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The CHAIRMAN. Our next witness is Mr. Chase.
Will you please identify yourself for the record by giving us your name, address, and capacity in which you appear, Mr. Chase ?
STATEMENT OF HENRY H. CHASE, ON BEHALF OF MEMBER STATE CHAMBERS OF THE COUNCIL OF STATE CHAMBERS OF COMMERCE
Mr. CHASE. Yes, sir. My name is Henry H. Chase. I am employed by the Esso Standard Oil Co. with headquarters at 15 West šist Street, New York City. I am chairman of the Social Security Committee of the Council of State Chambers of Commerce and I appear here today in behalf of the 29 State and regional chambers of commerce which are members of the council.
The CHAIRMAN. You are recognized for 10 minutes, Mr. Chase.
Mr. CHASE. Thank you, sir. With your permission, I would like to brief and paraphrase the statement.
The CHAIRMAN. With the understanding that your entire statement will appear in the record.
Mr. CHASE. Thank you. Let me say at the beginning, sir, that like every other witness who has been here representing an organization, we believe that adequate medical care should be available to all of the aged. There is no question about that. It seems to us that the differences in viewpoint revolve around how big the problem is rather than on how to attain this generally accepted goal.
We think these differences in viewpoint arise out of how one views the problem, the size of it.
There are three particular points that I would like to make. We think that voluntary health insurance has made tremendous strides, particularly recently, in providing hospital and surgical protection for the aged. We believe there is good reason to feel that this advancement will continue.
Secondly, we feel that the aged who are least able financially to support the cost of their own hospital and medical care will not be aided by the enactment of H.R. 4700.
Finally, sir, we believe that a drastic modification of the social security system is neither necessary nor desirable in order to assure reasonable hospital surgical protection for the aged.
The American system of voluntary health insurance has done a tremendous job. Recently, as I have previously stated, there have been unusual strides made in this field. We believe that they will continue. The changes being made by the insurance companies, some of the Blue Cross, Blue Shield, medical associations, together should add up to a sharply increased coverage.
It is sometimes felt that many of the social security beneficiaries or most of them are unable to finance their own medical care. We believe, sir, that some of the surveys made by the Bureau of Old Age and Survivors Insurance, indicate that this problem has been perhaps somewhat overstated and a great many of the social security beneficiaries today are able to finance their own care, as a matter of fact, about 4 million of them at the moment.
On the other hand, many of the aged are not eligible for social security benefits, and we believe that it is in this area where most of the problem arises where people have difficulty in financing their
care. But the Congress has already moved in this area by providing under title IV that assistance can be paid to those who are medically indigent, even though their normal living costs might not place them in that category of the indigent.
We believe the problem is somewhat smaller, not unimportant at all and not small, but smaller perhaps than believed by some in the past. We do not believe that the problem warrants an approach of making a basic change in the social security system, and we think that there are certain disadvantages which would arise out of the enactment of H.R. 4700. I would like to mention them just very briefly.
It would constitute the first provision for services as distinguished from cash income under the Social Security Act. That is a rather drastic change in philosophy, sir. One of the primary concerns of any prepayment plan providing medical care of course is cost. Characteristically, at least in foreign countries, sir, we have discovered, as I am sure you gentlemen have in your evaluation of it, that the initial cost estimates are almost invariably understated and as the program grows we find that the initial cost estimates were not adequate.
We believe that once a program of this sort is established that it is almost inevitable that there will be an attempt made to broaden the program, to expand it, so that in effect a complete comprehensive medical care is provided. We feel that the result would be a full blown program of governmental care for a very large and growing segment of the population, even though apparently from the figures listed by HEW most of the social security beneficiaries will, within the relatively near future, have the advantage of protection under private plans.
We think it would develop, sir, in much the same way as the social security program itself has, where it started with old-age benefits, expanded to survivors benefits, coverage
extended to virtually everyone, disability benefits were included. This is characteristic of programs of this type, and we believe it would likely occur in the same way in this area. To repeat just briefly, sir, we believe that private coverage is expanding so rapidly and making such tremendous strides now, and much of this has been recent, admittedly, sir, there is not the need for this program now that there might have been sometime in the past.
We believe that those in the aged group who are least able to finance their own care would not derive any benefit from this particular bill.
Finally, we think it would be neither desirable nor necessary to make a sharp change in philosophy in the social security system which we think the enactment of this bill would provide.
I would like to thank you for allowing me to appear here today to present the views of the members of the State Chambers of Commerce Council.
The CHAIRMAN. Mr. Chase, we appreciate your bringing to the committee your views and those of the Council of State Chambers of Commerce.
Any questions of Mr. Chase ?
