here to discuss ways and means of arriving at the same end-that of more security for our senior citizens.

I ask your indulgence in considering me as a small businessman with a wife and kids to feed, clothe, and educate from the fruits of self-employment. I am proud to be engaged in the distribution of the world's most valuable protection and service, health insurance on a voluntary basis.

We insurance agents are also proud of the service we render in leading and advising our American public in providing financial security for themselves and their families.

The record speaks for itself that insurance agents are most sensitive to the wants and needs of the public and have advised, counseled, and pleaded with people in all walks of life to improve their financial security and provide for the old age and sunset years of life.

I have talked to thousands of people about their most intimate problems. I have written and delivered many, many claim checks to policyowners and received their praise for helping them help themselves with health insurance protection.

After 20 years of experience, I have no small insight into what makes people tick; what breeds self-respect, and contributes to independence and pride.

I don't pretend to be an expert on the statistical-actuarial side of this picture, as is Mr. E. J. Faulkner, but I agree with his conclusions. However, one facet of this question deserves great stress: the human part of it. Older folks I know are happy and proud to take care of themselves. They want to be self-reliant and do not want to be a burden to their children or their Government. They grew up during a period when people were more self-reliant and of necessity had to look out for themselves and their future.

Many of them continue to enjoy an income after 65 and over 40 percent have health insurance protection now, and the percentage of those insuring and finding it necessary to insure because of rising medical costs is increasing much more rapidly than their number.

Over 1,200 companies, and thousands of agents, are now writing and continuing to develop more comprehensive policies and to apply liberal underwriting principles unheard of and unthinkable even a few years ago.

Just as progress has been made in the automobile industry and science and all other facets of our economy, improvement of an extent has been made in insurance.

In my office, as do many thousands of others, we write individual hospital, surgical, medical policies with no age limit, and they may continue for life, regardless of age.

We write individual policies for people under age 65 that are guaranteed renewable for life regardless of deteriorating health or physical condition.

We write such policies that are fully paid up at age 65 and are never subject to cancellation, and that provide as many as 365 days hospital care of any one illness or injury.

One of my companies, and there are a number of others, write what is known as the 65-plus plan. This is a unique program initiated in 1957 on a trial basis. They accept every application on persons over 65 regardless of age or physical condition.

They now have 63 people insured who are 100 years old, or older, and 2,152 between 90 and 100 years of age.

Another company in my State has just completed the enrollment period under a similar plan and has initially insured over 5,000 of our senior citizens.

To give you an idea how the public reacts to and receives our voluntary security is a letter from Mrs. Annie Young, of Wilmette, Ill. In her letter to the company she says, in part, and I quote:

I want to congratulate you on your wonderful old-age hospital insurance plan, which you folks call 65-plus. How you are able to do so much for such a small amount is a mystery to me, but I am sure you know your business. I hope I never have to use your policy, but if I do it is nice to know that I have such fine protection.

She is 89 years old.

Another lady 71 years of age writes:

My desire at this time is to convey my most sincere appreciation to the officials of your good company for making such coverage available in an area where it is so desperately needed. I have never before endorsed, or thanked the responsible persons for any product or service. However, I can never express quite adequately the warmth and gratitude I have for furnishing the protection as was provided by this plan.

I should like to cite one of the many claims we have paid. A 73-yearold man was insured on March 4, 1957. On May 26, 1959, he incurred hospital expenses of $473, resulting from pernicious anemia and heart block, and the company paid him $415.50 of the cost. His policy is still in force.

Why oppose the bill? We think the older age health care problem is overemphasized and magnified beyond proportion in relation to the problem of other citizens as a whole.

Our senior citizens are already favored in many ways, reduction in income tax, present social security benefits, much larger availability of pensions and retirement plans and new liberal insurance plans not available to those under 65.

Further, the medical profession has agreed to reduce fees for those over 65.

We insurance agents accept smaller sales commissions to reduce the cost to them.

