(d) Representatives of organized labor; (e) Representatives of the aged, such as the NRTA and AARP. 2. This trusteeship to (a) Formulate specifications for the best benefit plan or plans possible; (b) Submit such specifications to the insurance industry and/or Blue Cross and Blue Shield for competition; (c) Accept the best bid or bids; (d) Make available for election or option the plan or plans to all men of 65 or over and women of 62 or over, not included in the public assistance program; (e) Arrange for the collection of premiums from these persons, falling into two groups: (1) Nonrecipients of OASDI benefits; and (2) Recipients of OASDI benefits; (f) (For the nonrecipients of OASDI benefits:) Receive monthly premiums on a direct-payment basis or through arrangements with their income-producing agency, if so desired; (g) (For the recipients of OASDI benefits:) Make arrangements with the Social Security Administration to withhold such premium payment from the recipient's monthly payment and remit these gross withholdings to the trusteeship; (The withholding feature, both as a convenience for the elderly recipient authorizing it and as an essential saving in operational costs for the trusteeship, would reimburse the social security trust fund for the full cost of the services rendered, reimbursing it for time, labor, and material needed to perform this clerical function.) (h) Transfer to the respective insurance company or companies the premiums collected from all the insured; (i) Supervise the administration by the insurance carriers with the purpose of lessening costs and liberalizing benefits; and (j) Further the progress of the medical profession's announced purpose to increase the quality of services rendered to the elderly and to decrease the costs of such services. We believe that our proposal meets the needs of older persons. 1. The mass buying power which the trusteeship would have by adopting this plan would guarantee the subscriber the greatest benefits for the least cost. 2. The automatic deduction feature for OASDI recipients has been shown by statistics to be the most efficient means as evidenced by the fact that 68 percent of all families with health insurance policies provide for automatic deductions. Those elderly persons who feel they are already adequately covered, or who for other reasons do not desire such protection, have the choice of refusing to subscribe to the plan. Unlike the proposals made by the insurance industry, medical profession, and Government administration, our plan would (a) Provide immediate protection and not take years to be put into operation; (b) Obtain great numbers of subscribers due to confidence in the joint trusteeship; (c) Not be expensive because of the plan's tremendous buying power. Our plan would in short differ from H.R. 4700 in that it would(a) Be administered by private industry, not by the Government; (b) Be accepted by the beneficiary as a voluntary action and not through legislation; (c) Allow doctors to set their own fees and not be controlled by the Government but rather by the recommendation of their own medical association; (d) Be financed without additional social security taxes or Government aid: (e) Make its benefits available to all older persons, not OASDI recipients only. The most apparent objection to our plan is the question of finances. It might be said, "The elderly person would not be able to afford the monthly premium." We desire to answer this objection by stating that to us this statement involves two distinct and separate concepts: (1) The socially compelling one of making available to all elderly persons the best possible medical protection at the lowest possible price; and the other, the question of dollars. Very definitely to deny to all the first because of the second, affecting a segment only, seems to us faulty reasoning. The granting of additional benefits is itself a granting of dollars. Does not the real issue concern itself, on the one hand, with dollars to be spent by the recipient according to his choice, wise or otherwise; and, on the other hand, dollars allocated and earmarked for his use, the choice determined for him and not by him? We certainly maintain that the individual citizen, with proper advice, is capable of budgeting his income and allocating his resources to meet the necessities of living, including payments for his own health care. If the Government maintains that the elderly person is not competent to provide for his health care, would not the same Government be justified also in believing him equally deficient in his ability to budget for food, for rent, for clothing, and the other necessities of life? To compel the elderly citizen to accept an additional outlay of dollars in the form of required benefits is to deny him the American right of free choice and the freedom of independent action. There are other minor objections that can be raised. (a) You may say, "People who most need protection might not join the plan." Industry has taught us that with proper education as to the value of such protection it can expect an excess of 90 percent participation. Success in our own NRTA and AARP plans indicated that the trusteeship can be justified in anticipating similar results. In summary, our proposal rests upon certain basic assumptions, which we hope you, too, will accept. 