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Mr. UTT. I think you are probably correct, but we did have testimony to the effect that the reason most doctors will not testify against this was the fact that they feared expulsion from the American Medical Association.

I think your testimony will refute that.

My second question is this: Do you feel that Mr. Curtis, who is president of General Motors, and his wife, is entitled to free hospitalization and medical care at the expense of the workingmen of the

country?

Dr. FURSTENBERG. Congressman, if he pays the same as the workingman pays for Blue Cross he is entitled to the same benefits.

I don't see any difference in this from payments made under the Social Security Act. He should be entitled to the insurance that the social security legislation would give him. That is his right.

Mr. UTT. It seems to me that there are nearly 10 million self-employed people in the United States, most of whom built up a very sizable estate for retirement and if they are not permitted to draw upon the free medical care and hospitalization, there would be a better service and more money available for those people who actually need it.

Those are the people who I am more interested in than those people who are presidents of General Motors and General Electric and other large corporations.

I feel that while they have made a contribution to the fund that anyone who draws on that fund is going to draw so much more than he contributes that somebody is going to have to go without who has made a contribution.

My position is different from yours on that.

That is all.

The CHAIRMAN. Mr. Alger.

Mr. ALGER. Dr. Furstenberg, you described the Baltimore plan to us. Who pays for that plan?

Dr. FURSTENBERG. Up until recently they had been paid out of State funds. I believe now under the matching funds in the Social Security Act, that part of the money is being channeled through the State health department to the city.

Mr. ALGER. Do you turn away people who were sick because they cannot pay?

way:

Dr. FURSTENBERG. As a hospital administrator? Let me put it this There is a lot of poppycock about everyone getting medical care who needs it. It depends on the rate at which you get the medical care. If someone comes to an outpatient department or to a hospital emergency room and is in cardiac failure and needs to be hospitalized right away, there are no questions asked.

But suppose the person comes with hypertension and incipient failure, and it looks as though he needs medical care and he is a transient or he is indigent. There are many hospitals that will not take care of such patients until they establish eligibility, go through a means test so that the hospital can collect, and in a State such as Maryland where we have a great deal of public funds being channeled into hospitals, this is still the rule.

The patient has to show that he is medically indigent before he can get medical care in the hospitals.

Mr. ALGER. I appreciate that statement. I have had a little uneasy feeling that it was too much the other way.

So I share some of your concern, but does your hospital turn people away that obviously need help?

Dr. FURSTENBERG. No hospital and I don't believe any physician would turn the patient away who obviously needed help.

Mr. ALGER. It is the ones they are not too sure about they might delay or postpone ?

Dr. FURSTENBERG. Fortunately most patients are not emergencies. Mr. ALGER. You mentioned one other thing that I do not think everyone else has mentioned. First of all, they contract with hospitals and something about the fee or cost handled on a capitation basis.

I know what the word means, but what is in your mind when you make this suggestion?

Dr. FURSTENBERG. The health insurance plan of New York City, and I am sure that Dr. Baehr will be glad to go into this if he is asked that question, pays groups of physicians so many dollars a year, I think it is about $29 now, for the total care of a patient, exclusive of hospital care, I believe, which is paid for specially.

Mr. ALGER. He handles so many?

Dr. FURSTENBERG. The group takes care of so many thousand people, and receives so much per head. That is the capitation.

We have that system in the Baltimore city medical care program set up by medical authorities and approved by the medical society in our city for persons receiving public assistance.

Mr. ALGER. I have one other thing:

Does it seem fair to you, Doctor, that a number of aged who are not covered by social security are not covered by this bill?

Dr. FURSTENBERG. It does not seem fair to me that anyone should have to be pauperized in order to get medical care or that he should have to go through a means test to obtain medical care.

Mr. ALGER. Thank you, Doctor.

The CHAIRMAN. Are there any further questions of the witness?
If not, we thank you again, Doctor, for bringing us your views.

The CHAIRMAN. Mr. Eubank, will you please identify yourself by giving us your full name and address, and the capacity in which you

appear.

STATEMENT OF MAHLON Z. EUBANK, DIRECTOR, SOCIAL SECURITY DEPARTMENT, COMMERCE & INDUSTRY ASSOCIATION OF NEW

YORK

Mr. EUBANK. Mr. Chairman and members of the committee, my name is Mahlon Z. Eubank. I am director of the social security department of Commerce and Industry Association of New York, 99 Church Street, New York 7, N.Y.

The CHAIRMAN. Mr. Eubank, you will be recognized for 5 minutes. If any part of your statement is not orally delivered, it will appear in the record.

Mr. EUBANK. Yes.

(The formal statement of Mr. Eubank follows:)

STATEMENT OF THE COMMERCE AND INDUSTRY ASSOCIATION OF NEW YORK, INC. Presented by Mahlon Z. Eubank, director of the social security department of Commerce and Industry Association of New York, Inc.