H.R. 4700 would not solve the real problem. Many of our senior citizens are not under social security and would not be helped by this bill. The real problem is the indigent, which we have always had with us and always will. They are a problem of society as a whole and require the support of all of us. Hospital and medical care is only a small part of their total needs.

Many old people are in hospitals today because no other facilities are available to them, such as nursing homes, posthospital care, visiting doctors and nurses' teams, and low-cost preventive health facilities.

The Nation's hospitals are already overcrowded and the demand for higher standards of hospital care continues to increase the costs until they are a real problem of not only the aged, but also of the other citizenry, insurance companies, and we agents, as well.

H.R. 4700 would only worsen this condition and encourage many to take advantage of it and encourage malingering.

Observe what is happening in the Province of Ontario. The government plan has been in force only since January 1, 1959. It is

reported that badly overcrowded hospitals force a long waiting period before admittance for anything except emergencies.

H.R. 4700 could eventually jeopardize the present social security system. Estimates of the cost of such programs are traditionally low initially in those countries that have tried them. Present social security payments deal with fixed dollar amounts. Hospital and medical care, however, deals with the utilization factor, the use of free facilities over and over again from year to year, throughout life. There are always some people who like to be waited on and who like the sympathetic care of hospitals and doctors. Authoritative estimates are that 16 million people would be eligible for care now with 1,000 more added daily, and the costs would amount to $2 billion the first year.

There are no authoritative estimates of how much and how often these people would use free hospital and medical care, and it is indeed difficult to determine accurately the final cost of such a program when it has to be based in part on the desires of patients and the availability of medical facilities.

The hospitals understandably would try to accommodate them when the Government guarantees the bill. Voluntary insurance has already learned that the incidence of hospitalization is higher with prepayment health insurance even though the patient pays part of the bill.

Under a Government program in which the beneficiary has no financial interest in the cost of care, that incidence would undoubtedly be far greater.

Social security taxes are already scheduled to reach 10 percent to 15 percent of payroll in the years ahead.

H.R. 4700 could send them much higher ultimately and mean a smaller paycheck for everyone who pays the social security tax.

Unlike the present social security benefits which encourage people to continue to save and supplement their OASI benefits, H.R. 4700 discriminates against people who have had the foresight to save and prepare for old age by purchasing insurance.

H.R. 4700 discriminates against people geographically. It is a well known fact that semiprivate rooms costs in hospitals vary from $10 daily in some areas, to $30 per day in others, yet everyone would be paying the same amount of tax.

H.R. 4700 could materially reduce the quality of medical care. If doctors and hospitals are told what they shall charge, initiative is stifled and the freedom of medical choice may be denied millions of Americans.

The danger here was ably expressed by one of the members of your committee, Hon. Burr Harrison, in speaking before an audience at the Kings Daughters Hospital in Virginia. He commented about

the hands of Government bureaucracy itching to attempt solution of these problems with a medical program of impersonal mediocrity.

He called for continued

freedom to select our own hospital, our own nurse, and our own family doctor.

We would urge a fourth medical freedom, to select our own plan of voluntary health insurance.

President Eisenhower expressed his views before the American Medical Association when he said:

If the time ever comes when large numbers of our citizens turn primarily to the Government for assistance in what ought to be and to remain a private arrangement between doctor and patient, then we shall all have suffered a tremendous loss.

H.R. 4700 would require the present wage earners and business to shoulder the responsibility of one-twelfth of our population, including 40 percent who already have health insurance by individual initiative, including 28 percent still gainfully employed and able to provide for themselves, who are our customers and who we would undoubtedly lose, as such.

Further, such a program would set in motion pressures to expand it to cover the entire population and spell the end of the voluntary system in health insurance.

Summation: Voluntary health insurance is doing the job today. It requires no tax money to support it. Every person over 65 is offered the opportunity to purchase basic hospital-surgical insurance regardless of physical condition past or present.

