felt by persons of all ages. Older persons have larger than average medical care needs. As a group they use about two and a half times as much general hospital care as the average for persons under age 65 and they have special need for long-term institutional care. Their incomes are generally considerably lower than those of the rest of the population, and in many cases are either fixed or declining in amount. They have less opportunity than employed persons to spread the cost burden through health insurance. A larger proportion of the aged than of other persons must turn to public assistance for payment of their medical bills or rely on "free" care from hospitals and physicians. Because both the number and proportion of older persons in the population are increasing, a satisfactory solution to the problem of paying for adequate medical care for the aged will become more rather than less important.

We do not think that H.R. 4700 provides a satisfactory solution to the problem.

We are convinced that the objective of making adequate medical care reasonably available to our aged population should, so far as possible, be achieved through reliance upon and encouragement of individual and organized voluntary action.

Steady progress has been made in extending and improving voluntary hospital insurance coverage of the aged under nonprofit and commercial programs.

About 40 percent of the persons age 65 and over now have some hospital insurance protection. As recently as 1952 only 25 percent of the persons age 65 and over had any form of hospital insurance. The most rapid increase in coverage has been in the age group 65 to

69.

If the same average yearly increase in the proportion covered is maintained as has been maintained during the last few years, private hospital insurance will reach about 56 percent of the aged population in 1965 and 68 percent in 1970. If the same rate of increase in coverage of OASDI beneficiaries that was recorded between 1951 and 1957 continues, about 70 percent of the aged beneficiaries group will have some form of health insurance by 1965.

In view of the special efforts that are being made by nonprofit plans and insurance companies and in view of the experimenting that is taking place with new methods for extending coverage, it seems to me that we can look forward with confidence to 70 percent of the aged having some form of hospital insurance by 1965.

In the light of this situation, I believe that it would be very unwise to enact H.R. 4700. There is no question but that its enactment would bring to a virtual halt the voluntary efforts that are moving forward in such an encouraging manner.

It is, of course, true that if H.R. 4700 were enacted, some older persons would purchase insurance to cover the cost of types of services not covered by the Government program, such as private room accommodations in the hospital, or physician's home and office visits, but there would be no incentive for persons to purchase private insurance covering the costs of services already paid for by compulsory contributions to the Government program.

Furthermore, since the taking of this initial step would result in strong pressures to extend the scope of benefits to additional types of service, voluntary insurance might soon be eliminated from the entire field of health protection for the aged.

In other words, enactment of H.R. 4700 would have far-reaching and irrevocable consequences. It would establish a course from which

there would be no turning back. The opportunity for continued growth in coverage and adequacy of voluntary health insurance for the aged would be stifled before its full potential could be gaged.

The pattern of health coverage of the aged would have become frozen in a vast and uniform governmental system, foreclosing future opportunity for private groups, nonprofit and commercial, to demonstrate their capacity to deal with the problem.

I recognize, of course, that continued progress in the direction of covering an increasingly large percentage of the aged by voluntary hospital insurance programs will still leave us with problems that the Nation cannot ignore.

In the first place, there will be persons whose policies provide inadequate protection. Most of the persons holding such policies would be willing to purchase additional protection if it could be provided at rates they were able to pay.

In the second place, there will be those who have no protection but who would participate in voluntary programs if provided with policies at rates that they could afford to pay.

Over the last 10 years, various proposals have been made to deal with the problem presented by both of these groups. The major proposals can be classified under two headings, namely:

(1) Those designed to stimulate voluntary health insurance through pooling or reinsurance; and

(2) Those designed to provide Federal subsidies to private carriers in order to enable them to cover above-average risks or to supplement premiums of persons of low income.

I feel that these proposals should be reevaluated and discussed with persons both in and out of Government in the light of the basic data that have been brought together in connection with the report that we submitted to this committee in April and also in relation to other possible alternatives.

