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So the proportion of our aged is increasing. And of course, as you can see from the chart, the number of the aged as our population grows is very tremendously increasing and by 1970 it will reach nearly 20 million people.

Now one point that is of great importance that I am going to dwell on that this committee has heard from others, and I believe it has heard from me from time to time, is the basic problem of public policy that is presented as to whether you wish to have people's economic and health needs met through public assistance or through social insurance. If you will recall, this committee has on a number of occasions dealt with that fundamental problem of public policy.

When you enacted the two programs of old-age assistance and oldage insurance in 1935, old-age assistance was the primary program because insurance had not started. At that time as shown by chart III there was about 22 percent of the aged people in the country getting old-age assistance. It dropped a little bit during the war years, rose in the postwar period. Then by the very important amendments reported out by this committee in 1949 and enacted in 1950, a very major change in policy was taken; namely, to improve the old-age insurance programs, which in 1951 for the first time in our history took care of more aged people than assistance.

The result of that policy, as you can see by chart III, is a very important one; that today in the United States nearly 60 percent of the aged are taken care of through old-age insurance and around 15 percent through old-age assistance.

Now why do I present this chart? I present this chart for this reason which I ask the committee to consider. If there is not a more adequate way to deal with the health needs of the aged, this line shortly is going to begin to increase. I will develop that in some more detail later. I think the fundamental public policy question that is presented this committee is, that if you wish to have this public assistance line continue to go downward, which is what I think we all would like to see, then something new must be added to present policy, because otherwise from the experience that we have this line is shortly going to turn up as more and more older people have to come to the public assistance authorities for medical care purposes.

Now another matter of public policy which has been presented here is that we all know that there are a substantial number of aged people who do have hospital insurance. There is no question about that. There is no question that it is growing. There is no question that it will continue to grow. I think that is very satisfactory.

But the problem that is presented is, as shown by chart IV, that while there are something like 45 percent of the social security beneficiaries who have hospital insurance by a recent study, what do we find when we analyze that by the income of these people? We find that only 21 percent of the people who have income under $1,200 a year have hospital insurance. As might be expected, it rises very quickly with income, 35 percent for the people between $1,200 and $1,800 a year, 44 ercent for the next group, 55 percent for the next group, 60 percent for the next group, and for people $5,000 income a year and over, 65 percent.

44432-59--22

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CHART IV
HOSPITAL INSURANCE COVERAGE OF AGED OASI BENEFICIARIES

Married couples Having Hospitalization Insurance

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Now the problem is, that voluntary insurance, unless it is either subsidized or some other method is introduced like requiring the employer to pay it all or some other matter of financing it over the lifetime, we are going to find that the lower income people are not going to have voluntary insurance even if we reach 70 percent as has been predicted. The 30 percent without insurance will be the people who will have to go on public assistance and this committee will be financing that cost out of general revenues because you have already committed yourselves to the principle in the 1950, 1956, and 1958 legislation to pay part of the cost of medical care that State public assistance agencies now give.

I will dwell on that in a little bit more detail in a minute. The other big problem that we are faced with is the fact that it is true that a significant proportion of aged people have voluntary health insurance, but a great many have either inadequate health insurance and some of them who have it have to drop this insurance as their incomes decline in retirement and as they become older.

In other words, if you look at the proportion of the aged population that has voluntary health insurance you will find that it declines with age, as might be expected. The older the person gets, the more he uses up his income; the more he has greater health needs, the greater is the likelihood that he does not have this protection.

Let us look for a moment at chart V made from a study of the social security recipients, which brings out that 54 percent of the social security beneficiaries did not have health insurance. Now

CHART V
REASONS GIVEN BY AGED OASI BENEFICIARIES FOR NOT CARRYING HEALTH INSURANCE

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Not
interested 1
(14 percent)

company 2

Relused

Cancelled by
by

insuranco
insurance
company

(13 percent)
All other reasons
(9 porcent)

(2 percont) ! Includes persons who disapproved of health insurance or preferred using their own resources 2 Includes widows whose health insurance coverage terminated at husband's death SOURCE: OASI Boneliciary Survey, 1959

Other (5 percent)

of these people who had never had health insurance, here is a group that never carried it at all. Why did they not carry it? A large group here, 41 percent, said they could not afford the premiums. Another

group over here were about 9 percent, were turned down usually by a commercial carrier. Some did not approve of the principle of health insurance whatsoever in its present form because the benefits were too limited or they did not think it did the job the way they wanted it to and a large group of people never thought about it.

We are going to come back to this question later on because when you deal with the philosophical question of compulsion which is a basic policy question which this committee has had to deal with with respect to four other social insurance benefits, you have the question: Are you going to allow people who do not approve of insurance and never thought much about it, to make the general taxpayer pay their hospital costs out of general revenues? That is really the fundamental question that Congress has to decide.

If you want to allow people to have this option, you can do so. But I say then, gentlemen, you have to in the long run be willing to finance that health cost for those people out of general revenues and raise the taxation through this committee.

Now for the group of people, about a third of them, who had a health insurance policy but dropped it, why did they drop these policies? A large number of them were canceled by the company. One of the most unfortunate situations we have in this area is that a large group of people will have this health insurance, but at the first time they have any illness and there is any claim paid, if they take it out from a commercial company they will have the policy canceled. This is quite understandable from the standpoint of the company. It is a private company; it has to see that its losses remain such that it can stay in business. But from the standpoint of the individual and from the standpoint of society and from the standpoint of this policy question that we are faced with here, the cancellation results merely in making it necessary for a large proportion of them to have to go to public assistance.

Mr. Mason. They receive cancellation at age 65, they have been working, they are now forcibly retired, and the company which has been providing it says "You are now on your own.”

Mr. Cohen. That is correct. Namely, there are many contracts in this country in which when the individual does retire the employer takes the position, and I may say in one way I don't blame the employer, he takes the position that since the individual is no longer his employee the individual should take care of his health protection, himself.

I don't justify it, but I say I can understand his point of view.

But from your standpoint and my standpoint, if that means health insurance is discontinued when he no longer is in the employ of that employer, I would say to you ultimately over the course of time I could reasonably predict that 25 percent of those people who do not have health insurance will ultimately have their health needs paid in part by public assistance.

That is the dilemma of public policy that I think this committee has to deal with.

Now I would like to go back to my statement now to develop this point on public assistance a little bit more.

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