Commerce and Industry Association of New York, Inc., the largest service chamber of commerce in the East, represents approximately 3,500 employers, large and small, in all branches of industrial and commerical activity, including many corporations headquartered in New York but engaged in multistate operations. Through its special committee on health insurance, which includes executives of leading national business organizations specializing in this field, and its social security department, the association studies and actively presents management thinking on significant health insurance issues at both the national and State levels. The Commerce and Industry Association appreciates this opportunity to testify before your committee concerning the Forand bill (H.R. 4700) which would provide hospital, nursing home, and surgical service for persons eligible for old-age and survivors insurance benefits.

Over the years Commerce and Industry Association, recognizing and concerned with certain problems of the aged, has cooperated actively with governmental and private agencies to encourage more employers to provide opportunities for the hiring of the older workers. In line with that active interest, we are sympathetic toward making health insurance available to more of our senior citizens. While we believe that it is meritorious to focus attention on this important problem, we are convinced its solution does not lie in the Forand bill or similar Federal legislation. There are other and better ways to insure that our senior citizens can obtain medical care fitted to their needs and desires. Mandatory Federal action, inherent in the Forand bill, is not the answer. reasons for opposing Federal action follow:

COMPULSION WILL STIFLE EXPERIMENTATION

Our

All of the aged, and other OASI beneficiaries, should not be compelled to accept the same form of medical expense coverage. Our way of life is not one of regimentation but one of freedom of choice for all, in this instance, for both employers and employees. Medical care is one of the most complex, highly skilled and intensely personalized services an individual can require. As such, it is not compatible with a compulsory and uniform program for all the aged.

Today, employers may help to protect their retired employees with Blue CrossBlue Shield coverage, with conversion privileges under group health insurance policies issued by insurance companies, with the continuation of such group coverage after retirement, with group practice or with other types of voluntary plans. Benefits may include hospital charges, surgical or physicians' fees, major medical coverage or group practice. The retired employees may purchase individual health policies or in some instances unions may provide a similar variety of benefits and coverages for their members. Within all these areas there remain many necessary improvements that are being sought through constant revision and experimentation. To arrest these developments with the regimentation of a Forand bill would be most unwise.

At the present time no one-neither the insurance companies, employers, Government officials, nor even doctors-knows all the answers on how best to provide adequate medical care for the aged. All know the various ways but this is a relatively new type of coverage and still in the growing stages with better methods constantly developing. For example, will nursing home care for chonic or convalescent cases shorten the stays in hospitals equipped to deal with acute illness without converting nursing homes into residence clubs for the poorly motivated? Does visiting doctor or nurse care in the home promote more rapid rehabilitation and avoid the collapse of the will to live sometimes seen in hospitals or nursing homes? Will widespread diagnostic studies reduce the need for hosiptal care or will it merely breed more hypochondriacs? Such questions are being studied, experimented with and ultimately answered by the experience of the medical profession, insurance experts and industry. Passage of the Forand bill would freeze the format of coverage for older people and stultify the healthy growth which has been going on in industry.

In our opinion, if Congress enacts legislation for hospital and surgical expenses for OASI beneficiaries, it not only would hinder development of group health

insurance but would do more harm than good. We fear that many employers would be apt to drop, or not adopt, plans relating to health insurance benefits for present employees, such as major medical programs, or the extension of group beenfits to retired employees. This would be due to the fact that overall cost will increase and the amount which employers can allocate for health insurance is necessarily limited by economic conditions. Rather than liberalize their health insurance program, employers could and might cite a health provision in the Social Security Act as meeting their obligations to their employees. In fact, Federal legislation, such as the Forand bill, would hinder the normal evolution and current rapid progress of all types of health insurance.

In brief, the establishment of compulsory Federal benefits would stifle in healthy and rapid development which has resulted from enterprising private industry finding ways to meet the demands of our changing population.

OVERUTILIZATION

With enactment of the Forand bill, many of the aged undoubtedly would tend to take unfair advantage of its provisions. Employers who have inaugurated health plans without built-in economic controls know from sad experience that overutilization has resulted. For example, employers having sick-leave provisions always have a certain number who use up their sick leave with vague, ill-defined complaints. Individuals who need only minimal home care have no incentive to accept such care if they can get hospitalization without cost. The Saturday Evening Post last year, in a series of three articles on how present hospitalization plans are overutilized, cited the practice of individuals leaving their children in the hospital while they take a trip. Can we say that the children of aged individuals when going on a trip will not use the hospitals to care for their parents whether or not the parents truly need hospitalization? Perhaps some may even use this method to relieve themselves of this responsibility for 120 days a year.

The aches and pains of the aged are many and there is no limit on the amount of medical care a body can absorb. Physicians after hearing their stories cannot say with certainty that no hospitalization is necessary. Some doctors prefer to have their patients hospitalized to reduced the travel time involved in home visits. Hence, the aged person will, without question, get the benefit of any doubt. Some who are looking for free room and board will try to get themselves hospitalized for this reason alone. This economic pressure cannot be overlooked. The 120 days can easily become a "right" which every OASI beneficiary expects to exercise yearly.

