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income of such couples slightly under $2,200, medical expenses on the average for these aged people amounted to almost 10 percent of annual income. When we consider that the Health, Education, and Welfare Department reports that more than four-fifths of the aged incurring medical costs assumed responsibility themselves for all their medical costs incurred during the year, the drain on the assets of the aged is readily apparent.

This, Mr. Chairman, is why I believe that enactment of H.R. 4700 is necessary. Whereas some 40 percent of the aged are reported to have some form of health insurance of varying benefits, the adoption of H.R. 4700 would enable some 70 percent of our aged population to receive specified protection against the heaviest of medical expenses; that is, hospitalization and nursing home care.

Is such a bill desired by the public, Mr. Chairman?

Several weeks ago I sent out to the voters in my district a questionnaire. Among the questions was one asking each voter if he or she favored amending the Social Security Act to provide hospital, nursing home, and surgical services to our senior citizens. The results of the poll are not fully tabulated yet, but thus far they indicate that 66 percent are in favor of amending the act in this fashion.

This is a resounding percentage. I am sure that favorable percentages have been returned to similar questionnaires sent out by other Members.

I have also received numerous letters urging adoption of the bill. It is a subject that in various forms has been before Congress for more than 10 years, and sponsors of proposals in the field, as we know, have included among others such eminent Members of Congress as the late Senator Taft and the chairman of the Senate Labor and Public Welfare Committee, Senator Hill.

Is this bill preferable to suggested alternatives? Chapter VI of the report by the Health, Education, and Welfare Department offers highly interesting reading on alternative proposals. I will not take the time of the committee to describe them in detail, but they include stimulation of voluntary insurance, subsidies to private insurance carriers, and Federal grant-in-aid programs.

It is enlightening to read some of the comments in the chapter as to these proposals. For instance, on permitting private carriers to pool experience, such a program would not

meet the problem of the financial barriers to purchase of insurance by the aged. On a Federal program to reinsure carriers against abnormal losses it

would not improve the ability of low income persons to purchase health insur

ance.

On a plan for the Government to operate a checkoff system similar to a payroll deduction on a voluntary basis for persons receiving OASDI benefits

since participation would be voluntary and the entire cost would be borne by the beneficiary group, there is no reason for thinking that the premiums could be much lower than those now charged by group plans covering the aged.

On having the Government subsidize the cost of health insurance bought by OASDI beneficiaries through a matching payment for amounts deducted from the monthly benefit:

Unless the subsidy represented a substantial portion of the premium it is probable that not many more beneficiaries would participate in the plan than in a voluntary checkoff without subsidy.

On subsidies to private insurance carriers:

The difficulties of providing hospitalization and health insurance coverage for the aged stem primarily from the fact that they require above-average amounts of care and in general have below-average incomes. Any large expansion of protection for the aged thus seems unlikely without some way of covering the costs by spreading them over other segments of the population and throughout the lifetime of the individual. Voluntary insurance has succeeded in doing this to a limited extent through community-rated premiums and inclusion of the retired aged in employment groups.

There is a question, however, of how far voluntary effort and private industry can go to assure adequate protection to all or the great majority of the aged. And again, in respect to cost and premium norms of subsidized private insurance:

When such requirements are recognized and spelled out in detail it becomes apparent that the degree of regulation of voluntary health insurance that would be involved would probably be unacceptable and that such a program would be complicated and costly to administer.

On a program of Federal grants to States for medical care for the indigent

thus, expenditures for hospital care for the aged under a program of medical assistance assuring uniform nationwide protection might be of the order of magnitude as the costs of providing hospital insurance for aged OASDI beneficiaries roughly $750 million in 1960 for persons aged 65 and over.

And, I need not remind the committee that this money, of course, would be paid from the Federal Treasury out of appropriations rather than being raised through nationwide taxation on employers and employees in an insurance program divorced from budgetary considerations.

What would be the cost of the program? According to the Health, Education, and Welfare Department report, if the program were restricted to eligible aged persons, hospital service benefits would cost $826.3 million in 1960. To this would be added $14 million for limited skilled nursing home benefits for the aged and disabled. Surgical benefits were not estimated by the Health, Education, and Welfare report, but the Health Insurance Association of America has given the figure of $197 million.

