that is now keeping millions of Americans from the hardships and poverty which otherwise would have come because of unemployment, old age, death of the wage earner, disability, or industrial accidents. The problems of medical care for the aged are national problems in which all citizens have an interest.

The Congress has it in its power to make a contribution to the solution of the financial aspects of these problems through H.R. 4700. This bill utilizes the machinery of social insurance which has proved successful and which has been administered soundly, efficiently, and economically in connection with old-age, survivors, and disability insurance. In other democratic and free countries the extension of this principle to medical care has been found successful. It does not involve any fundamental change in the physician-patient relationship. It would be the beginning of a solution to this very vexing problem, and I respectfully express the hope that the members of this committee, after due deliberation and the weighing of all of the testimony and evidence, will give to this approach to the solution of the medical care problems of the aged the same favorable consideration which they have given to other social insurance programs which have originated in this committee of the Congress.

The CHAIRMAN. Gentlemen, we thank you for your statements of your views on this legislation and we appreciate you coming as representatives of the National Association of Social Workers to advise the committee on the position of that organization.

Mr. Schottland, we particularly welcome you back, along with Mr. Lourie. We remember our associations with you over the years when you were in an important position in HEW. The fact that a man is sometimes free is important. I know you look much better in the position you now occupy than with some of the problems that you had before when you came before the committee.

Mr. SCHOTTLAND. I am just a little fatter, Mr. Chairman.

The CHAIRMAN. We are glad you are doing so well and looking so fine.

Are there any questions?

Mr. Machrowicz?

Mr. MACHROWICZ. I am happy to join with the chairman in saying how happy we are to have the testimony of both of you gentlemen and particularly you, Dr. Schottland, because of the high respect the committee had for you in your position of Commissioner of Social Security.

I am sure that when you served in that position you had the opportunity to study proposals for old age and survivors disability insur

ance.

Do I gather that you think it is perfectly feasible to add such benefits and that they can be administered very effectively?

Mr. SCHOTTLAND. Yes, it is definitely my opinion. Administratively, I think the problem is not as difficult as some of those faced in the early days of the social security program when we had to start from scratch.

There is a mechanism to administer it and I am firmly convinced, as I think are practically all of the persons engaged in the administration, that administratively this problem can be very readily handled.

I think financially the program can be financed, and I think that, just as with other social insurance programs involving medical care, such as workmen's compensation, that it in no way raises any of the bogies that have been presented to this committee.

Mr. MACHROWICZ. As I said before, because of your past experience, your testimony is particularly valuable to this committee. I am sure that you know that, when the addition of the infirm and totally disabled provision was proposed previously, the doctors and insurance companies at the time opposed it and said it could not be administered effectively.

You have had considerable experience in that line as Commissioner of Social Security. Would you say that the doctors and insurance companies were, may I say, unnecessarily skeptical in that respect?

Mr. SCHOTTLAND. I think they have used the argument to opposing something with which they disagreed but I think experience has shown that the program to date have been administered efficiently at a very low cost, either an absolute cost of a percentage cost or per unit cost or any other way as compared with any comparable program of Government or private industry.

Mr. MACHROWICZ. Do you think personally, Doctor, that the medical profession will refuse to participate in this program if enacted? Mr. SCHOTTLAND. No, I think is a slur on the medical profession to say that they will refuse to give medical care merely because the individual patient does not pay the bill. Practically every doctor in the United States is now engaged in a social insurance program of one kind or another. Thousands of doctors are now engaged in getting payment through workmen's compensation. Thousands of doctors are now engaged in getting payment through public assistance and public welfare agencies. Thousands of them are receiving funds from State and local governments and the Federal Government in connection with medical treatment of retired employees and persons on the job, so that already the medical profesion is engaged in all kinds of programs using the social insurance principle and I do not see how they would suddenly say they will not treat people if there is one more social insurance program added.

Mr. MACHROWICZ. I am in perfect agreement with you, Doctor, but I must say that some of the testimony given so far would seem to indicate that there was some belief on the part of some people representing the profession that they would not participate.

