However, this and any other ideal service has its limitations because it cannot be paid for except by people who are employed, themselves, and their families, and usually with the assistance of their employers. It falls short when it comes to people in their old age who no longer can pay out of their private resources for the costs the entire cost of hospital care at that age.

From a long personal experience in providing medical and hospital care to people of all ages, extending over more than 50 years, I am convinced that prepayment for the hospital services required by retired persons over 65 years of age will never be possible through voluntary insurance. This opinion is based on the following obser

vations:

1. Most commercial insurance companies cancel health insurance policies at age 65 or 70, or when the beneficiary reaches the retirement age. If the policy permits conversion from group to individual insurance, either the premium rates are increased to prohibitive levels or many essential benefits especially required by the aged are reduced or eliminated.

2. Few employers will voluntarily continue to contribute to the premium cost of health insurance for retired employees, especially for those who have not been employed by them throughout most of their wage-earning years. A few labor unions have persuaded employers through collective bargaining to contribute sufficient amounts to the union's health and welfare fund so that it can afford to continue to pay the health insurance premiums of aged retired members of the union. But these instances are relatively so rare that they cannot be expected to solve the problem for the great majority of the aged.

3. It is not feasible to expect private insurance companies to add an increment to the annual premiums of all health insurance policies with which to prefund the future costs of medical care for the aged so that they could be given a paid-up health insurance policy on retirement. This is exactly what H.R. 4700 proposes to do through social security. Private insurance companies and I will remind you that in the statement from the Department of Health, Education, and Welfare it is stated that there are 1,150 or more private insurance carriers that are selling health insurance and each one of these carriers has not one kind of health insurance plan, but multiple plansprivate insurance cannot do it because of the great variations in benefits provided in the hundreds of types of health insurance which they sell to employers under group contracts and because most people shift repeatedly from one employer to another during their wageearning years.

Moreover, private insurance is a highly competitive industry in which sales are based in large part upon experience ratings. This means giving a lower premium rate to contractors whose employees are mostly young and healthy and a high rate to those who employ older persons. Experience rating is so widespread throughout the insurance industry that it is impossible to prefund the costs of health services for the retired aged in any reasonable manner through private insurance.

4. Most nonprofit health insurance plans such as Blue Cross and the Health Insurance Plan of Greater New York, HIP, with which I am identified, have always permitted insured persons to continue their coverage with undiminished benefits after retirement.

On reaching the age of retirement, they are urged by HIP to convert from group to individual insurance, which costs only $4.55 more a year for husband and wife. But $90 a year even for virtually total medical and surgical care for a two-person family without any extra doctors' bills at the time of illness seems to be too much for them to pay out of their small retirement income, especially since they must also carry the full cost of Blue Cross hospital insurance, which virtually doubles the cost. Today, with increasing Blue Cross rates, it is going to more than double the cost.

Only about one-third convert to individual insurance on retiring and many of these find it impossible to continue to pay the premiums after a year or two. They drop out just when they enter the years of greatest medical need. As a result, slightly less than 4 percent of HIP's 550,000 insurees are 65 years or over, whereas people of this age group constitute 9.1 percent of New York City's population. This clearly demonstrates that the privilege of converting health insurance to an individual contract after retirement will not solve the problem, even though the benefits are continued in full measure and the annual premium rate is almost the same as the group rate.

The only solution to the medical and hospital problems of the aged is a paid-up health insurance policy on retirement which they, and their employers, have earned through advance payments made throughout their years of employment. And this can only be done through social security, as proposed in the Forand bill.

I do not at this time advocate anything more for the aged than coverage of hospital costs, for that represents the greatest and most urgent need of old people.

To illustrate this point, I present the following medical and surgical experiences of HIP with subscribers over 65 years of age:

Seventy percent of insured persons in HIP who are 65 years of age or older see an HIP physician at least once a year. This is about the same percentage as younger persons. The old group, however, averages 7.5 physician visits a year whereas the entire HIP population of all ages averages 5.2 physician visits a year. Among the aged, 8.3 percent see a doctor at least 20 times a year, whereas among the entire insured population of HIP only 4.2 percent require 20 or more physician services a year. It is most interesting that this 8.3 percent of high users among the old people account for almost half of all the medical service required by the entire aged group. Almost 92 percent of the old people utilize little or no medical care in HIP than the rest of the HIP insurees of all ages.

Males over 65 are heavier users of medical services than women over 65. Actually, the utilization rate for women enrolled in HIP is higher at the high fertility ages of 20 to 29 than at the advanced ages. By contrast, the rate of utilization of physician services by males 67 years of age or older is far above that at any other age except the first years of life.

The need for specialist services increases throughout adult life to reach a peak among the aged. Utilization of surgeons, internists, and urologists is especially high at age 65 and over, especially among males. Family physicians are also required to give 37 percent more services to old people than to younger adults.

