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the special house of delegates in February. It was voted by a 2-to-1 vote then.

It was also from then until April reconsidered by the membership. The delegates voted in April again by that size vote to put the program into effect.

Mr. FORAND. That followed quite a series of information bulletins that were issued by the Union County Medical Society of Chariton, Iowa.

I have here their bulletins fighting tooth and nail against the adoption of any Blue Shield plan, so I would not want the committee to get the impression that this was all peaches and cream by a long

Dr. IRVING. I did not wish to leave that impression with the committee, Mr. Forand.

Mr. FORAND. I am not accusing you of having done that, but I just want to clear the picture.

Dr. IRVING. I think there is inherent in Iowa, perhaps in other States, the difference in the rural community and the urban community, and that raises differences of opinion as to how this should best be done, but this was carried on in a democratic way in my opinion and was received by the membership and we feel that we should get behind the program and try and make it a success.

Mr. FORAND. May I say this only: That whether it is this program, or the program outlined in my bill, or some other program that would solve the big problem that we are facing, and that is care of the aged, I hope all of us will continue our efforts to that end.

Thank you very much.
Dr. IRVING. That is right.

I would like to say that I am sure you will find the physicians of Iowa will go behind such programs the majority feel are necessary to take care of this problem and you won't see a resistance movement on their part should your bill become law. We are physicians first, sir.

Mr. FORAND. Thank you. That is all.
The CHAIRMAN. Are there any further questions?
If not, gentlemen, again

we thank you for coming to the committee. Our next witness is Mr. Gordon Brewer.

Mr. Brewer, will you identify yourself for the record by giving us your name, address, and capacity in which you appear.



Mr. BREWER. Mr. Chairman and members of the committee, I am Gordon E. Brewer, civil service counsel for the American Federation of State, County, and Municipal Employees, AFL-CIO.

I am accompanied today by my associate, Mr. Lawrence Smedley, of our research department, and Mrs. Katherine Ellickson, of the social security department of the AFL-CIO, who has very kindly consented to assist us in case of technical questions.

First of all, let me say that our union is comprised of approximately 200,000 members—public employees, in 46 States.

I wish to express my appreciation, as well as that of our members, to the committee for this opportunity to present our views in favor of H.R. 4700, popularly known as the Forand bill which will provide hospital, nursing home care, and surgical services for the recipients of old age and survivors insurance benefits.

Mr. Nelson Cruikshank, director of the department of social security of the AFL-CIO, has already made a detailed statement in support of Congressman Forand's bill. We wholeheartedly endorse the position taken by Mr. Cruikshank on this proposal as the spokesman for the organized labor movement in this country. We intend to supplement Mr. Cruikshank's excellent statement by some additional information, showing the great need of our own members for the type of protection which will be afforded to all recipients of old age and survivors insurance benefits by this bill.

As civil service counsel for our union, I am responsible for the work of the department of research and service. In addition to the usual wage and fringe benefit surveys which research people customarily prepare, we advise our membership on questions relating to civil service, retirement, social security, and health insurance plans. We have drafted many of the retirement laws which are in existence throughout the country. We have also worked closely with State and local governments in obtaining the adoption of health and accident insurance plans. Consequently, we are intimately acquainted with the problems of retired public employees in this field.

State, county, and municipal employees in general, and our members in particular, desire the passage of the Forand bill. There are approximately 2 million employees of State and local governments participating in the social security program at the present time. OASDI provides the only retirement benefits available to approximately 800,000 State and local governmental employees, a group which comprises one-eighth of all State employees and one-seventh of all local governmental employees. OASDI coverage represents the only form of retirement benefits available for 30 percent of all county and 21 percent of all special district employees. In 12 States, social security provides the only retirement protection for a majority of public employees within our jurisdiction. While it is true that a majority of State, county, and municipal employees participating in the social security program are covered by additional retirement systems, it should be pointed out that where a combination with social security has taken place, by and large there has been a diminution of the benefits received under the State or local retirement systems,

Even though retirement benefits in the public employee field are still far from adequate, it is only fair to state that in some cases where a combination of retirement systems and social security has taken place, the retirement coverage allowances received by our members compare favorably with those received by the general population. In spite of this fact, the experience of our retired members indicates that they are having considerable difficulty in paying for adequate health coverage, and have suffered great hardships as a

result of costly medical bills. Our union is not only aware of the hardship among our own members but we find ourselves in a unique position to understand the problems of the aged generally. We have thousands of our members who are social caseworkers or employees in hospitals, institutions, and homes for the aged, and they have firsthand knowledge of the problems of retired workers and their families. From my discussions with these members, one of the foremost problems is adequate health care for the aged.

I do not believe anyone can dispute the difficulties and hardships that persons over age 65 experience in trying to provide adequate health coverage for themselves and their dependents. There are in this country today approximately 15 million people of 65 years or older, 60 percent of whom have incomes of less than $1,000 a year and approximately half of whom have financial assets of $500 or less. Only a minority have voluntary health insurance and most of such coverage is inadequate, and will only meet a small part of their medical bills. Persons in this 65-year age group actually require twice as much hospital care as younger people. Thus, these people find themselves in a high risk, high cost group, with inadequate resources to pay their surgical and hospital costs. Adequate coverage by private insurance is not possible since premiums fairly computed will be higher than most aged people can afford.