STATEMENT OF HENRY H. CHASE ON BEHALF OF MEMBER STATE CHAMBERS OF THE
COUNCIL OF STATE CHAMBERS OF COMMERCE, IN OPPOSITION TO H.R. 4700 My name is Henry H. Chase. I am employed by the Esso Standard Oil Co. with headquarters at 15 West 51st Street, New York City. I am chairman of the social security committee of the Council of State Chambers of Commerce. And I appear here today in behalf of the 29 State and regional chambers of commerce which are members of the council. The State chambers for which I speak are listed at the end of my statement.
We appreciate this opportunity to present to this committee our views on H.R. 4700, which has as its basic purpose the provision of hospital/surgical care for social security beneficiaries.
At the very outset, let me emphasize that the organizations on whose behalf I am speaking today believe that adequate medical care should be available to all of the aged. This is a sound and desirable goal which we believe is accepted by everyone. Thus, it seems to us that differences in viewpoint revolve about the best method or methods of attaining that generally accepted goal. In part, at least, we think these different viewpoints arise out of varying evaluations of the size of the problem.
Based on these premises, my testimony will be directed to three points. We believe that
1. Voluntary health insurance is making large strides toward providing hospital/surgical protection for the aged. This advancement will continue.
2. The aged who are least able financially to secure hospital/surgical protection for themselves, would not be aided by the enactment of H.R. 4700.
3. A drastic modification of the social security system is neither necessary nor desirable to assure reasonable hospital/surgical protection for the aged. The American system of voluntary health insurance has done much to reduce the medical care cost problem for millions of our citizens, including many in the aged group. Relatively recent developments are particularly pertinent. From 1953 to 1958 the percentage of persons 65 and over who have some insurance against hospital costs increased almost 40 percent. If voluntary coverage continues to expand at the same rate as it has recently, by 1965 about 70 percent of social security recipients will be protected according to the 1959 study on hospitalization insurance made for this committee by the Department of Health, Education, and Welfare.
We believe that there are several factors at work which should tend to bring about even more favorable results, and thus reduce the problem of medical care costs even further. Expanded social security coverage means more individuals will be eligible for benefits and the higher benefits being paid means a better ability to finance medical care. The higher earnings during recent years means future beneficiaries will have accumulated greater savings than did those retiring in the past. Private pension plans have grown markedly in scope and in benefit amounts. More employers are helping their employees to pay for medical care after retirement. Insurance companies, Blue Cross and Blue Shield, and the medical profession, are sharply intensifying their efforts to provide more medical care protection for the aged on terms more in keeping with the requirements of the aged.
It is sometimes assumed that all individuals currently receiving old-age benefits under the Social Security Act are financially unable to provide hospital/surgical protection for themselves. However, a survey conducted by the Bureau of OldAge and Survivors Insurance indicates that this problem is not as acute as has been believed by some. For example, the Bureau's study shows that about half of the married couples on the social security benefit rolls had a cash income, exclusive of social security benefits, in excess of $1,100 a year. Including social security benefits more than half had a cash income of $2,100 or more annually, and almost half had an income of $2,400 or more.
The Bureau's survey indicates to us that a great many social security beneficiaries are in a position to continue to provide for their medical costs, just as they did prior to retirement. As a matter of fact about 4 million of them already do so through prepayment plans alone.
On the other hand, many of the aged are not now eligible for social security benefits. In all likelihood it is this group that produces the bulk of those who cannot, without difficulty, provide for their hospital-surgical expenses. Although there is not sufficient data available to determine accurately the actual extent of need in this group, it is clear that the bill now before this committee would
do nothing to solve their problem. Probably the best solution for such individuals already has been approved by Congress through provisions for the payment of medical costs under the assistance programs. Because this approach is directed to persons who qualify for public assistance, it will come closest to reaching the aged who have the greatest health care cost problem. The most recent liberalization of this provision made it possible for individuals who normally do not require assistance payments to meet their usual living costs, but who may require help because of unusual medical expenses, to secure governmental aid.
Of course, not all of the aged will have the protection of voluntary insurance. Some will not be able to pay the costs and some will not want such protection for various reasons. We question most seriously, however, the wisdom of drastically changing the social security system in an attempt to solve a problem which on examination seems considerably smaller than has been believed, and which we believe can be better solved by voluntary prepayment plans, other means of personal payment, and other programs such as governmental assistance.
As this committee in particular must know, there are a multitude of figures and estimates advanced by different sources, each of which purports to show how many or how few people would benefit from H.R. 4700. The accuracy of any of these estimates is, of course, subject to question. But at least one fact does seem solid. Of the some 15 million aged today about 6 million would be excluded since these individuals are not eligible for social security. When allowances are made for groups within the remaining 9 million who already have some protection under the various prepayment plans, or who are entitled to medical care under other programs, or who do not want medical care, the number who would benefit is reduced still further. After considering the various estimates that have been made it seems to us that perhaps 3 million individuals not now having some medical care cost protection might benefit directly from H.R. 4700.