Under the plan for providing medical and hospital care as proposed by the Forand bill, except for the overall total of 120 days' hospital-nursing home care, there are no built-in economic controls, such as coinsurance, deductible amounts or dollar limits to benefits. If enacted, it would be extremely difficult to police abuses of the benefits and in fact no one would want the job. The result might well be that unnecessary hospitalization and unduly prolonged stays will crowd out the truly sick persons. All experience and logic make it clear that a compulsory plan such as the Forand bill that provides services without cost to the aged beneficiary inevitably would lead to even more overutilization than now exists in voluntary plans for active employees, since motivations such as the desire to return to work no longer are present.

REGULATION

We recognize that the provisions of the Forand bill purport to prevent the regulation by the Federal Government of hospitals, nursing homes and the medical profession. Experience and the facts of life make this objective unrealistic. Responsible governments must have strict control over public expenditures and these controls would necessarily include quality and quantity of medical-hospital care. We predict that if this bill should pass, and if the cost of the program materially increased, there would be an irresistible hue and cry for Government regulation of hospitals. By way of illustration, the superintendents of insurance of New York and Pennsylvania, faced with requests for increased Blue Cross rates, have put pressure on Blue Cross to supervise the administration of hospitals in order to prevent abuses. There would also be a compelling pressure placed on the administrators of the program to supervise hospitals in order to cut down on abuses. Since it obviously is easy to shift costs from basic to ancillary services, the next step would be the supervision of all medical 44432-59-32

care for the aged. This will mean Federal fee schedules, Federal control of treatment and ultimately Federal control of all medical practices.

SOCIALIZED MEDICINE

The provisions of the Forand bill would be even more of an entering wedge for socialized medicine. Employees required to pay one-half of the cost for the aged would demand that they also be given free hospital and medical care. The result would be socialized medicine similar to what England now has.

England's National Health Service is demonstrating that socialized medicine is not the solution to the problem of rising medical costs nor does it still the cries of anguish when it becomes necessary to face up to these costs. Effective July 1, 1958, the contributions by individual users of the Service and by employers were increased. Individual increases were 371⁄2 percent for men, 20 percent for women, and 16% percent for children under 18 years. Employer contributions were increased 57 percent. Even so, the British Treasury (which means the British people through their income taxes) was still paying about 60 percent of the total cost of the Health Service.

MOST OLD AGE BENEFICIARIES HAVE PROTECTION

According to the report of the Secretary of Health, Education, and Welfare to your committee (p. 91) approximately 15 million of our people are over 65 and about 6 million of them have voluntary protection against medical expenses. On the basis of those figures alone, it would appear and it has been stated that only 40 percent of the aged have such protection.

There are, however 21⁄2 million over 65 who receive old age assistance and are eligible for the medical care benefits of that program. In addition, according to the United States census, there are another 11⁄2 million-veterans, religious groups, doctors, nurses, Indians, those with adequate resources-who do not need or want insurance or prepayment protection.

Thus, we have 6 million with voluntary protection, 22 million receiving old age assistance and eligible for medical care benefits, and 11⁄2 million who do not want or need to be covered, making a total of 10 million or two-thirds of all our aged.

So that only one-third of all our aged population are presumed to be without some form of protection for medical expenses, and they can obtain medical care by (1) paying for it directly as required; (2) subscribing to a voluntary health insurance plan, or (3) relying on welfare or old age assistance.

VOLUNTARY PROTECTION OF THE AGED IS INCREASING

Coverage of individuals over 65 for health insurance is making rapid progress. In this connection the report of the Secretary of Health, Education, and Welfare (p. 43) said:

"Health insurance coverage for the aged thus appears to have shown a fairly steady rate of increase, amounting to between 2 and 21⁄2 percentage points a year, since 1952.

"As of this time, detailed information for the total aged population by age groups is available only from the 1952 and 1956 studies. During the 41⁄2 years between these two surveys, while the proportion of all persons 65 and over with coverage increased from 26 to 36 percent, for those 65-69 the increase was from 36 to 48 percent. Even among those aged 75 and over, there was improvement in the proportion covered-from 15 to 24 percent, bringing this age group by 1956 almost to the level of coverage reported for the age group 70-74 in 1952 (5). Coverage is higher among aged men than among aged women. In the HIFNORC study for 1957, 42 percent of the men 65 and over and 35 percent of the women had health insurance."

The percentage of the aged who are covered will increase materially because of the increasing number of employees who are enjoying this protection with provision for conversion or continuation of group coverage upon retirement. Blue Cross, other nonprofit groups, and insurance companies are developing or already have measures which will bring adequate prtection within financial reach of the older person. The American Medical Association, to help in this endeavor, has adopted a resolution that lower fees should be charged to our senior citizens. All groups are intensifying their efforts to gain fuller public understanding of this problem and to make adequate coverage widely available.

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