I respect your viewpoint. Do you not believe that this program ought to cover everyone and not just everyone over 65, and have you not taken the position in the past that you believe that anybody enjoying social security coverage should also have this type of protection?

Mr. COHEN. I have in the past taken the position that they should, but I would not take that position at the present time because I believe that the voluntary plans and other arrangements have been making a successful and good approach in this other field. In other words, my philosophy is not that the Government should do everything. My philosophy is when it has been demonstrated that the problem is of such a grave character and that the implications of not taking care of it will mean that you are going to increase the public assistance rolls and that you are going to pay this cost out of the Federal Treasury anyway, then I am willing to come before this committee and say yes, the time for action is now.

Mr. ALGER. Did you not believe in the Murray-Wagner-Dingell bill?

Mr. COHEN. Yes.

Mr. ALGER. That would have been compulsory health insurance for everybody through a Federal law.

Mr. COHEN. Yes; I am very proud of the fact

Mr. ALGER. You have changed your viewpoint?

Mr. COHEN. Yes; and I think the fact that many of us pushed for that is the sole reason why the American Medical Association and others have made such remarkable progress.

Mr. ALGER. At one time back in 1950 or whenever it was, you probably felt that the Murray-Dingell-Wagner bill was necessary to modify your viewpoint because you have seen the advent of private programs. Now, may I suggest to you, sir, that the same logic that caused you at one time to believe the national health insurance was a good thing but you modified it, recognizing that voluntary programs have done partially what needs to be done, does it not indicate that maybe the voluntary programs can do better if given time because many of them are brandnew programs? Mr. Cohen, if I understand your testimony, then, you do not feel the danger that this type of compulsory Federal insurance for this group of people will kill out the private plan. Is that the gist of how you feel?

You complimented the private programs and I think that is a fair statement on your part. You do not believe this will necessarily curb the incentive?

Mr. COHEN. No, sir, this will help the private program and one of the reasons I am supporting the Forand bill is for this reason. I think if you can take the voluntary programs out of the high-cost area of dealing with the aged, they will be able to do a much better job for the people under 65.

The people in this country who are really trying to help the voluntary plans are the people who are supporting the Forand bill because if you go on the way you are going and charge people these high rates in the voluntary plans, you are going to drive the young people out of the voluntary plans.

Mr. ALGER. Did I understand you to say the folks supporting this Forand bill are also supporting the voluntary plan?

Mr. COHEN. I am. I am speaking for myself.

Mr. ALGER. I just want to assure you we are seeing a rather clearcut division here between those who think on the one hand that the Forand bill is one aspect and others who feel the opposite way.

Mr. COHEN. I speak for myself when I say the voluntary programs in the future are going to have a difficult time. I have been a member of the board of trustees of a voluntary plan. Any voluntary plan has a very difficult time. The more it tries to take care of the problems of the aged adequately, and finance that cost, the more it drives out the younger people.

Mr. ALGER. Would you have any objection to giving us a list of the various organizations that you are privileged to consult with as a social insurance consultant? Are you not an insurance consultant for the AFL-CIO?

Mr. COHEN. No, I am not.

Mr. ALGER. Are you consultant for others in this field who are interested in this field who are appearing before us?

Mr. COHEN. Quite a lot of people come to me for advice. I am perfectly willing to give advice on social security to anybody who is willing to listen to me.

Mr. ALGER. I thought you were employed as a consultant.

Mr. COHEN. No, sir. I am employed at the University of Michigan. My doors are always open to give advice to anyone who seeks it.

The CHAIRMAN. Are there any other questions of Mr. Cohen? Mr. HARRISON. I might say in connection with some of the duties of the subcommittee on social security, Dr. Cohen has been very helpful in giving us information.

The CHAIRMAN. Thank you again, Mr. Cohen, for coming to the committee. We appreciate the contribution that you have made to our understanding of the issues involved in this legislation.

Our next witness is Dr. Frank Groner.

