That would be in 1960. That would be the estimated cost in 1960 of H.R. 4700.

May I clear up one other point in my testimony, also. As far as this estimated level premium cost is concerned I indicated, and as Mrs. Merriam has indicated, that would be 0.79 percent of the taxable payroll. The bill as introduced, as you will recall, calls for an addition of 0.25 percent to the tax on the part of both the employer and the employee. If you were going to start out financing it on a 100 percent basis rate from the start it would be necessary to add another 0.15 or bring it up to 0.40 percent for the employer and the employee.

Mr. FORAND. Thank you very much, Mr. Secretary. I appreciate the information you have given us.

The CHAIRMAN. Any further questions of the Secretary?

Mr. MASON. Mr. Chairman ?

The CHAIRMAN. Mr. Mason will inquire.

Mr. MASON. Mr. Secretary, if you were asked that last question as to the cost of this bill way back in, say, 1930, you would have said it would cost $600 million instead of $1,120 million because of the change in the value of the dollar in that time. Is that not right?

Secretary FLEMMING. That would be approximately correct, sir. Mr. MASON. Then, of course, we can't approximate what is going to happen to the dollar between now and 2050. So we could not possibly approximate the amount of dollars that it would cost, could we? Secretary FLEMMING. That is right. That is why, of course, as Mrs. Merriam pointed out, that the actuaries have tried to think of it in terms of percent of payroll as contrasted with the overall dollar figure.

Mr. MASON. That is all.

The CHAIRMAN. Any further questions?

Mr. Curtis will inquire.

Mr. CURTIS. Mr. Secretary, first I want to congratulate you and the Department on your report of April 3, 1959, which I think is excellent. I must make this comment. I think it ill behooves members of this committee to be critical of the executive department in these studies in as much as when the request has been met, then the report just sits idle and nothing is done with it. Now I have urged and I will make it an official urging at this time that one thing this committeer do is hold hearings on your report because I think that is the way we can get at these things and find out where we think the report is deficient. I might say naturally there are differences of opinion and I do think there are many areas where we could be looking into which are not included in the report. I am sure that there are other citizens and interested groups who would have very beneficial and critical, I hope constructive, remarks to make in regard to the report.

Now, we do have a subcommittee of this committee on social security. I am the ranking minority member and that is one thing I have urged and I urge here, that our committee or subcommittee hold hearings on this report.

Now secondly, I have also urged here for many years that we have continuously available to the committee prominent professional people who know the field. I think it is that important. Until we have done those things I think we should be extremely wary in criticizing

the executive department for lack of progress in this area. I think this report is excellent and I am hopeful that we will hold hearings on that report.

Secretary FLEMMING. I might say, Mr. Congressman, that we would certainly be very happy to participate in hearings of that character, because I do feel that the staff has brought together a great deal of basic information that is very important for all who are considering this particular problem to get acquainted with and to take into consideration as they endeavor to work out solutions to what is a very important problem.

Mr. CURTIS. As one who was very strong in urging that we have a request for this report, I feel that we should do something with these reports when we receive them. I know how busy we all are on the committee, and I would say very few members have had the opportunity of reading it. I find the techniques adopted in handling the President's economic report, where the committee holds hearings on the economic report each year, has been one of the finest techniques that we have developed in Government within my memory. I think that that same technique could well be used to gain information and gain better understanding in order to come up with a correct solution to these problems.

Now, one other statement, and then I want to ask some questions. It seems to me that it is rather ironic that the problems that we have here with the aged to a large degree have been the results of the fine efforts of the medical, nursing, hospital professions in improving our methods of combating disease and keeping people alive longer. It has been that very tremendous advancement that to a large degree lies at the bottom of the economic difficulties of our aged. Would you not agree with that observation?

Secretary FLEMMING. I am delighted that that kind of progress has taken place and that as a result we are confronted with the type of problems we are confronted with.

Mr. CURTIS. I think so, too. The reason I think it needs to be borne in mind is that in treating the economic aspect of it, which is a serious one, there has been a great deal of criticism of the very groups who have brought it about; that is, our doctors, our nurses, our drug people, our hospital people, and so forth. Fast technological advancement has costs that go along with it; and if we want to continue technological advancement in these fields, and we do, we must recognize that we are going to have to pay for it; there will be costs there. So I think that that is an important thing.

