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munity, which often has inadequate resources for this purpose, particularly in textile areas. The retirees are, therefore, pauperized and inadequately cared for.
Our Nation boasts of its humanity and its wealth and the great social advances. This boast must remain empty while this great gap in our social security system exists.
We have developed a system of providing hospital care which is easily administered. We urge that the Forand bill be adopted to remove this injustice from the present system of care for the aged and to relieve the cost of this care from the local communities unable to carry the burden and which are therefore in many instances not discharging their humane responsibilities.
The speedy enactment of the Forand bill is imperative.
COMMUNICATIONS WORKERS OF AMERICA,
Washington, D.C., July 13, 1959. Hon. WILBUR D. MILLS, Chairman, House Ways and Means Committee, Washington, D.C.
DEAR CONGRESSMAN Mills: On June 22, 1959, the 1,200 rank-and-file delegates to the 21st Annual Convention of the Communications Workers of America adopted a resolution pledging their support of Congressman Forand's bill (H.R. 4700) which provides for the addition of health benefits to the existing old-age and survivors insurance program. The purpose of this letter is to inform you of some of the reasons for CWA's wholehearted support of the Forand bill.
In the communications industry the number of persons drawing company service pensions, as distinguished from disability pensions, has more than doubled over the past 10 years. At the end of 1958 there were a total of 49,006 retired men and women, including both management and nonmanagement employees, in the Bell Telephone System alone. At the end of 1947 there were only 18,730 people on pension. Of course, the overwhelming majority of these pensioners also are eligible for benefits under the Social Security Act.
The average monthly company pension payment amounted to approximately $105 during 1958. However, the average pension received by nonmanagement employees would be less since their wages were a great deal less than the salaries paid to management personnel.
Under the Bell System pension plan, as is true in the communications industry generally, the pension payment is reduced by one-half the amount of social security benefits received by the retired employee, and there are no survivor benefits provided. Thus, even with the combination of social security and pension benefit payments, a retired employee in the communications industry receives only enough to maintain and provide himself and any dependents he may have with the bare necessities of life.
In the vast majority of cases retired employees cannot continue their group hospitalization and surgical insurance at group rates, but must pay considerably higher, almost prohibitive rates, if they choose to continue this necessary protection subsequent to their retirement. Thus, for the most part, they are unable to afford any type of hospital and surgical benefit protection.
Under Congressman Forand's proposal the type of insurance most needed by our elder citizens would be provided, such as the costs for hospital, home nursing and surgical services. The manner of administration of the program is clearly defined and adequate safeguards are provided for the internal management of participating institutions, the practice of medicine and the manner in which medical services are rendered. Moreover, H.R. 4700 provides a means of adequately financing these additional benefits by increasing the present contribution rates of employers and employees by one-quarter percent each.
The Communications Workers of America urges you to consider most favorably the proposals contained in H.R. 4700 and to recommend the passage of this bill during this session of the Congress. It is respectfully requested that this letter be made a part of the verbatim record of the hearings on this matter which your committee is commencing this date. Sincerely,
J. A. BEIBNE, President.
STATEMENT ON THE FORAND BILL (H.R. 4700) TO PROVIDE HEALTH CARE FOR
SOCIAL SECURITY BENEFICIARIES (By the International Longshoremen's and Warehousemen's Union) The International Longshoremen's and Warehousemen's Union represents 60,000 members who work in the longshore, warehouse, sugar, and allied industries on the west coast and in Alaska, Canada, and Hawaii. We appear representing the membership and on behalf of pensioned and retired members of the union.
We wish to state at the outset that we support passage of H.R. 4700, the Forand bill, with but one technical amendment which we believe is imperative, and which we will describe later.
The Forand bill includes some of the improvements called for by the 13th biennial convention of our union, and it has been specifically endorsed by resolution and by petition by ILWU members and pensioners. Petitions signed by more than 5,000 ILWU pensioners and retired members were placed in the hands of Congressman Cecil King of this committee in June of last year in connection with the hearings on H.R. 9467.
STATUS OF HEALTH CARE FOR RETIRED ILWU MEMBERS
While the vast majority of ILWU members are covered by various pension plans, only in our longshore division do our contracts provide reasonably ade quate health care for the pensioner, his wife, and his children.”
