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by our neglect. They might be tempted to vote into office men who make rash and extravagant promises of financial help. It has happened before. It could happen again. Politically, we cannot afford to deal lightly with 15 million persons who need immediate assurance, and 35 million who are nearing the status of senior citizens.
According to Dr. Granz Goldmann, in his article “Financing Personal Health Services for Older Persons":
"The situation is gravely complicated by the economic conditions in which older persons find themselves. For the great majority, increased expenditures for personal health services come at a time when income from gainful occupation has ceased and other financial resources, such as pensions or savings, must be used to pay medical bills.
“It can then be said that the crucial economic factors requiring consideration in planning for effective financing of personal health services for older persons are three: (1) the infrequency of gainful occupation, (2) the low income of many of those who are not working, and (3) the lack of any income among a substantial proportion of the older persons."
That the great mass of our American workers are concerned deeply with the problems of their later years can be seen by the attention given fringe benefits, particularly retirement income, in practically all modern wage negotiations.
The bright spot in the picture is that 6 out of 10 of our older citizens are receiving social security, but if we look at the actual figures, we can see that the amounts received are barely enough to keep body and soul together, much less provide for health emergencies. In July of last year, the average monthly benefit actually paid to a retired worker was $65.87, and the average newly awarded benefit was $74.57. These figures have been increased about 7 percent by recent action of Congress, but they are still adequate only to keep the wolf from the door.
Some groups have suggested increased use of private insurance. But it is idle to suppose that many of the people we are discussing can afford to maintain private health insurance even at reduced rates. Private companies and even the nonprofit voluntary associations tend to be extremely conservative about risks. The typical person, after 65, will have an income of less than $1,000 a year and very little or no insurance. Yet he will require 242 times as much hospital care as a person under 65. The April 1959 report of the Secretary of Health, Education, and Welfare to the House Ways and Means Committee recognizes these facts. It says: "The basic difficulty that private insurance faces in its efforts to extend hospital insurance protection to the aged is that they are a high-risk, high-cost group. A premium charge based on the experience and covering the entire cost of a reasonable level of protection for an aged group will be higher than many aged persons can afford to pay.”
While the Health, Education, and Welfare report is largely a factfinding document for the benefit of Congress and does not take a position of its own in the controversy, it summarizes arguments for and against congressional action. In the arguments for is found the following:
“A little over 70 percent of all persons aged 65 and over are now eligible for benefits under the old-age survivors and disability insurance program. Eventually more than 9 in 10 aged persons will be eligible. The old-age survivors and disability insurance mechanism provides a ready and equitable method of spreading the cost of hospital care for the aged over the entire working population. An increase in the present social security taxes would provide immediate protection for those now eligible for benefits. Persons now at work would in turn become entitled to the same protection when they reach retirement age. The individual's contribution toward the cost of medical care in old age would be spread over his working lifetime without breaks in coverage due to change of residence or employment.”
The cost, of course, of additional old-age survivors disability insurance benefits to cover hospitalization is a legitimate inquiry. Who would bear the cost is a question the public would want clearly determined.
Now, in examining the various statements on this subject, I note that the organizations of physicians and dentists who oppose the QASDI approach invariably describe the benefits as free medical and free hospital care. I submit that the word "free" in this connection is in error. It is true that if health benefits were immediately included in social security, many persons would receive benefits over and above their contributions to the social security system. But,
from a long-range point of view, there is nothing free involved. By increases in social security taxes, to be paid by both employer and employee, funds would be raised to finance the plan. It would be no more free than the monthly social security payments which come out of the money paid over the years by employers and employees. These are nothing more than insurance, a highly American concept, the difference being only that it is administered by Government. As a matter of fact, the social security program has stimulated the growth of private pension plans. There is certainly room for both private and public insurance in our country.
So I think, in approaching this subject, we must first clear our minds of ancient bugaboos, prejudices, and superstitions. It was only about a quarter of a century ago that social security first came into being. When it was first proposedand I am sure many in this audience remember the furious controversy that was kicked up—social security was denounced as socialism, not creeping socialism, but galloping socialism. Well, the fires of that controversy have not only been banked; they have been extinguished. In the course of time social security has received universal acceptance among the American people. In fact, I doubt that of all the reform legislation passed in the last 25 years there is any measure more popular or more cherished than social security.
It was passed under a Democratic administration, but during succeeding Republican administrations it has not only been preserved but strengthened in breadth and in depth. Hardly a year goes by without extension of social security to more and more persons in our population, or without increases in benefits. It is no longer a partisan measure; it is a national measure.
Some of the opponents of an extension of social security insurance to include additional health care benefits ask for greater use of Hill-Burton funds in building nursing homes and chronic disease units of general hospitals. They ask for FHA-type loan guarantees to nonprofit and proprietary health facilities serving the aged. It is also a fact that about half the beds for the country's entire hospital population are publicly supported at the Federal or State level. It is difficult to see how these facts can be squared with opposition to an insurance plan, paid for out of the pockets of employers and employees, to guard against the illnesses of old age.
There is a real division of opinion among individuals in professional organizations over use of the social security insurance mechanism to provide health care. Even those who advocate this extension would want to know the facts about costs and methods of administration. Undoubtedly a full evaluation should be made of the shifting of costs from one group to another in providing such care.
Last year, the Governing Council of the American Public Health Association adopted a resolution stating that “Health services for the aged are inadequate throughout the Nation” and supporting “appropriate proposals to provide paid-up insurance for health services required by aged persons." The American Hospital Association recognizes the need for some type of Federal action and is looking around for alternatives. The Physicians' Forum and many other groups are supporting the use of the social security system to provide health care for our senior citizens.