Now, getting to this question of rising costs, I think it is important to mention that probably one of the greatest problems facing older people comes as a result of an unusual inflation since World War II which has had its impact primarily on this group. There are people right now who are trying to minimize the effect of inflation, but I would ask you if you do not agree that inflation hits this particular group and aggravates their economic problems probably more than any other single select group?

Secretary FLEMMING. There is no question about it, Congressman. Mr. CURTIS. Now, the second point I would make-and this is something that intrigues me-we use the cost of living index as a measure of the cost of hospital, of all costs to an American family, but what has in

trigued me about our cost of living index is that it does not adequately measure increased quality. Increased cost reflecting increased quality is not a measure of inflation, I suggest; it actually is measuring increased standard of living, if you please. Or put it this way, in your cost of living index maybe you have an item for a dollar spent for a bottle of Lydia Pinkham's vegetable compound and today the cost of a bottle of penicillin something of one-fifth that size would be $10. Yet that penicillin is worth in health a great deal more than 10 times the $1 amount of vegetable compound.

The cost of living index would show a tremendous increase in cost and yet would not reflect that the amount of value derived from the two items has likewise increased tremendously. I wonder if you would comment on that statement?

Secretary FLEMMING. Congressman, I would be happy to. I think the point you make is a very valid point. You undoubtedly noticed. that in our report on page 33 we did deal with this question of the rising price of medical care and we included a statement showing the percentage increase in the Consumer Price Index from 1948 to 1958. It showed for medical care an increase of about 43 percent. But also in that report, commenting on the rising cost, we included this paragraph which I think bears out the point which you are making.

The hospital of today is as unlike the hospital of 20 or 30 years ago as the 1958 model automobile is unlike the model T. You pay more but also get more. The hospital of today stands for the oxygen tent, the blood bank, the operating room, and the other instruments through which modern medicine demonstrates its ability to save life. It is also where the laboratory and radiographic procedures and radioactive elements are available for diagnostic procedures. It is a complicated organization of services most of which must be available for use on a moment's notice.

The report then goes on to discuss the question of hospital wages and salaries, where there has been a considerable change in our point of view over the years, and rightly so, and probably there should be an even more marked change in our point of view in the years that lie immediately ahead.

Mr. CURTIS. Thank you for pointing that out because that is exactly the point I wanted to stress and I think another reason why this study of yours deserves a formal hearing. Anyone who is in any way at all connected with running a hospital, and the economics of it, knows these problems and I think by any yardstick that the value which has been received for these costs has been tremendous.

There is one particular area and I notice on page 35 you call some attention to it, the length of stay and the fact that the average amount of time a patient stays in the hospital is being reduced as the cost per day is increasing. Probably as you multiply the average stay in days times the cost per day the cost is still higher. Nonetheless, because the days are shorter there is not as great a rise as the rise in cost for 1 day in the hospital. Another thing, it used to be that people would go to the hospital and the termination of their stay was when they came out feet first. Now, people are walking out.

That certainly is a difference that is of some value in devoting attention. Therefore, I think we must consider cost in relation to what we are getting for them not just in relation to the fact that the cost itself has increased.

Secretary FLEMMING. I agree with that and it seems to me, Mr. Congressman, that by devoting time and effort to it that we can undoubtedly reduce the number of days spent in what I might call the high cost part of the hospital. In other words-there is a term which has come into being, I guess fairly recently, "progressive patient care"-it is altogether possible we can do more in the direction of keeping people in the portions of the hospital that cost a great deal to operate a shorter period of time and then moving them over into maybe another wing of the hospital where it cost less to take care of them. Then, finally, if we can come to grips in an effective way with the nursing home situation that will make a still further contribution in the direction you have pointed up so effectively.