1. Health protection is an essential to a satisfying way of life. Once a luxury, it is now regarded as a necessity in the same category as food, clothing, and shelter. 2. It is the responsibility of society to make available to every older person desiring them the best and the least expensive types of medical protection, whether that person is or not an OASDI beneficiary. 3. While we fully grant that it is the obligation and the responsibility of society to supply the essentials for life to those not financially able to furnish them for themselves. We also maintain that the function of government is to do for the individual only that which he cannot do for himself. In the words of Abraham Lincoln, "In all that the people can do individually as well for themselves, government ought not to interfere." The CHAIRMAN. Dr. Andrus, you have consumed your time. The CHAIRMAN. Yes, we will recognize you for an additional minute. Dr. ANDRUS. We can look with confidence to the action by the trusteeship, taking into consideration these well-established facts: 1. The total medical cost of an elderly person will average approximately $200 a year. 2. The hospital-surgical-nursing home care, as estimated by HEW, will average $72 a year, approximately one-third of the total medical cost. 3. The protection under H.R. 4700 or any other program planned upon its specifications will absorb only one-third of the total medical cost, although almost 100 percent of the cost of the hospital-surgicalnursing home care. 4. There will therefore remain for the older person the necessity to provide the money to care for the remaining two-thirds of the cost of his medical care, or $10 per month, or $120 per year over and above that assumed by the provisions of H.R. 4700 or any other plan patterned upon its specifications. 5. The trusteeship recognizes its opportunity, through its vast participation, of the protection it offers, its ability to level out for every beneficiary the wide range of possible hospital-surgical-nursing home costs, basing its protection upon the statistical fact that only 14 percent of those persons over 65 will be likely in any one year to incur such costs. This is the well-accepted principle now protecting over 100 million American citizens. 6. With a limited percentage of coinsurance, and through the elimination of the high cost of member acquisition, savings on collection cost, the trusteeship will find it possible, as do certain large group cases in industry today, to pay out 95 cents of the premium dollar, keeping administrative costs below 5 percent. This is a savings in excess of 25 percent from the usual 60 to 80 percent payout per premium dollar in claim payments. 7. The trusteeship will then find itself in the position of offering to all persons over 65, on an optional basis, for a premium of $6 per month, coverage as follows: (The information referred to follows:) Hospitalization.-60 days of coverage: First 15 days at $25; next 15 days at $20; next 30 days at $15. Skilled nursing home care.-60 days of coverage: First 30 days at $7.50 per day; next 30 days at $5 per day. Surgical benefits.-The surgical benefits could be patterned after a relative value schedule recently adopted by the California Medical Association whereby they have agreed to accept 60 percent of their normal listed fees in full payment for persons over 65 with modest incomes. Included also are the fees of the anesthetist and assistant surgeons. Full payment would be provided for 44432-59-34 those persons going to a participating surgeon who has agreed to abide by scheduled amounts. In the event a person determines to go to a nonparticipating surgeon, he would receive the cash allowance provided and deal with his surgeon personally. 8. The trusteeship looks hopefully toward the day when once having solved the large problem of hospitalization-surgical-nursing home care, it can follow the example of industry and labor and gradually extend its economic protection to the other two-thirds of the elderly person's medical budget; namely, medical visits, surgery, drugs, dentistry, appliances, etc. The fundamentals of our program are simple: 1. Provide a prepaid budget health protection program to be offered at minimal cost, on a voluntary basis. 2. Provide a simple withholding mechanism of premium payments by deduction from the social security warrant for OASDI recipients, upon request, and 3. Educate our elderly population to the value of benefits of voluntary participants under this protection. This is therefore our request-that your committee facilitate the premium collection by the proposed trusteeship through the initiation of legislation that would authorize the Social Security Administration to withhold the premium cost from the monthly payment of those social security beneficiaries requesting such a convenience. By this action, your committee will immediately set in motion over the entire land a program of medical security for the elderly, simple, speedy, economical, serviceable, American. It will permit, through the flexibility of the trusteeship's administration, a periodical adjustment, through the years, and so protect the retirees of the future as well as the retirees of today. While our proposal may not meet the absolute