However, the need of old people for medical services is very much greater for conditions which require admission to a hospital. The

illnesses to which the aged are prone and for which they require hospitalization require 154 in-hospital physician services per 100 insured older persons, compared with a rate of 57 in-hospital services for persons of all ages in HIP-or almost three times as many. More than a fifth of the contacts the aged have with physicians, 21 percent, take place in the hospital.

As is to be expected, both the hospital admission rate and length of stay in hospital are much greater for old people. If we exclude obstetrical admissions, the hospital admission rate for all HIP subscribers is 59.6 per 1,000 insured persons of all ages, whereas the rate for those who were 65 years of age or over is 121 per 1,000 persons, almost exactly double.

The old men have a rate of 191 hospital admissions per 1,000 and the old women a rate of 102 per 1,000. This compares with a hospital admission rate of only 54 for all males in HIP and a nonobstetrical hospital admission rate of 65 for females of all ages.

Similarly, because of the nature of their illnesses, old people must remain much longer in hospital, 160 days per 100 insured older persons-176 for old men and 128 for old women-compared with 49 days for people of all ages in HIP.

In considering these figures it is important to remember that people insured in HIP require 20 percent fewer admissions to hospitals and their length of stay per 100 insured persons is 20 percent less than among comparable populations insured by Blue Cross and Blue Shield in New York for inhospital benefits.

A possible explanation for this is that all persons insured in HIP have available unlimited home and office care and unlimited diagnostic and specialist services outside of the hospital without any extra charges. Under the HIP program, there is no financial incentive for them to enter a hospital unnecessarily or to remain in the hospital longer than necessary in order to save doctors' fees.

In my opinion it is inadvisable for legislation such as H.R. 4700 to include payment for medical or surgical services in a hospital unless it also would include comprehensive personal health services of all kinds outside the hospital, in patients' homes, and doctors' offices. For economy in the utilization of expensive hospital services and also for the welfare and happiness of old people, medical services should be available which will enable them to stay out of the hospital.

It is illogical for H.R. 4700 to provide payment for surgical care in a hospital but not for medical care. Aside from the fact that it will give rise to endless bickering with the medical societies in regard to fee schedules, payment of a surgeon is not more important than payment of a physician for the treatment of coronary thrombosis, or stroke, or a malignancy which can be treated by modern radiation technics or chemotherapy.

Until government can find a way to provide comprehensive personal health services for the aged outside of the hospital as well as inside, I hope that the Forand bill, H.R. 4700, will be amended to eliminate payment for in-hospital surgical services.

I would also urge that the specification that hospital facilities must be semiprivate be omitted. The general service of the hospital is far better, for it obligates the hospital to treat the OASI beneficiary

as a service patient. He becomes then the joint responsibility of the entire medical staff which has been selected by the trustees or governing authorities of the hospital because of professional competence. He benefits from the combined knowledge and skill of the entire medical staff and from all the ancillary scientific services of the hospital.

This is far more likely to assure competent medical care than when the patient selects a single physician to attend him without full knowledge of the nature and seriousness of the illness or the ability of the doctor to cope with it.

Free choice of hospital is essential, but free choice of doctor is not necessary or desirable when the hospital is expected to provide all the medical and ancillary services that may be required for a complicated and serious illness.

I recommend, therefore, that the term "semiprivate" be replaced by a requirement that hospital care be provided in a one-, two-, three-, or four-bed room. This is the physical equivalent of the so-called semiprivate facility.

With these two changes, I urge the passage of the Forand bill, H.R. 4700. Only through the social security mechanism can people of moderate means prepay in advance during their years of employment those high costs of hospital and nursing home care to which most people are exposed in their old age. This measure is humane, logical, and urgently needed.

The CHAIRMAN. Thank you, Dr. Baehr, for bringing to the committee your views on this matter.

Are there any questions?

Mr. FORAND. Mr. Chairman, I don't have a question, but I personally want to thank you for bringing to the committee your thoughts on this very, very important subject. You have made a real contribution and I thank you.

The CHAIRMAN. Any further questions?

If not, Doctor, we thank you, sir.

Dr. BAEHR. Thank you, Mr. Chairman.

(Attachments to Dr. Baehr's statement follow :)

REFERENCES SUBMITTED BY DR. BAEHR

Paul M. Densen, Eve Balamuth, and Sam Shapiro, "Prepaid Medical Care and Hospital Utilization," Hospital Monograph Series No. 3, Chicago, American Hospital Association, 1958.

Sam Shapiro and Marilyn Einhorn, "Experience With Older Members in a Prepaid Medical Care Plan," Public Health Reports, volume 73, No. 8, August 1958. "Health and Medical Care in New York City," a report published for the Commonwealth Fund, Cambridge, Harvard University Press, 1957.

Governor's Conference on Problems of the Aging: "Financing Health Costs for the Aged," Albany, commissioner of taxation and finance, 1957.

George Baehr and Neva R. Deardorff, "The Experience of a Group Insurance Plan With Older Enrollees," Journal of Gerontology, 7: 245-253, April 1952.