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I think there is some element of truth in this, there are some aged people who are not getting hospital care at the present time who would get it if this plan or a similar plan were put into operation.

The major reason they give, once you eliminate the financial barrier to hospital care is that people will abuse it and the costs will be very great. I do not believe this is true because, if it is true, the only way you can get into a hospital in the United States other than an emergency is to be admitted by a doctor.

Tlierefore, if the AMA says the costs are going to be substantially greater and that these are unjustified, they are saying that the doctors of the United States will admit people into a hospital when they do not need to go into a hospital. I do not concur with the American Medical Association in saying that the doctors of this country will so abuse the program.

I think, therefore, their cost estimates are much too high. However, I would say this: If there is any element of truth that the costs are likely to be greater than what Dr. Flemming and his staff estimated, I think this is likely to be true under a voluntary plan. If you are going to go from 50-percent coverage to 70-percent coverage as Dr. Larson says, and 20 percent more of the population are going to get hospital coverage and they are going to use more days of hospital care, then costs are going to increase under a voluntary plan as they would under your bill.

As I look at their estimates, which I do think are too high, they are either saying that doctors will not faithfully carry out their responsibilities, which I do not believe, or that aged people are not getting all of the hospital care that they need, or if hospital care does get expanded that it will only be expanded under a public program and not under a voluntary program. I think these points would have to be very carefully inspected by the committee before their cost estimates are correct.

One final point: I think you gentlemen on this committee will remember that the cost estimates cited by the American Medical Association in connection with disability insurance were always much too high, always much too high. The American Medical Association for some reason which is not quite understandable to me, takes the position that doctors cannot be trusted in the administration of these programs.

In disability insurance they said if you gentlemen passed the program the costs will be greater because doctors will not certify people correctly. That has not happened under the program.

Now, they are coming to you and saying if you enact this program doctors will admit people to hospitals when they should not be admitted. I happen to have more faith in doctors than I think the American Medical Association has and I do not think that will happen.

Mr. FORAND. I am in complete agreement with that statement because the doctors would have control as to who gets into hospitals and who does not, except in emergencies, and I think they have enough fortitude to tell a person that he does not need hospitalization. In fact, I know it is being done right now.

Mr. COHEN. There is the exceptional case where a doctor will, under some pressure from the family or the individual, hospitalize

you could

say that

a person when perhaps he or she may be able to stay at home or may be taken out of a hospital a few days earlier. There is a human element in here.

We should not completely overlook this, but I think in part that depends on the alternative methods that you set up so that you do not have to overhospitalize people.

My main point is simply this: If you have 70 percent of the aged who have voluntary insurance, you are going to have these same problems of overutilization with voluntary insurance as you would have with your bill.

The fundamental problem is, since the individual has the insurance and he can get the hospital care and he wants it, there will be some pressure for him to use his insurance. This will be just as true with Blue Cross or commercial insurance as with your bill. .

This is a problem that doctors and hospitals and all of us have to work with, but I do not think it is any different under one proposal as compared with another.

Mr. FORAND. I have come to the conclusion after listening very intently to all of the testimony here that we are getting the same arguments against this bill that we heard when the disability benefit question was being discussed. In fact, it is very much the same argument we had when the original social security bill was written.

Mr. Cohen. You know, Mr. Forand, disability insurance, since you mentioned it, was pending before this committee for 17 years.

Every single argument made against disability insurance by those who have opposed it has not turned out to be true in practice. It is working very successfully. It is very efficiently administered. It is being administered in accordance with the instructions from this committee to administer it carefully; it is financially sound and no doctor in the United States as far as I know has been socialized even though those were the arguments made against it, and I think it is one of the most wonderful provisions of the social security program, but it took 17 years for us to get the AMA to accept what is now a reality.

Mr. FORAND. One more point and one that has been used here considerably is the play on the word "compulsion" that it would make it compulsory for this, that, or the other thing. Do you have any comments on that?