Dr. Groner, we welcome you back to the committee. We remember your previous appearances, but for the purposes of this record will you please identify yourself, giving us your name, address, and the capacity in which you appear?

STATEMENT OF FRANK S. GRONER, MEMBER, BOARD OF TRUSTEES, ACCOMPANIED BY KENNETH WILLIAMSON, ASSOCIATE DIRECTOR, AMERICAN HOSPITAL ASSOCIATION

Mr. GRONER. My name is Frank S. Groner. I am administrator of the Baptist Memorial Hospital in Memphis, Tenn. I appear before this committee today in behalf of the American Hospital Association, as a member of its board of trustees. I am accompanied by Kenneth Williamson, associate director of the American Hospital Association. I wish to first express our appreciation of the opportunity to discuss with this committee H.R. 4700, which would

amend the Social Security Act and the Internal Revenue Code so as to provide insurance against the costs of hospital, nursing home, and surgical service for persons eligible for old-age and survivors insurance benefits, and for other purposes.

I will not dwell upon the organization of the American Hospital Association, its functions and its purposes, except simply to state

that the association includes within its membership in excess of 90 percent of all the general hospital beds in the United States and its territories and approximately 77 percent of all listed hospitals of every type in the United States and its territories.

You will recall that on June 27 last year, representatives of the association appeared before this committee and presented our views on the problems aged persons face in financing their hospital care. At that time, we also outlined the extent of our studies, discussions, and efforts over the years, to stimulate programs of prepayment in financing health care and in providing health facilities for the aged. I am not going to restate the points covered in our testimony of last

year.

I shall review what the American Hospital Association has done and some of what has been done by others since last year's hearings.

Action programs: American Hospital Association activities. A committee of the association undertook a thorough analysis of the use of the OASDI mechanism as a means of financing the hospital care of retired aged persons. From this a statement was developed outlining specific advantages and disadvantages we could see in the use of OASDI in financing hospital care of the aged. This report, “An Examination of the Use of the Social Security Mechanism to Meet Hospitalization Costs of the Retired Aged," was approved by our board of trustees and was widely distributed. We believe this is an important educational document to create understanding of the issues involved. Copies of the document have been sent to each member of this committee. We would like, Mr. Chairman, if possible to have this document included in this hearing record.

The board of trustees of the association established an ad hoc committee with leading representatives of the Blue Cross plans and private insurance companies. This committee's mission was to explore the extent to which voluntary health insurance could be extended to provide adequate health coverage for aged persons. The work of this committee contributed to an increased awareness as to the acuteness of the problem and we believe will stimulate further progress toward a solution.

The association is participating as one of the members of the joint council to improve the health care of the aged. This council provides a forum of exchange of information among its participant members and is intended to encourage research. It has also stimulated interest and activity at the State level that have already resulted in action within local communities.

This association has urged congressional committees to increase Federal expenditures for needed health facilities for the aged. We have expressed particular concern that in undertaking a program of voluntary health insurance for Federal employees and their families that the Government give real leadership in providing benefits to retirees. We have urged the increased appropriation of funds for research in the health problems of the aged.

We have also urged that increased attention be given to the provisions of health services for aged public assistance recipients.

Our house of delegates, the association's policymaking body, extensively discussed this whole matter and enunciated specific policies. A copy of this policy statement is attached.

This association established a committee which is at work studying the health facility needs and services of aged persons and is developing programs to insure quality of care. We sponsored jointly with the U.S. Public Health Service, a national conference of carefully selected authorities to probe and to suggest courses of action with respect to the care of the chronically ill. A report of this conference will be available shortly.

Criteria for measuring the ability of nursing homes to provide at least a minimal level of acceptable care have been developed. These criteria will be used as the basis for a program that ultimately will provide a national list of such facilities.

Congressional and executive action: The report which this committee requested from the Department of Health, Education, and Welfare on hospitalization insurance for OASDI beneficiaries has made a most important contribution. The report indicates the breadth of the problem, the fact that it is an increasing problem, and in many ways parallels the findings of our own studies, reported to this committee last year.

