Do you have any comments on this? That because this person is an old lady apparently, had a wild hair on her eye lid, that she was refused Blue Shield insurance unless she signed a rider, apparently waiving any benefits for that particular infection. Dr. STUBBS. There are several points to your question, sir. The first about specific case, we will be glad to investigate it and report fully to you and to the committee. As to the fine print in Blue Shield contracts generally, we are rather proud that we have few of them. I am not familiar with the fine print in the Texas contract, but in general it is the policy, as I stated, of the Blue Shield plans to permit continuation of coverage and it certainly is not a policy to refuse the degree of coverage because of the introduction of some ailment into it. It is quite common to have a waiting period of 10 months for preexisting ailments even in group contracts before coverage is allowed. Without knowing about this case, all I could say is that we are not even sure that she has a Blue Shield contract. Mr. FORAND. I agree with you, but in view of the fact that this has come to me, I thought that perhaps you might be helpful to the committee to clear up this matter so that the committee would know definitely just what the situation is. Dr. STUBBS. I might say two other things that come to mind from the source of this telegram being in Louisiana and from Blue Shield in Texas-I misunderstood you. Mr. FORAND. No. She said her mother is old and on a Louisiana pension plan, but this is from Texas. For hospital insurance, Blue Shield, Dallas, Tex. Dr. STUBBS. In Texas, Blue Shield has unfortunately had to spend a good bit of money protecting their trademark and their symbol because of infringements for profit by several groups over the years. At the present time we have several such infringement efforts outstanding. For that reason, I would say that it is even more possible that this is not a bona fide Blue Shield, but I will repeat our offer to investigate fully and report to you, sir. Mr. FORAND. In order to accommodate you, I am going to have my office make a copy of this telegram and give it to you if you will wait just a few minutes before I turn it in for the record. The CHAIRMAN. Are there any further questions of Dr. Stubbs? Mr. FORAND. I have one more point, Mr. Chairman. At this point I should like to include in the record by unanimous consent a newspaper story from the Providence, R.I., Evening Bulletin, the first paragraph of which reads: Rhode Island Blue Cross will be forced to seek an increase in premium rates next year if there is no letup in the present drain of more than $100,000 a month on its reserves. The CHAIRMAN. Without objection, that will be included in the record at this point. Mr. FORAND. That is all. (The newspaper clipping referred to follows:) [Providence, R.I., Evening Bulletin, July 6, 1959] CITIES DRAIN ON RESERVES: BLUE CROSS MAY HAVE TO BOOST RATES Rhode Island Blue Cross will be forced to seek an increase in premium rates next year if there is no letup in the present drain of more than $100,000 a month on its reserves. This was disclosed today by Stanley H. Saunders, executive director of the hospitalization insurance plan, who reported that Blue Cross expenditures have exceeded income by more than $750,000 in the first half of 1959. The insurance program's board of directors has decided, Mr. Saunders said, that if the current "alarming and disturbing trend" continues, "they will have no recourse but to increase rates." The reserves built up by Blue Cross will make it unnecessary to seek a change in the rate structure this year, Mr. Saunders declared. "But we can't keep dipping into our reserves forever," he added. "Right now our reserves will just about cover 3 months' hospitalization-a minimum established as an approval standard by the Blue Cross Commission of the American Hospital Association. If we have to continue to draw upon reserve funds, Blue Cross will find itself in the position of having to adjust rates." The State insurance commissioner must approve any changes in premium rates for Blue Cross and Physicians Service, the Rhode Island Medical Society's surgical-medical insurance program operated jointly with Blue Cross. Still pending is the approval of premium rates for a more comprehensive surgical insurance plan voted last January by the corporation of Physicians Service. Under this new plan, which will go into operation when premium rates for it are established, full surgical coverage will be guaranteed for individuals with an annual income of $3,300, families of two earning up to $4,400 a year and families of three or more with an income of $5,500. The income limits for full surgical coverage under the existing program are $2,400 for an individual subscriber, $3,000 for a family of two and $3,600 for a family of three or more. Mr. Saunders reported that Blue Cross has not been in the black for a single month this year and last month's deficit was above $100,000. The upsurge in Blue Cross expenditures was attributed by