiving just as good medical care in my community as the young are.

Mr. FORAND. I want to commend you for that if your community has that type of service.

Mr. MARSHALL. There are many others.

Mr. FORAND. However, just recently you perhaps have read the same item in the newspaper that I did about an aged couple down south that committed suicide because they could not get any medical care from anybody, could not get help of any kind. The newspapers fetaured that two or three times. If that is occurring in that particular area, I am sure that other areas in this country are also lagging in the type of care that should be given these aged people.

Mr. MARSHALL. I am quite sure that is true, Congressman, but I would like to respectfully suggest that perhaps there are others in that same community who are not receiving medical care. It is not only the aged, but it may be the young.

Mr. FORAND. I have to agree with you on that.

How do you figure that an aged couple with an income of $2,000, or a little more or less, can afford either to buy comprehensive health insurance or, lacking it, meet the cost of long-continued illness?

Mr. MARSHALL. The premiums on this insurance are roughly about 7 percent, I would guess. That was the figure, I think you will find, in the report of HEW.

Mr. Schlotterbeck reminds me it is on page 93 of the HEW report. Mr. FORAND. However, you will admit, especially in view of your experience with hospitals, that a $2,000-a-year income is not sufficient

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to meet many of those hospital bills that are coming through, according to a number of hospital bills that have been submitted to me by people all over the Nation.

Mr. MARSHALL. I submit, Congressman, that there are times when I am worried about whether my income is sufficient to meet hospital bills that might be submitted to me in the case of a catastrophic illness, but I submit also that these insurance premiums are nothing more or less than a mechanism for saving up over the years for paying for those bills in the years when I do not have any to meet, and I think you even out the load over a period of years by buying insurance so that when that catastrophic illness does occur the insurance takes care of a substantial part of it.

Mr. FORAND. I wish I could agree with you on the "substantial" part of it. That is not along the lines of the experience that I have had.

Mr. MARSHALL. It depends on the form of policy.

Mr. FORAND. In fact, at this point, Mr. Chairman, I would ask permission, after Mr. Marshall has concluded here, that I may be permitted to include in the record a letter from Congressman Rabaut, along with two or three other letters with reference to a hospital case that he has asked be inserted in the record.

The CHAIRMAN. Without objection, it will be included at that point. Mr. FORAND. Mr. Marshall, as the voice of business, has the chamber met with the insurance industry in any attempt to provide insurance adequate for the aged?

Mr. MARSHALL. We have an insurance department in the Chamber of Commerce of the United States and they have a committee which deals with these problems of health insurance as well as other insurance matters.

We also have had for many years a joint subcommittee of my economic security committee and of the insurance committee, composed of representatives of the insurance industry and representatives of the employers, doctors, and other people from my committee which have met together to devise means and try to spread the work with respect to these kinds of insurance programs.

That activity has been going on, I think, to my personal knowledge for at least 15 or 20 years. I think I was chairman of that joint subcommittee some 10 or 12 years ago. They have tried to take a very active part. We have held meetings.

One of the first meetings in the chamber I ever attended was on this subject in the city of Cincinnati, some 15 years ago. We have had meetings in New Orleans, Albany, and throughout the country to try to stimulate this sort of activity.

Mr. FORAND. I am asking that question because, as you perhaps well know by now, as I have repeated it so many times, I am looking for alternatives, if alternatives can be found, to solve the problem that we all agree is a very serious problem and must be solved.

I have to assume that your paper here is the best recommendation that your committee can make on this subject because so far as I know the chamber has not presented us with any particular alternative.

If the chamber should have some alternative program that they can set out for us and would furnish it to the committee, I for one would be most appreciative.

Mr. MARSHALL. I would like to suggest the first determination that should be made, it seems to me, is whether this is a national problem particularly for the aged, and I think a survey in depth of given communities would be the first step in making such a determination.

Then I would like to urge, and I have a personal interest in this, because I devised the first such program, that we examine very carefully this catastrophic health aspect, because to my mind even though Mr. Cruikshank and I disagree on this, it seems to me that that is the only real insurance protection that you can afford in this thing. You don't hire a bank to pay your monthly grocery bills or you don't hire an agent to pay your meat bill or your electric bill.

By the same token, I think it is a mistake to hire an insurance company to pay for doctors to come and take care of the children's colds and things like that.

That in effect is what you are doing when you have first dollar coverage. The real catastrophe, though, is the long illness, the cancer, and other things, and that can be insured against and very cheaply, because it is a comparatively rare occurrence.