Even if this figure is somewhat low, and it may be, we believe it would be most inadvisable to sharply alter the philosophy underlying the social security program in an effort to aid this group. For the reasons previously set forth in this testimony we do not believe such action necessary. Furthermore, we believe it could produce results that in our opinion would be highly undesirable. Let me mention briefly some of the consequences we foresee should H.R. 4700 be enacted :
(a) It would constitute the first provision for services, as distinguished from cash benefits, under the Social Security Act. This is a sharp change in philosophy. In effect Congress would be deciding how a part of each social security beneficiary's monthly benefit should be spent.
(b) One of the primary concerns in any prepayment or benefit program providing medical care is the quality of that care. We believe our present system of private medicine is the most desirable system. Regardless of the form of the original legislation, we fear that the Government may eventually drift into a broad system of Government hospitals and salaried personnel, including physicians, which many believe would jeopardize the quality of medical care.
(c) The matter of costs is a subject of considerable concern. The experience of public medical care programs in other countries indicates that the full costs of such a program invariably are considerably understated when the program is conceived. It seems very likely that the initial cost estimates of any program of medical care adopted in this country will be far less than the actual costs.
(d) Once a program of hospital benefits for OASDI recipients has been firmly established, it appears almost inevitable that such recipients will seek, and Congress will provide, more comprehensive medical care benefits-for example, doctors' services, nursing services, drugs, prosthetic devices, and so forth. The result would be a full-blown program of Government medicine for a large and growing segment of the population, even though the great bulk of social security beneficiaries would otherwise be covered under private prepayment plans.
(e) This program might well become an initial step toward a similar program for the entire population, instead of providing a defense against the spread of Government medicine as some have argued. We have seen the OASDI program extended from retirement benefits to survivors' benefits to disability benefits and coverage extended to almost everyone. A hospital benefit program could be expected to follow the same course.
To summarize our position, we believe that
Such rapid advances in expanding coverage under voluntary prepayment plans are now taking place that a large majority of the aged will soon be protected.
Those in the aged groups who are least able to finance their own medical care costs, and who would not benefit from H.R. 4700, already have been provided for by the Congress.
It is neither necessary nor desirable to sharply modify our existing social security program in order to assure reasonable medical care for
the aged. Thank you for allowing me to appear here today to present the views of the member State chambers of the Council of State Chambers of Commerce who have authorized me to make this presentation. They are: Alabama State Chamber of Commerce Empire State Chamber of Commerce Arkansas State Chamber of Commerce (New York) Colorado State Chamber of Commerce Ohio Chamber of Commerce Connecticut Chamber of Commerce State of Oklahoma Chamber of ComDelaware State Chamber of Commerce merce Florida State Chamber of Commerce Pennsylvania State Chamber of ComGeorgia State Chamber of Commerce Idaho State Chamber of Commerce South Carolina State Chamber of Indiana State Chamber of Commerce Commerce Kansas State Chamber of Commerce Greater South Dakota Association Kentucky Chamber of Commerce
East Texas Chamber of Commerce Maine State Chamber of Commerce South Texas Chamber of Commerce Mississippi Economic Council-State West Texas Chamber of Commerce Chamber of Commerce
Lower Rio Grande Valley Chamber of Missouri State Chamber of Commerce Commerce (Texas) Montana Chamber of Commerce
Virginia State Chamber of Commerce New Jersey State Chamber of Com- West Virginia Chamber of Commerce merce
Wisconsin State Chamber of Commerce The Salt Lake City, Utah, Chamber of Commerce also has endorsed my testimony.
The CHAIRMAN. Mr. Fitzpatrick.
Mr. Fitzpatrick, will you please identify yourself by giving us your full name, address, and capacity in which you appear?
Mr. MÁCHROWICZ. Mr. Chairman, may I say I am very happy to greet Mr. Fitzpatrick here. We are very proud of the work he is doing in Detroit. He has a fine program for the retired in Detroit, recreational program and otherwise, and for making known to society the problem of the aged people. I am glad to welcome him here today.
STATEMENT OF JOHN FITZPATRICK, MEMBER OF THE ADMINISTRATION BOARD, FORD-UAW PENSION PLAN, SECRETARY, STEERING COMMITTEE VAW RETIREE PROGRAM IN METROPOLITAN DETROIT
Mr. FITZPATRICK. Honorable members of the Committee on Ways and Means, my name is John Fitzpatrick. I am 69 years old, and I have been retired from the Ford Motor Co. for 312 years.
I am a member of the administration board of the Ford-UAW pension plan and I am also secretary of the steering committee and a member of the legislative committee of the UAW retiree program in Metropolitan Detroit which represents about 60,000 UÀW retired members and their wives.
Mr. Chairman, I will not attempt in the time assigned to me to read my whole statement.