Totaled together, these sums amount to $1.0373 billion.

If all OASDI beneficiary groups were included in the hospital service benefits, an additional $69.1 million would result for a total of $1.1054 billion.

These are the estimates of experts. Others have ranged as high as $1.370 billion. In general, I believe that it would be safe to say that the total cost would run in the neighborhood of slightly over $1 billion in 1960. It may be trite to refer to such oft-quoted figures as national spending of $6,074 million in 1957 for cigarettes or $9,140 million for liquor, but few people could reasonably argue that $1 billion for the heath of our senior citizens would not be a far more salutary expenditure.

Mr. Chairman, I believe that the bill should be carefully considered by the committee. I believe that it proposes a reasonable method for meeting an obvious need in this country; that it is supported by a great many Americans; that it offers a proposal superior to suggested

alternatives; and that its cost, spread over an insurance program, can be satisfactorily absorbed by the American economy.

It certainly is not socialized medicine. The Health, Education, and Welfare report, to my knowledge, never resorts to such terminology. Like the other great welfare programs which our Nation has undertaken, such as national distribution of Salk polio vaccine, it offers a pragmatic solution to an existing problem.

I thank the committee for its courtesy and I respectfully urge that it recommend legislation in this vital area.

Thank you, sir.

The CHAIRMAN. Mr. Halpern, we appreciate your bringing your discussion of this matter to the attention of the committee this morning. Are there any questions of Mr. Halpern?

Mr. FORAND. Mr. Chairman, I don't have a question, but I do want to commend Mr. Halpern for his presentation. I know of his sincerity in this program and the hard work he has been putting into it, and for that I say thank you.

Mr. HALPERN. Thank you very much.

The CHAIRMAN. Mr. Byrnes.

Mr. BYRNES. You said that Senator Taft supported this proposition. I would say that I have a great admiration for the Senator and I wonder if the gentleman can tell me where or when the Senator supported a proposition such as this?

Mr. HALPERN. Yes. It is my belief that from 1946 to 1949 Senator Taft was a sponsor of legislation in the field of medical assistance. It may not have been this bill. I didn't say it was specifically this bill.

Mr. BYRNES. No.

Mr. HALPERN. Or even the exact objectives of this bill, but he did sponsor a grant program to States for assistance for those unable to meet medical or dental care.

Mr. BYRNES. Under the old-age assistance program?

Mr. HALPERN. Yes.

Mr. BYRNES. Not the old-age and survivors insurance system? Mr. HALPERN. No.

Mr. BYRNES. What we are talking about here is the old-age and survivors insurance system.

Mr. HALPERN. I think there is a kindred relationship as to the philosophy behind it.

Mr. BYRNES. I would differ with the gentleman, and I think most members of the committee would, as to the objectives. One is based on need, the insurance system is not based on need.

That is all, Mr. Chairman.

Mr. FORAND. Mr. Chairman, I think we ought to make it clear that the assistance program is part of the social security system.

Mr. BYRNES. Is it not part of the old-age and survivors insurance system?

Mr. FORAND. You are breaking it down into chapters.
Mr. BYRNES. That is right.

The CHAIRMAN. Mr. Halpern, I was somewhat myself interested in your observation of Senator Taft's support during his lifetime. of anything such as this connected with OASDI because it has been my thought that he had not supported further expansion of OASDI

in the field of paying for medical services, but, as Mr. Byrnes points out, that is not material to the discussion of the committee at the moment.

Thank you, sir, very much.

Mr. HALPERN. Thank you, sir.

The CHAIRMAN. Our next witness is our colleague from New York, the Honorable Thaddeus J. Dulski.

We are pleased to have you before the committee this morning and you are recognized, sir.

STATEMENT OF HON. THADDEUS J. DULSKI, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK

Mr. DULSKI. Mr. Chairman, I appreciate this opportunity to appear here before this distinguished committee.

I noted some of the things that Mr. Halpern brought out and my statement would only be repetitious.

So, with your permission, may I have my statement included in the record at this point.

The CHAIRMAN. Without objection, your entire statement will be included.

Mr. DULSKI. Thank you.

The CHAIRMAN. We thank you, sir, for coming to the committee. (The statement referred to follows:)

Mr. Chairman, and distinguished members of this committee, I appreciate this opportunity to appear here today in support of the Forand bill, H.R. 4700.