goal of the various groups represented at these hearings, it would, in our opinion, be acceptable as a constructive forward step in providing the health protection needed by our elderly and long overdue. It would translate years of discussion and dissension into immediate and salutary action. In conclusion, we recommend that your committee refer our proposal to an ad hoc subcommittee to which we gladly offer the services, personnel, and statistical data of our association in developing its possibilities. The CHAIRMAN. Dr. Andrus, it will not be possible for us to hear you for the time that would be required for you to read the remainder of your statement. It will be in the record. If you want to say something in just a very brief statement about your conclusion, we will be glad to hear that. Dr. ANDRUS. May I present Mr. Davis for a comment? Will there be time? The CHAIRMAN. For the conclusion, if you want to. Mr. DAVIS. Mr. Forand, we have read the hearings of last year, and we have listened to your hearings this week and we have all appreciated your position and would like to give you credit for the fact that you also invited a solution that will work and will be acceptable to all groups. We believe that the solution we presented here today, and which we have previously presented to you in person, is the solution which will be acceptable by all groups that have appeared during these hearings. Though it will not meet the absolute goals of every one of those particular groups, it is our sincere belief that it meets every one of their objections, and that if you actually develop a subcommittee study of this proposal as we are now submitting it, all the groups involved would agree to go along with it and there could be instituted immediately an effective means of providing protection to the older person. The CHAIRMAN. We thank you very much for bringing to us this suggestion representing your views and the views of those associated with you. Mr. FORAND. Mr. Chairman, I think I am safe in telling Mr. Davis and Dr. Andrus and the other lady that all of the proposals that have come in to the committee will certainly receive very serious consideration. I was particularly interested in this item No. 6 on page 9 where it reads: With a limited percentage of coinsurance, and through the elimination of the high cost of member acquisition, savings on collection cost, the trusteeship will find it possible, as do certain large group cases in industry today, to pay out 95 cents of the premium dollar, keeping administrative costs below 5 percent. This is a savings in excess of 25 percent from the usual 60 to 80 percent payout per premium dollar in claim payments. The representative of the insurance industry told us just this afternoon that they are paying 89 percent. Would you want to comment on that? Mr. DAVIS. Yes, I would, Congressman Forand. I, too, of course, am an indirect representative of the insurance industry, having developed the original over 65 coverage plan myself with Dr. Andrus, and in 1955 concluding it for the Retired Teachers Association. I heard Mr. Faulkner make his statement today. When he was talking of 89 percent, he was talking for all group cases of various sizes. He was talking of small group cases of 10 lives and group cases of a hundred lives, and he was talking of group cases like United States Steel Co., and the automobile industry which run on a very much smaller percentage. For a case of the size that we envision here, we are certain that the trusteeship, without any difficulty at all, could have the insurance industry fighting to underwrite the plan with a 5 percent administrative cost. May I also point out that this is similar to the administrative cost that has been estimated by Mr. Flemming in his HEW report. There is no reason that the insurance industry, through the mechanisms already established, could not administer it even more cheaply than the Government because they already do have these established mechanisms. If we had had the opportunity to read further, you would find that we outline a plan of benefits which we feel are comparable to those benefits which are offered in your bill. These benefits established on the basis of a 95-percent payout, must be able to pay out the exact same benefits that your bill suggests since your bill can also only pay out 95 cents on the same dollar. Therefore, we feel that through this mechanism we can accomplish what you are trying to accomplish, which is to bring protection to the people, but at the same time do it through the private industry basis and not have the objections of the American Medical Association or any other organization, because what in fact you are doing, Congressman Forand, of course, is that you are giving everybody an additional $6 a month in social security, and then taking that sum and telling them, "You cannot have it in dollars, but you must have it in benefits." We say if you want to give the people an additional $6 in social security, fine. Give it to them in cash. Then educate them to make the right option and make available to them the option to buy the medical protection that they would like to buy for that $6. Mr. FORAND. There is one point I would like to have you comment on, if you care to. I have had reports that the rates charged by the |