Longshore pensioners receive the same health coverage as do working members. Even though this coverage is the best on the west coast under available prepaid plans, we have found that they are inadequate for the needs of our retired members. A perennial problem, one which emerges persistently and chronically, is that of the pensioner who exhausts his hospitalization benefits. Under our plan the limit is 100 days per year per disability in the hospital under most of our service plans, and 70 days per year per disability under our insured plans. We find that the great need of this group is for nursing home care which is not provided under our plans. Such care generally costs much more than the total money income of our retired longshoremen, including both their ILWU-PMA pension of $100 a month and their social security pension. It will, therefore, be of great importance to our longshore pensioners to secure the nursing home services provided by H.R. 4700.
Longshoremen in Hawaii have similar health coverage for pensioners as in west coast locals. Of the remaining parts of our union, only the pineapple and sugar divisions of our Hawaii local 142 provide such care, but it is limited coverage only.
THE NEED FOR AMENDMENT OF SECTION H Unfortunately section h of H.R. 4700, as written, clearly envisages reimbursement of fee for service systems only and does not clearly provide a mechanism for reimbursement of service plans under which most retired longshoremen, for example, secure health care at the present time. We do not believe this was intended and we urge adoption of an amendment which would, in some fashion, convert fee-for-service dollars into a per capita amount so that service plans will be treated on a basis of equality with fee-for-service plans. Otherwise, groups that utilize service plans will be penalized.
THE SOCIAL CHARACTER OF THE PROBLEM
The general shape of the problem clearly emerges from the report by the Secretary of Health, Education, and Welfare to this committee.
Fifteen and one-third millions are now aged 65 and over, and the proportion of the aged in the population is steadily inc sing.
The median total money income of retired couples on social security in 1957 was $183 a month. Single retired workers and aged widows had considerably less money income. Three-fifths of the aged have yearly incomes of less than $1,000. The aged cannot possibly be expected to pay for medical care from this meager income.
1 In most ports pensioners' children are covered up to age 19 (except in Aberdeen, Wash. (age 18), and the Seattle Service Plan (age 21)). All longshore pensioners' children up to age 15 are also covered for dental care.
The health care needs of the aged are much greater and therefore are much more expensive than for those who are younger. The aged use an average of 242 times as much general hospital care as younger persons, and have special need for long-term institutional care. Under these circumstances, any serious sickness is the most feared catastrophe to the aged.
Of social security pensioners hospitalized last year, 85 percent had medical bills of $1,000 or more. Yet 60 percent have no hospital insurance and 76 percent have no surgical insurance. The majority of social security beneficiaries who have no health insurance said they couldn't afford it or that their policies have been canceled. Such insurance as the aged have pays only a small fraction of their costs. Married couples on social security who have used their voluntary insurance have found that it met two-thirds of hospital costs and one-fifth of doctor bills.
Whenever serious illness strikes, the small savings of the aged are depleted or they go in debt, or either relatives or welfare agencies are forced to assume part of the burden. A certain proportion of the aged become dependent on free medical care or are forced to apply for public assistance.
This is the picture that emerges from the report of the Secretary of Health, Education, and Welfare to this committee.
One outstanding authority has concluded that ill health is now a major cause and is tending to become the predominant cause of destitution among the aged.
IS COLLECTIVE BARGAINING THE ANSWER TO THIS PROBLEM ?
We believe that our union has done as much as any other union in trying to meet this need, but our experience has led us to the conclusion that there are obvious limits on the ability of any union to do this job adequately. Despite our best efforts in collective bargaining, thus far only two-fifths of our total ILWU membership has somewhat adequate health coverage. None has the special kind of institutional health care required by the aged.
If we examine the costs and the trend of costs in that part of our union which has been relatively most successful, the west coast longshoremen, we find a source of real concern.
When ILWU-PMA longshore pension plan was first well underway, in July 1952, there were 1,184 pensioners on the rolls. As of June 1959, the number of pensioners had increased to 2,307.' On the other hand we had 15,899 active working longshoremen under the welfare program in 1952. This had declined to 15,070 by June 1959."