Do you know what the cost was of administering the OASI program in terms of benefits paid? Can you give us some views on that? Mr. SCHOTTLAND. Roughly speaking, the costs have run around 2 percent.

Mr. MACHROWICZ. Can you tell me how that would compare with the administrative costs of private insurance?

Mr. SCHOTTLAND. It is very difficult, as you know, to have an outright comparison for the simple reason that there are many things that go into the private insurance bill which do not come into the social-security bill, problems of taxes, insurance salesmen's commissions, et cetera, but private insurance will vary depending on the kind of insurance anywhere from maybe 8 or 10 percent to 30 percent, depending on the type of insurance program.

Mr. MACHROWICZ. Private insurance costs would be considerably greater, would they not?

Mr. SCHOTTLAND. They would have to be because of the nature of the program.

Mr. MACHROWICZ. Thank you very much, Doctor.

The CHAIRMAN. Are there any further questions?

Mr. Forand?

Mr. FORAND. Mr. Schottland, I want to join with my colleagues in saying welcome back to the committee although in a different capacity and with more freedom.

Some opponents of this bill are concerned about the effect of the physician-patient relationship.

Would you expand a little bit on the reason for not being concerned about this relationship under the proposed bill?

Mr. SCHOTTLAND. There is nothing in this bill which would provide for the Government to establish hospitals, say, such as Governmentoperated hospitals of the Veterans' Administration or some of the other Government hospitals that we have.

There is nothing in this bill which would provide that the Government would hire doctors.

This bill provides a financial arrangement under which hospital and nursing home bills will be paid, and I do not see how this can affect the physician-patient relationship any more than workmen's compensation has or any more than the temporary disability insurance in my State of California has, or any of these other social insurance programs.

It is a financial arrangement.

If this bill provided, as some countries have done, that the Government would make available these services as a Government charge like public schools or other public services, I think then it would be clear that there would be some change in the relationship, but under this bill which provides merely a financial arrangement for paying the bills, I do not see how there can possibly be a change in the physicianpatient relationship.

Mr. FORAND. Now, Mr. Schottland, I do not believe you were here yesterday, but we had a witness who charged that this bill was communistic. I understand you headed a Government mission to Russia some time back to study their social security. Do they use social insurance to provide medical costs in Russia?

Mr. SCHOTTLAND. Well, as a matter of fact, Mr. Forand, the Soviet Union has specifically rejected the social insurance principle as a way of providing medical care. They have Government medicine. They have Government hospitals.

The doctors are all paid by the Government. They have deliberately determined that social insurance under their Communist system is not appropriate to provide medical care.

On the other hand, since you asked the question, I would point out that practically every western, free, democratic industrialized country of Europe does use the principle of social insurance to pay for medical care. Italy, France, Germany, Great Britain, Belgium, Holland, Norway, Denmark, Finland; all of these countries have such programs. Mr. FORAND. On the basis of your response, I feel convinced that the charge that this bill is communistic is a very baseless one. Thank you very much.

The CHAIRMAN. Are there any questions?

Again we thank you, gentlemen, for bringing your views to the committee.

Mr. SCHOTTLAND. Thank you.

Mr. LOURIE. Thank you, sir.

The CHAIRMAN. Our next witness is Dr. Kernodle.

Doctor, please identify yourself for the record by giving us your full name, address, and the capacity in which you appear.

STATEMENT OF JOHN ROBERT KERNODLE, M.D., CHAIRMAN, MEDICAL SOCIETY'S CHRONIC ILLNESS COMMITTEE, MEDICAL SOCIETY OF THE STATE OF NORTH CAROLINA

Dr. KERNODLE. My Chairman and members of the commitee, I am Dr. John R. Kernodle, of Burlington, N.C., where I am engaged in the specialty medical practice of obstetrics and gynecology. I am chairman of the Medical Society's chronic illness committee.