Roughly I think, and I have checked these figures, 1 out of every 10 people go to the hospital every year. Many of those hospital trips are for the normal things that occur that you ought to save up for; births, tonsillectomies, and so on, but the minute you get first dollar coverage, then people tend to take advantage of that.

I well recall one insurance program we put in with first dollar coverage and a man with 11 children had the tonsils taken out of all of his 11 children the first year it was in. I am sure that the doctor who looked down the throats of those 11 children didn't see 11 cases of diseased tonsils. I think he saw something else there, but that is the kind of thing you get in first dollar coverage.

Mr. FORAND. Mr. Marshall, the thing that disturbs me the most is the fact that we hear everywhere that this problem is being studied. It has been studied for years and yet no one seems to have come up with a solution to this problem.

I am sincerely hopeful that all interested parties will collaborate and come up with something in the very near future.

I thank you very much.

Mr. MARSHALL. Thank you, sir.

The CHAIRMAN. Mr. Mason will inquire, Mr. Marshall.

Mr. MASON. Mr. Marshall, I judge from your testimony that you are not in favor of the provisions of this bill and I judge from Mr. Cruikshank's testimony that he was in favor of this bill. Evidently, you two people are looking at it from two different directions.

There are at least two differences, as I see it, between commercial insurance and Government social insurance, and this is to show the different points of view that you and Mr. Cruikshank have.

First, in commercial insurance the basic motive is profit and the second thing is, it is voluntary on the part of the people who go into it. The motive behind Federal or Government social insurance is supposed to be the welfare of the public, and it is compulsory.

From everyone there is a collected tax. Those are the two basic things.

Now I am saying this: that if I believe in the profit motive in all industry, which has made this country great, I should, therefore,

think that the profit motive might solve this problem as well, if not better, than Government ownership of all industry or Government operation of this matter. And those are the two points of view that you typify and Mr. Cruikshank typifies.

And the members of this committee can take either point of view they think is the one thing best for this Government. Is that right? Mr. MARSHALL. Substantially that is correct, Mr. Congressman. I would like to point out, though, Mr. Mason, that not all insurance programs by private insurance companies are profitmaking enterprises.

Of course, you have these stock and mutual companies and you have other forms of so-called private insurance as distinguished from Government insurance.

Mr. MASON. There are all grades, but the motive behind even the mutual insurance companies is profit for somebody, even if it is only profit for the officers of that company.

That is all, Mr. Chairman.

The CHAIRMAN. Mr. Curtis will inquire.

Mr. CURTIS. First I would like to ask, you are familiar, of course, with the report submitted to the Committee on Ways and Means by the Department of Health, Education, and Welfare of April 3 on "Hospitalization Insurance for OASDI Beneficiaries"?

Mr. MARSHALL. I have glanced through it, but I wouldn't say that I am thoroughly familiar with it.

Mr. CURTIS. You may have heard, if you have been in the room, that I have requested witnesses representing other organizations, if they would care to, to give us the benefit of their criticism of this document as to accuracy and where it might fall short or where it might be in the future improved.

That would be, I think, very helpful to us as a starting off point. (The following letter was received by the committee:)

Hon. WILBUR D. MILLS,

CHAMBER OF COMMERCE OF THE UNITED STATES,
Washington, D.C., August 3, 1959.

Chairman, House Ways and Means Committee,
House Office Building, Washington, D.C.

DEAR MR. MILLS: On July 14, Mr. A. D. Marshall testified for the Chamber of Commerce of the United States before the Ways and Means Committee on H.R. 4700. At that time, the committee requested the national chamber to submit an appraisal of "Hospitalization Insurance for OASDI Beneficiaries," a report by the Secretary of Health, Education, and Welfare to the Committee on Ways and Means. We will confine our observations to chapter I of this report. Others are more qualified to comment on chapters II-VI.

Part of chapter I is devoted to the financial status of aged social security beneficiaries in 1957, and in the future. On page 10 of this report, there is a chart showing the distribution of these beneficiaries by "total money income groups" in 1957. The underlying data are from a sample survey of such aged persons. Since considerable significance may be attached to the findings of this survey, it should be noted that no technical statement has been released as yet by the Bureau of OASDI on the representativeness of the sample employed.

We have two comments to make about this survey conducted in 1957. First, the sample appears not to be a representative one and, second, the interview process doubtless resulted in a substantial bias.

Available data indicate that this sample may have been unduly weighted with persons in the older age brackets. This is shown by a comparison of the percentage of aged beneficiaries in the sample receiving old-age assistance,' with like data for all aged beneficiaries.

1 See National Survey of Old-Age Survivors Insurance Beneficiaries, 1957, No. 1, table 207.