There is every reason to believe that the number of active longshoremen will decline more precipitously in the future. Inded, the major subject of current negotiations between the ILWU and PMA is the establishment of an orderly procedure to meet the labor-saving effects of new machines and technology.
The ILWU-PMA welfare fund is financed by an employer contribution of 11 cents per hour worked by active longshoremen only. No income comes from the pensioners. As the proportion of pensioners to the total grows, the financial problem will obviously become more and more burdensome. This burden is aggravated by the fact that the cost per pensioner is substantially greater than for those under 65. For example, under our contracts with the Kaiser Foundation health plan we are charged an additional $1.80 per month for each member in the group that is age 65 or over. The net effect of including pensioners is to increase the number covered by about 13.7 percent and to increase costs by about 19.3 percent.
If present trends continue, with the number of pensioners rising and the number of active longshoremen declining, it may not be long before the financial problems become prohibitive. We can understand the reluctance of employers to bear costs which may place them at a competitive disadvantage. It is difficult for a single employer, or, for that matter, for a relatively small group of employers to bear this kind of a burden when other employers have no similar expense. The cost must be spread more broadly and health care for the aged must be removed from the area of economic competition between employers. Thus, even our most successful experience proves the need for H.R. 4700.
2 Dr. James P. Dixon, commissioner, department of public health, city of Philadelphia, and
chairman of the American Hospital Association Committee To Study Health Needs of the Aged, in hearings on social security legislation before the Committee on Ways and Means, 85th Cong., 2d sess., June 27, 1958, p. 857.
3 This excludes Tacoma, Anacortes, and Seattle checkers and walking bosses who came into the pension system at a later date,
The picture in collective bargaining throughout the Nation as a whole indicates that collective bargaining is not the solution of this problem. The report of the Secretary of Health, Education, and Welfare provides a brief analysis of coverage of employees under so-called industrial plans, which are mostly collectively bargained plans. Of the 175 plans analyzed only 46 percent provided health care for pensioners, only 23 percent covered the dependents of the retiree, 14 percent reduced the retiree's benefits below that of the active workers, in 14 percent the worker has to pay the entire premium, in 12 percent he had to pay part of the premium.“
Even these figures, however, may be misleading because they give us no indication of the adequacy of the coverage provided. If one examines the "Digest of One Hundred Selected Health and Insurance Plans Under Collective Bargaining, Early 1958" issued by the Department of Labor, it is possible to gage the adequacy of these benefits. In order not to burden this statement, we are not attempting any detailed statistical analysis. We, however, draw the general conclusion from our examination that, even in those cases where the retired worker gets the same benefits as the active worker, these benefits are generally limited and partial benefits under insured programs in most cases where the vast bulk of medical expenses are incurred must be paid by the retiree himself.
In the absence of the Forand bill, ILWU, like all other unions, has no alternative but to continue collective bargaining to provide health care for retired workers. At the same time we recognize the limitations of this effort and we believe that the only adequate solution is in the direction charted by H.R. 4700.
ARE SPECIAL INSURANCE COMPANY SCHEMES FOR THE AGED AN ANSWER TO THIS
This picture demonstrates the futility of the belated efforts made by some insurance companies and Blue Cross to solve this problem. It is the essence of all of these plans that (1) they place the entire burden on the aged themselves who obviously cannot afford any additional burden, and (2) in order to reduce the cost to something approaching feasibility they have reduced the benefits to the point of absurdity. These plans generally cover only a small fraction of the total cost. For example, the "65 Plus Plan" of Continental Casualty, the "Senior Security” policy of Mutual of Omaha, and the "Security Plan” of Blue Shield of Wisconsin, all provide a maximum of $10 a day for a limited period of hospitalization. This is about half the average charge. They all require a 6 to 9 months waiting period for preexisting conditions, yet who can possibly reach age 65 without a complex of preexisting ailments?
The insurance companies that attempt to provide health insurance for the aged are clearly on the horns of a dilemma. They must foist the entire cost on the aged themselves who cannot afford to pay these costs. If the benefits are adequate this cost becomes prohibitive. If the benefits are inadequate, the plan cannot be considered a solution of the problem.