The committe is concerned with the study of data, information, and systems of advanced care of the aged and chronically ill as medical and health care problems and in stimulating thought and plans of action related to the development of the proper concern for and services to the chronically ill and aged to which I shall make primary reference hereafter in this presentation.

You are referred to the longer statement prepared and deposited with you prior to this hearing which I propose to be included as part of this verbal statement and constituting the statement of the Medical Society of the State of North Carolina.

This society, representing the profession, must forever maintain concern for contributing only to that which purveys the highest standards of medical care and which promotes the sound growth of a profession which is dedicated to serving the best health of humankind. Our concern with and effort on the problems of the aged rightfully joins us to you in the legislative considerations upon which you seek enlightenment today as best approaches to the problem as representatives of the people of this Nation.

Organized medicine was among the first to recognize the new and increasing numbers of older-age people who, because of improved medical care, treatment, and supervision, modern medical research, discovery and perfection of therapeutic agents, and other important protections, enjoy an extended life expectancy. Likewise, medicine is among the first to recognize and to begin stimulating individual and public interest as to ways and means of practical concern at National, State, and local levels. Physicians know what the health needs of their patients are and because of the close physician-patient relationship can best guide and direct the regime of health maintenance for each patient.

The State medical society's committee in 1954 had five original purposes. Three of these were:

1. Education of the doctors and community as to the number, the needs, services, and facilities for health care of the chronically ill and aging.

2. Provision for more hospital beds with improved nursing and medical attention for these patients.

3. Overall management of the patient, including the financing of such care.

Some of the accomplishments to date based on these objectives are: 1. We have made surveys to determine numbers, existing services and facilities, and the type care now available for these patients. Two out of three known patients have needs that can be adequately met through a home care program whereas Forand legislation proposes invited use and certainly abuse of hospitalization for 100 percent of all possible eligibles.

2. We are increasing and improving patient care in our hospitals, nursing and convalescent homes, and in our domiciliary home facilities.

3. We now have a mandatory licensing law for protection of all facilities.

4. We have financial assistance for the medical indigent through official, private, and voluntary funds, and the patient-physician related services without the proposition of fee.

5. Pooled hospital funds has been increased to $10 per diem statewide for category public welfare recipients. Intrastate residence requirement changed from 1 year to 3 months.

6. All of our 100 counties have general assistance funds to assist with health and medical care of those in need, and we have and do favor legislation providing matching State assistance to be administered locally.

7. The house of delegates of the medical society, at their annual meeting in 1958, went on record as opposed to the Forand bill and any like bill. Again in 1959 they reaffirmed their position on Forandtype legislation and voted in favor of general assistance funds from State to match local general assistance funds now amounting to $22 million.

8. We have, through the Blues and commercial insurances, extended prepayment coverage to older people through senior certificates, with reduced medical fees.

9. In North Carolina we have a joint committee for the health care of the chronically ill and aging for coordination of efforts as a combined interest group as well as individual agencies and organizations serving the aging people.

Additional activities are included in the prepared statement.

STATEMENT OF THE MEDICAL SOCIETY OF THE STATE OF NORTH CAROLINA RE H.R. 4700, 86TH CONGRESS

To: The Committee on Ways and Means, U.S. House of Representatives
By: John Robert Kernodle, M.D.
Date: July 10, 1959.

Mr. Chairman and members of the committee, I am Dr. John Robert Kernodle of Burlington, N.C., where I am engaged in the specialty medical practice of obstetrics and gynecology. I am chairman of one of six commissions referred to as action bodies of the Medical Society of the State of North Carolina and within the frame of that commission I have for several years headed the committee on chronic illness which is concerned with the study of data, information, and systems of advanced care of the aged and chronically ill as medical and health care problems throughout the State of North Carolina and in stimulating thought and plans of action related to the development of the proper concern for and services to the chronically ill, including the aged, to which I shall make primary reference hereafter and in this presentation, I make reference to a longer statement prepared and deposited with the committee which I propose to be included as part of this verbal statement and constituting the statement of this society.