Mr. CURTIS. I want to thank you for mentioning that because that is exactly the area where I see that we can move forward and we are, convalescent homes, nursing homes. I understand that the nursing homes cost per day is one-tenth almost of what it is in a modern hospital, and for the gentlemen who are interested in Federal legislation I want to call attention to the fact that in both housing bills last year, in both the Senate and House versions, sponsored by the administration, there was this FHA guarantee for private nursing homes meeting certain standards. And it is in the housing bill again this Congress. If we can only keep that particular feature in whatever housing bill is passed I feel that we will have done more to meet a big aspect of this problem of cost of medical and health facilities than any other single thing. This bears out another point that I tried to make in requesting this report from Health, Education, and Welfare. In Congress we tend to break up subject matters in accordance with the jurisdiction of the committees.

The Ways and Means Committee has only one aspect of this big problem of our aged. A big aspect is because we have jurisdiction over social security. But in order to treat the subject intelligently I think this committee needs to know what is being done in other areas. It is for that reason I emphasize this FHA-type guarantee for loans to private nursing homes. Of course, that legislation comes before the Committee on Banking and Currency, other matters come before the Committee on Education and Labor, others before the committee on Interstate and Foreign Commerce, and I dare say that there are other ramifications of this tremendous problem that come within the purview of other committees.

I think it is important for some committee, and I think this committee should do it, to try to bring those things together because we are trying to solve the problem, not create more jurisdiction for ourselves.

I notice you mention the fact of the progress that is being made in the insurance field. That is another place I would like to see some testimony. This is an area where I think a great deal can be done particularly in the development of a catastrophic sickness insurance program. As I understand from what information is available, most of it is in on a contribution basis. That is really the cheapest kind of insurance premiumwise you can get and yet it is the kind of insurance that really solves more of these social problems than anything else. For example, a family who has an aged person who gets cancer and lingers for 3 and 4 years has tremendous costs that go with that. If

we could do something in the area of catastrophic sickness insurance, we would correct the most pressing problems of our people. I wonder if you can comment on what is being done? I notice there is something in the report on it.

Secretary FLEMMING. Congressman, I certainly agree with you as to the desirability of further progress being made in this particular area. In our report on page 41 we did call attention to the fact that 72 million persons with regular medical insurance in 1957 included approximately 13 million with major medical expense policies, a form of insurance unknown about 10 years ago. We then went on to say

that

This new form of insurance-designed to provide partial protection against the costs of "catastrophic" or prolonged illness-covers a wide range of types of care both in and out of the hospital but insures only amounts over a specified sum (the deductible amount which may be covered by basic coverage or paid by the insured himself).

I think that typically may run as high as $500, something of that kind, and—

usually

as you have pointed out

only a stated portion (75-80 percent) of the remaining medical bills up to a maximum which may be as high as $5,000 or $10,000. The 72 million persons include also about 5 million persons enrolled in community and other independent plans providing quite comprehensive medical services of all types.

I feel that this is an area where serious effort should be directed toward evaluating the possible role of government in helping nonprofit organizations and insurance companies to provide this kind of protection. For example, I do not know whether it is feasible or not to provide some Federal guarantee against losses incurred by private insuring organizations that provide broad coverage against these "catastrophic" illnesses. I am not stating a conclusion here, but this is one of the areas that I think calls for further serious, careful study. This is one of the areas that we have under study at the present time as I indicated in my opening comments.

Mr. CURTIS. Thank you, Mr. Secretary. I am not going to take any further time now although this is the sample of the kind of thing that I believe this committee should be doing. I think the Forand bill is premature. I wish that our hearings, and I am glad we are having hearings but I wish the hearings were on the report; I wish that ample time had been set aside for hearings. I know how busy this committee is but we do have a subcommittee which could go into these matters and make the study that is necessary. I am satisfied that there is a great deal that can be done but I do not think that we should go into the study on the assumption that this particular program should do it. I was happy to hear Mr. Forand state that he was not wedded to his particular bill but that what he was really trying to do was to get people to start to think about it.

Mr. FORAND. Mr. Chairman, I think I would like to correct that last statement. The intent is not just to have people stirred up and study this thing. It is to find a solution to our problem.

Mr. CURTIS. I agree with that. That is why I pointed out to the chairman I am for action and one action I have had a lot to do with