They should also be reevaluated, it seems to me, in the light of the possibility of their being applied to the aged group alone because these previous proposals related to the population as a whole.

As we indicated in our report to this committee, the alternatives that can be classified under these two headings to which I have just referred are based on previous legislative proposals.

We indicated in the report that there are other possibilities for Federal action. We also stated that time had not permitted any of them to be developed and evaluated in adequate detail for the report. We are now in the process of evaluating these other possibilities.

One possible approach, for example, would be to develop a plan under which workers, particularly those who do not now have the opportunity of participating in large group plans that will provide them with protection after retirement, could make voluntary contributions over a period of years to the Government which in turn could purchase insurance for them from nonprofit groups and insurance companies.

I have requested the staff to make a thorough study of those possibilities that we have not yet had the opportunity of developing and evaluating in adequate detail, and to discuss the most promising ones with persons both in and out of Government.

At the conclusion of these studies, we will be in a position to determine whether or not it is possible to develop any plan that is both practicable and desirable. At that time we will be happy to report the result of our studies to this committee and its Subcommittee on Administration of the Social Security Law.

In summary:

1. We must come to grips with the problem of providing adequate hospital care for the aged.

2. The percentage of aged persons covered by hospital insurance written by nonprofit groups and insurance companies has increased in a very significant manner in recent years.

3. There is every indication that the percentage of aged persons covered by hospital insurance written by nonprofit groups and insurance companies will continue to increase.

4. The enactment of a compulsory hospital insurance law would represent an irreversible decision to abandon voluntary insurance for the aged in the hospital field and would probably mark the beginning of the end of voluntary insurance for the aged in the health field generally.

5. Instead of abandoning voluntary hospital insurance for the aged in favor of compulsory insurance, every possible effort should be made to determine whether or not a plan can be developed that will strengthen the voluntary approach by making adequate protection available to a larger percentage of the aged.

Mr. Chairman, that completes my opening statement.

The CHAIRMAN. Mr. Flemming, we thank you, sir, for your statement and your appearance.

Secretary FLEMMING. Mr. Chairman, before proceeding with questioning, I might identify the persons who are accompanying me here today: Mr. Elliot Richardson, the Assistant Secretary of the Department for Legislation; Commissioner William Mitchell, Commissioner of Social Security Administration; Mrs. Ida Merriam, who is in charge of our research and planning work in the social security area. The CHAIRMAN. Thank you, Dr. Flemming.

Mr. Forand will inquire.

Mr. FORAND. Mr. Secretary, the report which you have filed of course was not a surprise to me. I know that there was an awful lot of delay in getting reports from the Department. The first report, which was due on February 1, did not arrive until sometime in April. The report that had been requested on this bill was delayed and delayed until finally it came to us on Friday.

I sincerely hope that the report to which you make reference here, of your further studies, will not also be so delayed that we will not get anyplace with it.

I am disturbed, greatly disturbed, at the fact that for years we have had a lot of talk about help for the aged, but we have had very little action comparatively speaking. I realize that it is a difficult question for us to solve.

I realize also that if everybody who is interested in trying to find the solution to this problem had been devoting his time to finding a solution rather than fighting a bill that I introduced 2 years ago, perhaps we would have a solution by now.

I am hopeful that as a result of the bill having been introduced and the interest stirred up in it that we have at least achieved a little for

ward movement and that this movement will gain momentum as it goes along.

Now, the Department of Health, Education, and Welfare is already administering grants that go to pay for medical care for millions of people. Would not the problem of administering the proposed Federal health benefits be similar to those that have been solved satisfactorily in connection with these other programs?

Secretary FLEMMING. Congressman Forand, first of all, may I comment on your comments relative to the delay in the reports that have been submitted?

I think that I should personally assume responsibility for the delays. As you know, I took office last August. I regard this as one of the most important issues that confronts the Government, both the executive and legislative branch, and I have personally tried to take time, first of all, to get acquainted with the contents of the report that was submitted to you, and in the second place I have tried to look at all of the possibilities in connection with the solution of what I recognize, as you recognize, to be a very real problem.