Mr. Cohen. I think this point of talking about compulsory insurance being compulsory and the other plans being voluntary is not really a correct description of the two programs. There are many compulsory features of the present so-called voluntary programs. In many companies if you go to work for them at the present time you must as a condition of employment agree to contribute to their pension system, agree to take out Blue Cross or commercial insurance, and the employee usually has no option.

When I went to work for the University of Michigan there was a whole system of contributions in effect when I went there. If I wanted to work at the University of Michigan I was required to make the contributions which I am very glad to do. They are for my protection and society's protection, but to argue that it is voluntary as if I had complete freedom to take it or leave it is very misleading.

Secondly, as I pointed out, the employers who make these deductions get tax deductions from the Federal Treasury. It is a little bit

anomalous to say they are voluntary when they are really being paid for by the U.S. taxpayer.

On four different occasions this committee has dealt with the question of compulsion. Many of you gentlemen here have had to face up to this before. You decided in 1935 that compulsion was a desirable thing in connection with old age. There were people who came before your committee in 1935 and said that if you did this you were going to drive all private insurance out of business if you applied this principle of compulsion and I am reading from the committee report of 1935.

They said that if you applied this principle of compulsion you would destroy private pension plans. They said that you would put such a crushing burden upon industry and labor as to be undesirable. In addition, they said it was unconstitutional.

It seems to me you had to face up to this same issue in 1939 when you added survivor's insurance and you had to face up to it in 1955 and 1956 when you added disability insurance.

Now, why did you gentlemen use the principle of compulsion? I know most of you pretty well and I know you do not believe in compulsion for compulsion's sake. None of you were interested in applying this principle of compulsion because of its own sake. You came to the conclusion, that if you did not apply the principle of compulsion, many people were not going to protect themselves and contribute over their lifetime, and in the last result the taxpayer of the United States was going to be left holding the bag through public assistance.

You decided that that was not a desirable alternative. You decided that it was more in the interest of society to require everyone to pay over their entire lifetimes a small premium that would protect themselves and their families and society from this threat which you have which will ultimately cost billions of dollars of general revenue to the general taxpayer if you do not find some solution to that group of people of the aged who do not have voluntary insurance.

I say that the principle of compulsion, while it must be considered very carefully, is nothing new. It is a principle that you have embodied in countless laws and in the social security program not because you believe in the principle of compulsion but because ultimately you believe that society is better protected. I see nothing wrong in that principle, and I would like to say this:

If you will study the public opinion polls on this very issue, you will find that there are more than 50 percent of the American people who say that they want you to apply compulsion to them in this regard. They think that is a democratic method by which it can be applied.

I think, for myself, the principle of compulsion here is one that we should not shy away from. It is one we have adopted and we should use when we find that society is being disadvantaged.

Mr. FORAND. Thank you very much, Mr. Cohen; you have contributed a great deal to our discussion.

Mr. Mason. I do not have any questions but I have an observation to make.

Mr. Cohen, you have furnished us valuable, professional, yes, and I would say scientific testimony in connection with this problem that

is facing us and I think you have made a valuable contribution to our thinking on this matter.

The CHAIRMAN. Are there any further comments or questions?

Mr. ALGER. You mentioned this matter of rising costs earlier. I missed a lot of the things you said because you were talking so fast. You made the statement if I recall correctly, that it does not make any difference whether it is voluntary health program, whether the Government pays for it, the costs will be the same. Is that what you said?

Mr. COHEN. That, substantially, is my position; yes.

Mr. ALGER. I do not want to belabor it but I must take issue with you. I, coming from small business, have found there is an incentive factor. Government costs go up and up and up because of lack of incentive and you have deprecated administration costs which you say would be very small and covered by the payroll taxes.

I have the uneasy feeling that the administration costs might be staggering. No one has been able to give us a prospectus of how many human bodies would be involved in administering this program. Could you comment on that?

We are limiting all the witnesses and I realize it is a big question. I suppose we should take a lot of time with this.