I have received a great many letters from my elderly constituents telling me of their sad plight caused by the heavy costs of doctor bills and hospitalization. Also, a number of organizations, such as the American Nurses' Association, the AFL-CIO, the National Association of Social Workers, and others, have contacted me endorsing such a health provision in our social security program.

The cruelest costs in old age are medical costs. Illness, often prolonged, means heavy doctor bills and hospital bills. Our social security system could be greatly improved if the biggest share of these costs could be met through a health insurance provision. The gain in alleviating human misery would be enormous. America has many splendid voluntary health-insurance programs. But, for most of our elderly people, these programs are impossible not only because the premiums are higher as age increases, but also because many of these older people are prohibited from joining the plan.

Today we find many industries and business firms providing health insurance programs for their employees. Right now we, in the Congress, are considering health insurance legislation for our Federal employes. But, when he reaches the age he needs it most, there is no health insurance protection available for Mr. Senior Citizen unless he can afford to pay the high premium costs.

A study made 2 years ago revealed that only 40 percent of old-age beneficiaries have some form of health insurance. Even this is often inadequate and it is expensive—in view of the limited resources of the greater majority of our senior citizens. In the meantime, hospital and doctor costs continue to rise.

Improvement in our social security law to provide hospitalization benefits, say for 60 days a year to old people, would in no real sense compete with our free voluntary health insurance system, but would be an excellent supplement to the voluntary health insurance which has been so successful in our country. Our Government has been concerned about the health of our Nation for many, many years, and today furnishes billions of dollars for medical care for the needy through public welfare programs, for research programs, for our Armed Forces, etc. We must not overlook those who have contributed so much toward the progress of America, and who have played a substantial part in bringing all these programs into fruition. I strongly urge favorable consideration of this legislation which is long overdue.

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One will never know the true meaning of social security until he reaches the age to which it applies and he has perhaps no other income on which to depend. Then he will understand why the principle of social security is so sound.

The CHAIRMAN. Our next witness is Dr. Esselstyn.

Will you identify yourself by giving us your full name and address and the capacity in which you appear.

STATEMENT OF DR. C. B. ESSELSTYN, SECOND VICE PRESIDENT, GROUP HEALTH ASSOCIATION OF AMERICA

Dr. ESSELSTYN. My name is Dr. Caldwell B. Esselstyn. I am here to represent the Group Health Association of America.

The CHAIRMAN. Doctor, we have allotted to you 20 minutes. you conclude your statement in that time?

Dr. ESSELSTYN. Yes, I can.

Can

The CHAIRMAN. Fine. You are recognized, sir. If you omit any part of your statement, you may do so with the understanding that your entire statement will appear in the record.

Dr. ESSELSTYN. Thank you, Mr. Chairman.

Mr. Chairman, on behalf of the Group Health Association of America, I want to thank you for this privilege of appearing before the Ways and Means Committee to testify concerning H.R. 4700. The Group Health Association of America is an organization composed of prepayment health plans and individual members.

The health plans include indemnity insurance plans, as well as direct service plans, providing comprehensive care through group practice. The individual membership is made up of administrators of labor health plans, as well as professional and lay persons who are primarily interested in the evaluation of our present methods of providing health services, and of ways and means of making available better medical care for the American people, particularly through consumer sponsored prepaid comprehensive direct service plans.

Today, Group Health Association of America is representing the health interests of between 42 to 5 million individuals throughout the United States.

It is an organization which is primarily concerned with the problems of the consumer of medical care, and represents a unique forum where free and open discussions between producers and consumers have resulted in many constructive plans and united front in regard to our concern over the dilemma of providing health care for our senior citizens.

Throughout the week you have heard from experts dealing with many of the facets of H.R. 4700, and although at this late date some of the things which I am going to mention may be repetitious, I believe it is justifiable for the sake of emphasis.

The Group Health Association of America believes that the legislation under consideration by your committee at this time is of tremendous significance, and is bound to have a profound effect on the shape of things to come. The necessity for action at this time is the result of a number of important developments:

1. The fact that during the past 10 years, the price of medical items in the Consumer's Price Index, such as professional fees, hospital charges, drugs, and medical supplies, have increased more than 45

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