I can assure you that as far as the additional studies that are referred to in my statement are concerned that they will be given my personal attention and I will certainly endeavor to bring them to a conclusion just as rapidly as possible.

My hope would be certainly that they would be available to the Congress when it comes into the second session of this particular Congress.

Now, as far as the administration of a program such as is envisioned by H.R. 4700 is concerned, I think that we do have to keep in mind the fact that this would be a new departure as far as social insurance is concerned.

In the letter that I transmitted to the committee, giving our views on this particular bill, I said this:

Such a system—

that is, the one envisioned by this bill

in order to meet the objective of adequate coverage of the risk in an economical manner, must be designed to meet all or substantially all of the costs of those services which the system undertakes to provide. In this significant respect, the compulsory health insurance under H.R. 4700 differs from the old-age, survivors and disability insurance program which contemplates, and in fact provides, an incentive for supplementation of a basic floor of protection through individual incentive and thrift and private insurance.

Then a little later on, I indicate that this program would have farreaching and irrevocable consequences.

On top of the last page of my letter I indicate this:

Such foreclosure of future opportunity for private efforts to demonstrate their capacity to deal with the problem would require far more convincing justification than is afforded by present evidence that nonprofit and commercial insurance cannot meet the need. It would demand, moreover, the payment of an additional price in the form of Governmental intervention into arrangements that are on the whole better left within the framework of nongovernmental action.

Then I proceed to list some of the new types of administrative problems that would comfront the Government if we move in this direction.

This is just a very brief summary and the identification of the administrative issues that would confront us and that were described in chapter 5 of the report that we made to this committee.

In other words, in summary, Congressman Forand, it seems to me that we would be faced with a new set of administrative problems if we moved in this direction as contrasted with the problems that have confronted us in connection with the administration of the old age and survivors' disability insurance, and public assistance programs. Some of those problems would present the Government with issues which it has never faced before.

Mr. FORAND. I agree it might bring in some new problems, but I do not believe that you want to tell the committee that these would be so insurmountable that the social security system could not handle them.

Secretary FLEMMING. Congressman Forand, I never assume that an administrative problem is an insurmountable problem.

My point is that it would make it necessary for us to move in a direction as a government that would be contrary to the direction in which we have moved up to the present time in the field of social insurance.

Mr. FORAND. Maybe it is in a different direction, but again I say it is not a problem that will not be solved; it is not an insurmountable problem.

Secretary FLEMMING. I think you and I would agree up to this point: I do not assume that any administrative problem is insurmountable. It would require the Government to take action which it seems to me would be undesirable for the Government to take.

In other words, my differences are philosophic rather than administrative.

Mr. FORAND. Naturally, you and I cannot see this in the same light. Secretary FLEMMING. That is right.

Mr. FORAND. Now, Mr. Secretary, hundreds of millions of dollars are being paid now by Federal, State and local governments for the care of the aged. Could you let the committee have estimates, either now or later, of the total amount of Federal money that is being spent this year from general revenues of the Treasury for each of the major programs that we have in the health care of the aged?

Secretary FLEMMING. Congressman Forand, I think it would be better for me to supply that for the records.

I do have some figures here dealing with various aspects of the program. For example, they indicate our payments for the aid to the aged programs under public assistance and other similar programs.

Mr. FORAND. I realize I am asking for quite something here. I am perfectly willing that you supply that for the record with a breakdown for each program. Will you do that for us?

Secretary FLEMMING. I shall be very happy to do that.

Mr. FORAND. Mr. Chairman, I ask that it be included in the record. The CHAIRMAN. Let it be understood during the course of this hearing that each witness will supply for the record such information as a member of the committee requests without the necessity of obtaining permission on each occasion. Without objection we will follow that rule.