Mr. COHEN. On this matter of administration, it is not the Government that is administering these plans; it is the doctors and the hospitals. The Government in the plan that Mr. Forand has presented has very little to do with it. It is not the Government who puts the man in the hospital; it is his doctor.

Mr. ALGER. I have gone with you up to this point but who is going to certify what doctors, nursing homes, and so on and who is going to carry it out?

Mr. COHEN. You cannot get into a hospital unless a doctor admits you. That is point No. 1.

Mr. ALGER. Who is going to lay down the law?
Mr. COHEN. Congress would lay down the law.
Mr. ALGER. Who is going to enforce it?

Mr. COHEN. The administrative agency would enforce the law but the administrative agency does not put the man in the hospital.

Mr. ALGER. It has to start with the administration.
Mr. COHEN. No, sir; it starts with the doctor.

Mr. ALGER. Does it make any difference where it starts? who is going to administer the program? The Federal Government will administer it since it is a Federal program.

a Mr. COHEN. I beg to differ with you because I think since the man cannot get into the hospital unless the doctor puts him in there it is the doctor's initial and professional responsibility.

Mr. ALGER. A doctor will not even have a right to participate unless he has been certified by the Federal Government and the administrative personnel to do that.

Mr. COHEN. That is correct.

Mr. ALGER. Then, do not tell me that the administration is not involved and that the starting point is with the doctor. It is with this group of Congressmen right here that will write the law that will be administered by the Government and only later then, all the human beings like doctors will become involved.

Mr. COHEN. The law and the regulations will not pay a single person's hospital bill until the doctor puts him in the hospital.

Mr. ALGER. Have you any idea what the personnel group will be in the Federal Government to administer this since there is where the program will be conceived, originated, and administered?

Mr. Cohen. I think with 2,500 additional people you could administer this whole additional program.

Mr. ALGER. Thank you; I appreciate your giving me the figure. I realize how difficult it is to give any figure and I would be the first to admit that none of us really are certain about the figures.

Mr. Mason. Will the gentleman yield there for just an observation? Mr. ALGER. Certainly.

Mr. Mason. If anyone should know the number of additional Federal employees this would require, the witness should know because he has been in this field for 20-odd years and administering it himself and knows at first hand approximately how many would be involved.

Mr. ALGER. I appreciate that. I might say to the gentleman from Illinois, I do not subscribe to it because I am a newcomer and I do not know of his past experience.

On page 8 you bring up this subject which keeps recurring about the contribution that will be collected from nearly all people who work for a living

If the tax is levied on the employer or the employee, or the selfemployed, obviously the consumer will ultimately pay for it in the price of the product.

Do you think this a fairer way to levy the tax or as you have touched on, although not in this record, would it be fair for it to be taken out of the Federal Treasury and not have a business tax as such?

Mr. COHEN. That is a very, very big question and I would say in balancing all the ramifications and I thought about this question for 25 years—I would prefer to have it paid by employers and employees rather than out of the general revenues because I think it is good to have the employers and employees take a sense of responsibility for these matters and not pay it out of the general revenue.

Consistently, for 25 years, I have supported the idea that it is much better to have employers fully participating and employees fully participating in the fundamental policy decisions that come before this committee rather than pay it out of general revenues and sort of everybody's business is nobody's business.

Mr. ALGER. I appreciate that. Let me ask you further in the same vein now, do you feel the Forand bill embodies a good bill?

Mr. COHEN. Yes, sir. I have made some suggestions for changes.

Mr. ALGER. You would find fault that only some over age 65 who need help are covered ?

Mr. COHEN. There are people who are not covered and I would hope as this committee has done on other occasions it would see fit to continue to broaden the coverage so that everybody would be covered.

Mr. ALGER. And you would rather see everybody over 65 covered as a matter of equity?

Mr. COHEN. As a matter of equity I see the greatest advantage in having everybody 65 and over covered.

Mr. ALGER. This is a matter of logic consistency.

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