Voluntary health insurance is more sensitive to changes in the needs of our people and can readjust to them faster than Government. It can do more about abuses, and avoid more waste and unwarranted use. It can be administered more economically by insurance companies operating under the discipline of competitive conditions.

Some say voluntary insurance can't do it fast enough. I respectfully point out to you the fantastic growth record of coverage for persons under 65.

At the beginning of 1947, only 30 percent of the population had some form of health insurance. A decade later the figure was more than 70 percent.

We believe that a similar and even faster job can be and will be done for the aged if insurance remains unhampered.

With respect to both the present and future aged the proportion insured will continue to grow and the uninsured problem of the aged will decline.

Finally, there are better ways of helping our senior citizens, such as the Keogh-Simpson type of legislation, that would give tax relief for ultimate financial old age needs.

We are in sympathy with doing all we can to help those who have long carried the burden of building and preserving our country, but let us not discard willfully the rights and freedoms of our heritage in doing it.

A free society has always risen to the demands and needs of its people and there is evidence that it is doing it today.

The CHAIRMAN. Mr. Galloway, we thank you, sir, for bringing to us the views of the International Association of Accident and Health Underwriters.

Are there any questions of Mr. Galloway?

Mr. Baker.

Mr. BAKER. Mr. Galloway, you have a very informative statement, but I do not agree with you that voluntary health insurance is doing the job. I think voluntary health insurance has made substantial

strides toward doing the job, but I certainly cannot agree that they are doing the job.

Generally speaking, what is the difference in rate between noncancellable insurance and the cancellable insurance?

Mr. GALLOWAY. Approximately 10 percent, sir.

Mr. BAKER. Only 10 percent?

Mr. GALLOWAY. Yes.

Mr. BAKER. Do you think the general public knows that? I certainly did not know it. Why would anybody for the difference of 10 percent, if they knew what this did, if it was not in tiny print, purchase a cancellable policy today when they could get for 10 percent more a noncancellable policy?

Mr. GALLOWAY. Sir, that is one of the great strides of progress that insurance has made in the past few years. Previously, many years ago, companies did resort to the practice of canceling policies for people who had abused it or who had used it unduly, but in the past 5 years the major companies have all agreed and universally refrained from canceling policies for health reasons.

Mr. BAKER. Why do you still write those policies?

Mr. GALLOWAY. Because there are a number of people who cannot qualify for noncancellable insurance, and because the premium is lower and thus making it available to a greater number of people.

Mr. BAKER. Mr. Faulkner stated that the only difference between cancellable and noncancellable is rate alone; is that right?

Mr. GALLOWAY. That is correct.

Mr. BAKER. I simply cannot believe that the public is informed, that there is such a tiny difference. I want to take 1 minute to give you an illustration: When I was practicing law, probably 20 years ago, a man came to my office who had had a health and accident insurance policy for many years. It would pay $50 a week. He was unquestionably permanently and totally disabled. He filed the claim before he came

to me.

They wrote him a letter canceling the policy. They sent him a check for 7 weeks. They sent his premium back and they canceled it. I read and read and I found down in fine print they had a right to do it. I could not believe it. I brought suit, and lost the case.

If this is still going on, something should be done about it. Mr. GALLOWAY. Sir, thank you for your comments about it. But I again reiterate what I have said in my statement, that progress has been made in our general national economy and similar progress has been made in insurance. Such practices today are very rare, whereas I will admit when I first started in the business it was very prevalent. Mr. BAKER. I agree with you that progress has been made, but more progress should be made.

That is all.

The CHAIRMAN. Are there any further questions?
If not, Mr. Galloway, we thank you, sir.

Mr. FRAZIER. Mr. Chairman, I would like the privilege of introducing Mr. Stanton E. Smith. Mr. Smith originally came from my home in Chattanooga, Tenn., now resides in Nashville, Tenn., and is president of the Tennessee State Labor Council.

Mr. Smith was formerly a professor, a teacher of mathematics, before he became interested in the labor movement.