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.

44432-59-37

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. Can you conclude your statement in that time?

Dr. ESSELSTYN. Yes, I 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

percent, and that during this same period hospital costs, alone, have nearly tripled; yet, the end is not in sight.

2. The fact that at our present economic level we are told that of the more than 16 million people over 65, 3 out of every 5 have gross incomes of less than $1,000.

3. The fact that of those over 65 only two out of every five have any health insurance programs at the present time.

4. The fact that throughout the country it is recognized that the No. 1 cause of dependency is sickness and disability.

5. The well-known fact that the aged require about 22 times as much general hospital care as younger persons.

6. The fact that married couples on social security who have had to use their voluntary insurance found that it met only two-thirds of the hospital cost, and one-fifth of the doctor bills.

7. The fact that last year, for the first time, the percentage of the population covered by health insurance did not grow, but remained at 70 percent-strongly suggesting the possibility that voluntary insurance has reached the saturation point.

8. And, finally, the very important observation of the ineffectiveness of the voluntary and commercial insurance plans which have recently been developed.

The initial legislation which was proposed by Representative Aime Forand in 1957, at the 85th Congress, under H.R. 9467, has acted as an effective burr under the saddle of voluntary and commercial plans, to produce in some way some kind of insurance to adequately meet the peculiar needs of the group over 65 years of age.

Every credit should be given to these people who have worked so long and earnestly and hard to try and produce a substitute for a taxsupported plan. But, as you can readily appreciate from a review of the foregoing facts and figures, no voluntary insurance plan of any sort can create the necessary resources to provide adequate coverage for this older age group.

It is just a question of trying to get blood out of a stone.

Recently, before I came down here, I had an experience with a patient who left the hospital. He was insured under the Continental Casualty program of over 65. His hospital stay over and above what he was allowed through his insurance cost him $538.

I think this is a very representative case of the kind of things that happen with the best there is in the over 65 policies that are being made available today.

Several features of H.R. 4700 incorporate principles which the Group Health Association of America has endorsed since the very founding of the original organization in 1946, which was known then as the Cooperative Health Federation of America.

Foremost among these is the principle of prepayment which our association has always endorsed.

There is the principle of service, rather than indemnity benefits which have been written into this bill.

There is the provision for making full use of the present nonprofit health plans which may be in existence.

It has long been our contention that although the profit motive. is an honorable one, the care of the sick should not be entrusted to a commercial organization whose driving force, of necessity, is to make money.

It is also gratifying to see the Federal social security system used as a solution to the problem of more adequate health care for the aged, as proposed in H.R. 4700. Such a solution was one of the unanimous recommendations of the last Presidential Commission on the Health Needs of the Nation, and was recognized as desirable in 1952 in the report of the Commission on Financing of Hospital Care.

Finally, we are delighted to see that provisions in the bill would allow for the professional services to be provided through established group practice direct service plans.

The enactment of H.R. 4700 will also have beneficial effects in several areas besides the health of the social security beneficiaries.

For the last several years the nonprofit plans with rates based on community rating, have been working at a great disadvantage in competition with the commercial insurance companies who have been writing sickness insurance based on individual rating, which so frequently is cancelable when needs are greatest.

Through the support of the nonprofit plans under H.R. 4700, a great stimulus will be given to these existing important, but financially insecure nonprofit plans.

Hospitals will be helped immeasurably by putting this group of patients on a pay-as-you-go basis, rather than having to accept welfare rates, or provide charity care as it is necessary to do so often at the present time.

To the extent that sickness is the No. 1 cause of dependency, the existing public assistance programs will be benefited.

Because, then, of the overwhelming evidence which supports the need for this kind of legislation, because of the fact that there are so many inherent qualities in H.R. 4700 which are based on principles for which we have long stood, and because there are also important fringe benefits inherent in H.R. 4700 which will provide a measure of relief to many worthwhile existing health agencies, the board of directors of the Group Health Association of America voted unanimously to give their most ardent support to the principle of adding to social security benefits now available to persons eligible for retirement and survivors' benefits under the Federal social security system, certain medical care benefits.

Within the organization of the Group Health Association of America there is a professional service committee, which is made up of doctors primarily concerned with the professional aspects of medical care plans.

From this point on, I would like to speak as a member of this committee.

Representative Forand has very kindly invited criticism of his bill, and within the spirit of this invitation, I would like to offer the following suggestions:

How comprehensive should the provided coverage be?

In any consideration of this problem, one must certainly be guided by the difference between the ideal, which would be total comprehensive medical care, and the degree that is practical.

I would like to suggest that in the final drafting of H.R. 4700 this committee give careful consideration to the following changes:

I can see little justification for the inclusion of acute surgical benefits alone.

In fact, it any physician's services were to be included, it would seem more meaningful to include medical care, which is more often needed than surgical care which, although many times of major severity in this age group, occurs less frequently.

The omission of surgical benefits would simplify the implementation of the program, as well as save an estimated $80 million, as estimated in 1958 for 1959.

I think that the final draft of this bill must provide for ambulatory diagnostic care in nonprofit institutions.

You are all well aware of the fact that it is not so much the use, but the abuse, of Blue Cross which is one of the major influences forcing Blue Cross plans to price themselves out of the market today. The needless hospitalization of patients for diagnostic services, which can be provided just as well on an ambulatory basis, will cause a significant unnecessary financial load to this program.

I believe the addition of ambulatory diagnostic services in the end will effect an overall reduction of cost, as well as prevent an unnecessary added burden to the existing, already crowded bed capacity of our hospitals in certain areas.

I am fully aware of the fact that in certain areas of the country, facilities for ambulatory diagnostic services are practically nonexistent, but I believe in these instances exceptions could be readily provided.

Another benefit which I believe would pay its own way is that of rehabilitation. As a result of a recent survey of 1,480 patients in nursing homes and county infirmaries, made by a group of psychiatrists in New York State for the Bureau of Chronic Diseases, it was found that 15 percent have a high enough degree of rehabilitation potential so that they could either be taken care of in a self-help unit, or returned to their own homes, and 33 percent more had a slight degree of rehabilitation potential, at least enough to bring them into a category where their care would entail considerably less ex

pense.

Although there are those who feel that insistence upon high standards and quality controls might jeopardize passage of this bill, none of us who has been circulated at National, State, and county levels in the last 3 weeks by the AMA can in any way feel that the opposition of this organization would be changed to support, if provision were made in this bill, to allow any doctor to provide any service to any patient.

Relatively recently the executive director of the American Medical Association, Dr. F. J. L. Blesingame, made the pronouncement at the San Francisco meeting of the American Association of Medical Clinics, that the most important function of the American Medical Association today is to stop any further Government intrusion in the field of medicine, no matter how worthy the cause.

I am sure your committee would much prefer to see this bill passed over the opposition of this kind of fanatical thinking.

However, it should be passed complete with built-in standards and quality controls, which nobody can ever criticize and which will never have to be improved, rather than attempt appeasement by lowering specifications of standards and quality.