Mr. Saunders to these three factors: An increase of about two-tenths of a day in the average length of hospital stay for subscribers. A rise in the admission ratio per 1,000 subscribers from 120.8 to 128.5. "While two-tenths of a day increase in stay may not loom as a large figure in the public mind," Mr. Saunders said, "it actually can cause considerable financial distress to an organization such as Blue Cross which handles upwards of 80,000 hospital cases per year. At the present daily cost of $23.46, it means an additional expenditure of $375,000 for this factor alone.” NEW DRUGS, EQUIPMENT The rise in cost per patient day was ascribed by Mr. Saunders to the use of new and expensive drugs and equipment, coupled with additional services made available a year ago, when Blue Cross liberalized its benefits for mental, tuberuclar, and chronic cases. Mr. Saunders noted that the length of a patient's hospital stay is governed entirely by his doctor. He said the steady increase in hospital beds may have a bearing on the increase in the admission rate. Since 1955, when Blue Cross premium rates were last changed, the increase in the hospital admission rate per 1,000 subscribers from 107.1 to 128.5 has meant about 1,000 more hospital cases a month, Mr. Saunders emphasized. In the same period, he said, the cost per patient day has jumped from $16.32 to $23.46. The CHAIRMAN. Are there any further questions of Dr. Stubbs? Our next witness is Dr. Lowry. Will you please identify yourself and state your name, occupation, and the capacity in which you appear. STATEMENT OF DR. EARL C. LOWRY, PRESIDENT, IOWA Dr. Lowry. Mr. Chairman, members of the committee, I am Dr. Earl C. Lowry, of Des Moines, Iowa. I am president and medical director of Iowa Medical Service, better known as Blue Shield of Iowa. I am on a full-time basis in this position. I appear here today as representative of the board of directors of Iowa Medical Service, which is composed of distinguished physicians and laymen. The CHAIRMAN. You are recognized for 10 minutes, Dr. Lowry. Mr. LowRY. The primary mission of Iowa Medical Service is to furnish to the people of Iowa medical services under a nonprofit service plan of several Blue Shield policies offered in Iowa, each relating the policy to his income, 90 percent of our people could receive physicians' services on a full service basis. That is, the Blue Shield payment would constitute payment in full for physician services. Dr. Donald Stubbs has informed you of the views of national Blue Shield as related to H.R. 4700. Our plan heartily endorses Dr. Stubbs' position. Since Blue Shield in Iowa is engaged in offering medical care for the people, all the people, we are greatly concerned about the health of our senior citizens. The percentage of persons over 65 in the population of Iowa is as high as any State in the Nation. We have given careful study to the health needs of this group. If I might depart from the statement, Mr. Chairman, I would like to take cognizance of the stimulus which has been given in this area by the Honorable Mr. Forand. It has been quite effective in stimulating the survey. We have given careful study to this area and share with your committee a joint interest. I would, therefore, like to review for you the problem in Iowa. We have over 300,000 persons in Iowa over 65 years of age. They are divided into the following groups: 1. Those persons whose income and resources are such that they do not need and normally may or may not buy health insurance. 2. A large group of middle income persons who financially can, and many do, purchase health insurance coverage. This includes purchases from Blue Cross, Blue Shield, and commercial carriers. 3. Another group which might be classified as "Persons of low income and modest resources." This is the group wherein our problem lies. 4. The medically indigent. I would like to comment on each of the above groups separately: 1. Those persons whose income and financial resources are more than adequate usually purchase what they want from sources of their choice and need not concern us further here. 2. The middle income group; historically, Blue Cross and Blue Shield in Iowa have never canceled a policy because of age. Some 60,000 persons over age 65 are currently covered for health service by the regular policies of the two corporations. We also continue to enroll persons over 65 who are employed in groups already covered, or new groups. These people contínue their premiums at customary rates and receive the usual adequate health coverage. I am certain that among this group there is a large number carrying health insurance sold in our State by multiple private health insurance companies. All policies available from voluntary sources give this group a wide choice of health coverage from which to choose. 