It is true that some commercial insurance companies have recently established health insurance coverage for older people. Despite favorable publicity, careful analysis shows the impossibility of providing adequate health insurance for the aged by private means. Let us look for a moment at the plan which has received the most favorable response. It includes

(a) $10 per day maximum for hospital benefits;
(6) Maximum of 31 days in the hospital;
(c) maximum of $100 for hospital extras;
(d) payments for surgery limited to not more than $200;

le) No coverage for skilled nursing home care, home nursing, or any nonsurgical medical care;

(f) Six months' exclusion of preexisting conditions. These benefits are to be provided for a premium of $6.50 per month per person. It is obvious that such policies will cover only a small portion of the total medical care costs today. Special note should be made of the exclusion of preexisting conditions as few people reach age 65 without some prior ailments. There is certainly no guarantee that the rate for this inadequate coverage will not be raised for the overall group. Medical cost is the fastest rising item of all the major components comprising the cost-of-living index. There is every indication that this trend will continue and even accelerate. Thus, it should be obvious that the cost of health insurance will rise at a faster rate than retirement allowances and will require an increased percentage of total retirement income.

The average old-age and survivors insurance primary benefit, even now, is only slightly over $70 per month. The premium of the previously described plan, $6.50 per person per month, amounts to about 9 percent of such income. This is equivalent to $36 on a $400 income. Nine percent is the most favorable percentage comparison which can be made for this average benefit. As I stated before, there are other

plans which are even more costly. When one considers that the wife receives only one-half the primary benefit or the widow three-fourths, the percentage which must be taken from retirement income to provide this grossly inadequate insurance becomes even more startling. How are these people expected to pay the costs for a catastrophic illness when such expense far exceeds the previously described benefits? Elimination of frills is not possible on a small retirement income which is entirely consumed in providing the basic necessities of life such as food, clothing, and shelter. The sacrifice of basic necessities is a very high price to pay for insurance coverage when one still has to pay the bulk of the medical bills.

In addition, persons presently covered by health insurance are individuals whose health and financial condition enable them to secure coverage. It will be increasingly difficult to broaden coverage by private insurance in the future to less fortunate members of our aged population. There will always be a large number who will never be able to secure any type of health insurance coverage. While there is some care available for the medical indigent, it is usually substandard and inadequate. The aged should be spared the humiliation of charity and given the right to receive medical care with dignity. Thus, it seems clear that proper health protection for this group can only be provided by governmental action. Proper care of the aged has always been considered a social responsibility and there is no reason why the definition of proper care should not be broad enough to cover adequate medical care, which most aged are currently unable to afford.

The old-age and survivors insurance system is the best mechanism to administer a program of medical care for the aged. It is the logical means of spreading the cost of hospital care for the aged over the entire working population at a time when they are able to bear such costs. Thus, in the future, individuals who retire will receive medical care which they have paid for in advance and which is theirs as a matter of right. The administrative difficulties resulting from implementing the program would be held to a minimum since the same records and procedures could be utilized. For example, existing tax reports and wage records could be used for identification of eligible persons. It only requires a small increase in the social security tax rate to provide protection to those now 65 years or older who would be entitled to immediate benefits.

Removal of the aged from private health insurance coverage will enable insurance companies to provide greater benefits at lower cost to the rest of the people. In addition, there are many secondary social benefits. For example, the bill will ease the financial burden of hospitals by relieving them of the care they must now give on a charity or below-cost basis. It will relieve welfare agencies, both private and governmental, of a considerable financial load now carried by the public.

Fears are always expressed whenever social insurance legislation is proposed. We only have to look back to when the old-age and survivors insurance program was first advanced. There were fears that costs would be excessive, that individual decision making and thrift would deteriorate, that private savings would be curtailed and capital formation impeded, and that private insurance provisions for old age

would be destroyed. None of these fears have come to pass. In fact, the security offered by old-age and survivors insurance has greatly contributed to the growth of private insurance. It is obvious that as old-age and survivors insurance stimulated the development of private retirement pensions, the passage of this bill will similarly stimulate the development of more private health insurance coverage.

Let's take a more recent example. You gentlemen, of course, are very familiar with the fears expressed concerning the disability amendment to the Social Security Act. The program has worked well and all of the fears proved groundless. The costs were less than expected. It must be a source of great satisfaction to those members of this committee who had the foresight and wisdom to support the disability amendment.

When all the testimony has been completed, when all the facts have been studied, when all the statistics have been compiled, one inescapable fact cannot be ignored—the aged require more and more medical care at a time when they can afford less. Society must either share their burden or callously ignore the grossly inadequate medical care they can now afford. The gains in economic benefits resulting from tho passage of this bill will be great, but the gains in human values will be even greater. We sincerely hope that after this committee has given careful attention to this pressing problem, favorable action will be taken.

The CHAIRMAN. Mr. Brewer, we thank you, sir, for bringing us for consideration the views of the American Federation of State, County, and Municipal Employees. We appreciate your bringing Mrs. Ellickson back with you and this gentleman.

Mr. KEOGH. Mr. Chairman, may I express my appreciation to Mr. Brewer?

The CHAIRMAN. Yes. Mr. Krogh. I understand you were good enough to take the place of the Council of Golden Ring Clubs and give them yours so that they might get back to New York at a reasonable hour, and I appreciate it

very much.

Nr. BREWER. Certainly.
The CHAIRMAN. Thank you very much.
Are there any questions?
Mr. Alger will inquire, Mr. Brewer.
Mr. ALGER. Briefly, Mr. Brewer, on page 3 of your statement you

say this:

Medical cost is the fastest rising item of all the major components comprising the cost-of-living index.

Are you acquainted with the report submitted to this committee at the request of the Ways and Means Committee by the Health, Education, and Welfare Department?

Mr. BREWER. I have looked over the report. I have not studied it in great detail, but I have examined it somewhat.

Mr. Alger. We will take this up more at some other time, but I did want to call your attention to several sections in it:

Over a longer period, from 1938 to 1958, the price of medical care, as measured by the Consumer Price Index, increased only slightly more than the average for all goods and services.

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