The action of the Congress establishing the White House Conference on the Aging, the creation by the Senate of a special subcommittee on the problems of the aged to gather grassroots information, the recent OASDI beneficiary survey, the study of public assistance programs initiated by this committee, and the studies being undertaken through grants provided by the National Institutes of Health and by other Government agencies all constitute important action by the Congress and the administration looking to the development of adequate means for coping with the problem.

Activities of other groups and organizations: It is impossible within this statement to outline all of the studies and research programs on the needs of aged persons being undertaken throughout the country. In addition to these research programs and studies, a great many local community programs are underway. All of them are contributing importanly to serving the physical and mental needs of the aged. These are of particular significance because without doubt they can affect the need and use of hospital facilities. A great deal more can and should be done to develop programs for community homemaker services, rehabilitation and educational services and medical and dental home care services and others.

Considerable progress has been made in the extension of existing prepayment programs and the development of new ones for the aged which I am sure will be described to this committee by other witnesses. I should like, Mr. Chairman, to emphasize a point stressed at the recent 12th National Conference on Aging, held at the University of Michigan during the week of June 22, to the effect that the needs of aged persons cannot be met by any one group alone. They demand the combined efforts of the individual and his family, the local community, the State and Federal Government, and of numerous health agencies and organizations. Until more time is allowed for such efforts to develop we cannot be sure that the extended years of life of our older citizens may be spent in maximum health and happiness. American Hospital Association position: Mr. Chairman, I should like to state that the position expressed to the committee last year has been reaffirmed as the official policy of the American Hospital

Association and is in opposition to the use of OASDI as a mechanism to finance the hospital needs of the retired aged at this time. Therefore we are opposed to H.R. 4700.

Use of social security mechanism: After extensive study, to which I have referred, we concluded that there are at least three dangers inherent in the use of the social security mechanism which cannot be avoided. These are of such consequence that it causes us to have serious misgivings with respect to a compulsory health insurance program even for the retired aged. These dangers are:

First, that the Government as a purchaser of so much hospital care would exert the power of the purse in ways detrimental to the interests of hospital patients.

Since the Federal Government would become a major purchaser of hospital care, it would have to become concerned with hospital costs. This would, we believe, lead to a concern in the administration and operation of hospitals, and because of the intimate relationship of hospital costs to the quality of service would, lead to interference in the care of patients.

Any underestimation on the part of Government as to the cost of the program is likely to be reflected in pressures to reduce the costs of care which means a reduction in the quality of care.

The use of the social security mechanism implies a commitment by the Federal Government of such a magnitude that there is little possibility of later retraction. It is an irrevocable step.

Second, that there is a real danger that the provision by Government of prepaid hospital benefits would lead to overutilization that could not be controlled and thus to runaway costs, with consequences that could be disastrous to hospitals and the public.

We believe that an alleviation of the financial burden placed upon older persons will naturally result in a sizable increase in their use of hospital facilities. This is a natural and desirable development. But it is desirable only to the extent that their hospitalization represents a medical need and is not for nonmedical purposes. There is a definite danger of abuse both as to the admission of aged persons and the lengthening of their stay beyond the point of medical need.

The acknowledged shortage of desirable housing and custodial facilities for the elderly will increase demands for use of expensive hospital facilities. Such overtaxing of hospital facilities could result in the unavailability of beds to meet the needs of the rest of the population.

Because of the uncertainties associated with the use of health facilities by the aged, and the great difficulties in controlling use and eliminating overuse, the total costs of care may well run to proportions far in excess of what is contemplated in establishing the program. The underfinancing which we believe could result from a total national program to provide care to all retired aged might well be of such magnitude as to create great pressures to reduce payments to hospitals in order to maintain the solvency of the program. Such a result could lead to the bankruptcy of the voluntary system or a serious deterioration in the quality of care.

Third, that the acceptance of compulsory health insurance for one group of the population would foster its extension to other groups, and perhaps ultimately to the whole population.