Why this was done is stated explicitly by the insurance companies themselves. In what appears to be a form letter sent to our union on January 7, 1959, Louis C. Vorrell, vice president of Continental Casualty Co., says "65 plus is the first positive answer to current attempts to force Government into this field.” And Joseph F. Follman, Jr., spokesman for Health Insurance Association of America, said on February 16, 1959, that public rejection of these new insurance company policies for the aged "can only mean a Government scheme on a broadly compulsory, monopolistic basis * * *."
H.R. 4700 A SOCIAL SOLUTION TO A SOCIAL PROBLEM
The only reasonable way to finance health care for the aged is to do it over the entire life span of the population as a whole. Just as it is prohibitively expensive to buy life insurance when one is already past age 65, it is equally prohibitive to try to buy health insurance when one is past 65. The higher cost of medical care for the aged is a social cost and should be shared by the entire community. The social security system is the most logical and most economical medium by which this can be accomplished. The Forand bill would give social security beneficiaries up to 60 days of hospital care a year, and up to 120 days of nursing home care a year, as well as pay certain surgical costs. Employers and employees each would have to pay an additional onequarter percent payroll tax, and the tax base would be raised from the present $4,800 limit up to $6,000 a year.
• Op. cit., p. 54.
WHAT'S HAPPENING IN OTHER COUNTRIES ?
One aspect of this question which is not covered by the report of the Secretary of Health, Education, and Welfare is the extent to which health care for the aged is provided by other countries.
The United States is unquestionably the world leader in many respects. In providing health care for our aged, however, we are not. In fact, we lag behind some 20 nations who have realized for many years the social necessity to provide health care for their aged as part of thei overall social security systems. This list of nations which already provide health care for the aged (table 2) deserves careful scrutiny. Included on the list, for example, are a number of relatively poor countries. Isn't it somewhat absurd for the richest country in the world to say it cannot afford this social cost while nations like Bolivia, Panama, Peru and the Philippines, Belgium and Iceland, countries with only a small fraction of our per capita income, do bear this cost?
Also included on this list are a group of advanced western nations. We often assume the role of leaders for such nations as France, England, Italy, Australia, West Germany, Norway, Sweden, etc. These nations, however, have advanced to the point where health of the aged is accepted as a social responsibility, while we have not. Moreover, those who allege that this program is "socialistic" should note that these nations have economic systems like ours. TABLE 2. NATIONS HAVING HEALTH CARE SYSTEMS FOR PENSIONERS, JANUARY, 1958 Albania Iceland
Union of Soviet Socialist
Yugoslavia Limited to persons with small and moderate incomes. 2 Voluntary insurance available if annual income is below specified levels. 3 Voluntary coverage available. * Voluntary continuation of coverage after employment ceases by paying combined employee and employer contribution.
Source: U.S. Department of Health, Education, and Welfare, “Social Security Programs Throughout the World,” 1958, chart II, pp. 32-59.
THE COMMERCIAL TELEGRAPHERS' UNION,
Silver Spring, Md., July 29, 1959. Hon. WILBUR D. MILLS, Chairman, House Committee on Ways and Means, Washington, D.C.
DEAR SIR: The Commercial Telegraphers' Union, AFL-CIO, which represents some 32,000 radio and telegraph employees is very much interested in the proposed Forand bill, H.R. 4700, which would add health benefits to old-age and survivors insurance.
We believe most sincerely that Federal legislation is necessary to provide adequate coverage and protection for the aged. Most of the employees within our industry who have retired or who have been retired because of age or illness are finding it extremely difficult if not impossible to meet ever increasing medical costs and as a result of this experience our members who are still employed understandably look to the future in this respect with much apprehension and misgiving. And we know that for the most part older persons everywhere are similarly affected.
We support fully the representations made by AFL-CIO social security director Nelson Cruikshank and Walter Reuther of the AFL-CIO industrial union department before the House Committee on Ways and Means of which you are chairman. We hope intensely that you and the other members of this committee will find it possible to support and work for the adoption of the Forand bill at this session of Congress. With best wishes, Sincerely and respectfully,
W. L. ALLEN, International President.