3. Now we come to the problem area, which includes persons over 65, of low income and modest resources. In this group, the cost of living consumes nearly all of their income. It includes many persons who are social security beneficiaries. Like other persons 65 and over, they get sick more often, they stay sick longer, and more often require treatment for multiple diagnoses when ill. This makes them exceedingly difficult to insure by common insurance principles. Further, the income of this group is lower than the average person and by the regular rules of the insurance game, the premiums are higher. After careful analysis of this problem in our State, the Iowa Medical Society, asked Blue Shield to present a program for this group, within their means. In considering what could be done, it was determined that these persons could probably pay the overhead costs of their medical and surgical services, if payments could be made on a monthly basis and the physicians would donate their time and effort to the cases. On this premise, a Blue Shield policy and a companion Blue Cross policy was developed and made available to such persons. Without going into detail, the senior citizen pays $6.35 per month for the combined policies of Blue Shield and Blue Cross. I might add this is $3.00 and $3.35 if you want to break that down. If such a family has an income of $3,000 per year or less, or a net worth of $30,000 or less, the participating physician accepts Blue Shield payment as payment in full for services rendered. These policies went into effect May 20, 1959, and there are approximately 7,500 already in operation. The purchases are continuing at the rate of 30 per day. I would like to say that similar efforts are being made in California and many other States. Of course, this is a pilot study and changes will be required, but the object is to meet the needs of the people and there seems to be no doubt that this can be done. May I also add here that during 1959 in the State of Iowa, two major private insurance companies have conducted campaigns and have insured large numbers of persons in our State over 65, without underwriting, that is, an open period where anyone could enroll, regardless of health status, entirely with the ingrown eye lid. 4. The medically indigent. Iowa is blessed with substantial source of medical care for indigent persons. This includes beds and professional services at the medical school of the State University of Iowa at Iowa City. All counties have a bed quota at this hospital. This includes free ambulance service to the hospital. A patient is qualified for admis sion by certification from local authority in the county where he lives. There are also many indigent beds available from municipal and county sources, such as the well known Broadlawns Polk County Hospital in Des Moines. Sources of aid in this group are too numerous to mention, but I would like to pause at this time to point out that not infrequently a social security beneficiary qualifies for medical help from this source. Mr. Chairman, it is my purpose to call to your attention the fact that the voluntary health agencies, and especially Blue Shield and Blue Cross, have for some time recognized the need which H.R. 4700 is designed to correct. More recently, real progress toward a solution is being made. During the year 1959 more progress has been made toward the solution of the problem than in the past 10 years. The fruits of these efforts are only now becoming available. I, therefore, urge the committee, in its careful judgment and wisdom, to consider the merits of the voluntary health plans versus a Government plan. I believe that when this is done, you will conclude that the present efforts from private sources deserve further time and opportunity in order that they can get the job done. Thank you. The CHAIRMAN. Dr. Lowry, we thank you for bringing to us the views which you have expressed. We appreciate your coming to the committee. Are there any questions? Mr. MASON. Mr. Chairman. The CHAIRMAN. Mr. Mason. Mr. MASON. Dr. Lowry, among the 75 or 100 witnesses we have. been listening to for 5 days, about 8 or 10, I would judge, represented State medical associations. But I am told that some 20 or 30 other State medical associations have filed testimony on this bill. I think perhaps we ought to know that so that it is not just six or eight, it is quite a good number of State medical associations that are testifying. That is all, Mr. Chairman. The CHAIRMAN. Are there any further questions? If not, we thank you, Dr. Lowry, for coming to the committee. The next witness is Dr. Carl Fortune. Mr. WATTS. Mr. Chairman, members of the committee, it gives me a great deal of pleasure, real satisfaction, to introduce to this committee Dr. Carl Fortune of Lexington, Ky. He is a personal friend, family physician, and one of the most eminent medical authorities in the State of Kentucky. He is eminently qualified to testify on this subject before the committee. It is a pleasure to have you here, Doctor. The CHAIRMAN. Doctor, we are pleased to have you. Can you conclude your statement in the 5 minutes we have allotted to you? Dr. FORTUNE. I believe so. The CHAIRMAN. If you omit any part, you may do so with the understanding that your entire statement will appear in the record. You are recognized. |