A tidal wave of public and professional opinion is gathering to promote remedial action. Nor can there be any doubt that the problem is one that affects the national interest or is one that is properly a matter of national concern. Abraham Lincoln said: "The legitimate object of Government is to do for a community of people whatever they need to have done but cannot do at all, or cannot do so well for themselves, in their separate and individual capacities." This is the test which President Eisenhower often uses in his analyses of public problems. Last year, Congress passed a measure calling for a White House Conference on Aging in January 1961, and similar State conferences prior to that time. In all these meetings the question of health for the aged will receive a high priority.
I seriously doubt that a satisfactory system of insurance could be set up by the individual States acting in cooperation with the Federal Government. "We did so in the field of unemployment compensation, and the result has been a patchwork of schedules throughout the country. The States that live up to their responsibilities, by providing fair compensation and reasonable time limits for men out of work, are discriminated against by States which provide low compensation and short-time limits. It is generally agreed that men thrown out of work through no fault of their own should receive about half their regular wage
in unemployment compensation. Despite the constant urging of the President and Secretary of Labor, many States fall below this standard. By this means, they seek to lure industry from States which adhere to a higher standard. In health care, if it were left to the States, we could very well have a repetition of this unfair patchwork pattern.
There are two serious practical difficulties in solving the problem of health aid to the aging at the local and State levels. Welfare administration left to local autonomy creates islands of injustice and a lack of uniformity develops. We see this particularly with respect to general assistance programs when left to local jurisdictions without State supervision.
Secondly, many of our State legislatures are not responsive to the needs of the populous areas. Time and again legislatures not reapportioned for decades, representing acres rather than people, refuse to act. The Federal Legislature in such cases responds.
Now it seems to me a most important step should be taken by the present session of Congress, and that is to hold public hearings on the various bills that have been introduced concerning health measures for the aged. We all realize that there are many knotty questions involved; that this is not a simple but a complicated matter, and all sides should be heard as we go forward to produce solutions to one of the gravest problems of our time. One way or another, upon society falls the burden of caring for older persons who cannot care for themselves. They are on the public assistance rolls; they crowd our institutions; many older persons, indeed, find their way into mental hospitals where they do not properly belong.
In the absence of a sound and reasonable alternative, I feel we must solve at least part of the problem by the American principle of insurance, as represented by the social security system.
STATE OF NEW JERSEY,
Trenton, July 15, 1959.
DEAR MR. CHAIRMAN : The enclosed report of a special committee to the New Jersey Commission on Aging will be submitted to the Commission for its consideration.
It is submitted to you for your information and for inclusion in the record of your committee's hearings on H.R. 4700, the Forand bill. Sincerely,
DAVID S. DAVIES, Executive Assistant.
REPORT OF A SPECIAL COMMITTEE TO THE NEW JERSEY COMMISSION ON AGING
It is axiomatic that a person who is sick long enough and severely enough eventually will exhaust his resources, and the resources of family, too, if he is fortunate enough to have others upon whom he can depend. Indigency by virtue of medical expenditures is a threat to nearly every person, and particularly to those 15 million Americans who are 65 years of age and older, 9 million of whom have yearly money incomes of less than $1,000.
The diseases of old age are chronic diseases. Chronic illness, debilitating in itself, is disastrous to the majority of the Nation's senior citizens who are unable to pay the cost of hospital, surgical, and nursing home care.
A comprehensive health program for senior citizens is universally recognized in this country as the single most critical need of the elderly.
Given the universal recognition of the problem there must also be universal agreement that adequate insurance must be provided for our senior citizens against the costs of maintaining good health. How is such insurance to be provided ?
The loudest voices now being heard are calling for an expansion of existing private insurance programs. The best that can be said for those who make such proposals is that they are not facing squarely the medical problems of the aged. For example, the most liberal private insurance program now available to persons 65 years of age and older provides the following benefits: $10 per day for 31 days of each hospital confinement; $200 for surgical benefits and
50 percent of miscellaneous hospital expenses up to $125. The cost of such a policy is $6 per month, or $72 a year.
What does such protection mean to a senior citizen in New Jersey who has money income of $1,000 a year?
The average cost of a hospital bed in New Jersey is $25 per day. If the privately insured person spends 31 days in a hospital where he is charged $25 per day his total bill for the hospital bed will be $775 of which his insurance will cover $310, leaving $465 for the privately insured patient to pay. This combined with his annual premium means that he will be spending more than half of his income for a stay in the hospital, and he will not yet have begun to pay doctor bills or the cost of such nursing home care as he may need subsequent to being discharged from the hospital.
How significant, then, is the boast by those who propose that private insurance programs do the job that 40 percent of all persons 65 years of age and over have some kind of private medical insurance? Obviously it is a hollow claim that says nothing about the ability such insurance gives the policyholder to pay his medical bills.
The fact is that older people have need for far greater coverage than is available, and that they are less able to pay the rates required. Hopeful reflections on the growth of private insurance indicates an unwillingness to recognize that the health needs of the aging represent a major social ill-one that cries for constructive remedy.
The New Jersey Commission on Aging, the first agency to develop a program for older people within the executive branch of a State government, has considered various proposals to deal with the problem of health protection for senior citizens.
Action by individual States has been rejected as contributing to the patchwork of social legislation such as workmen's compensation, temporary disability insurance and unemployment insurance, the inconsistencies of which work to the disadvantage of the insured.
The commission believes that this Nation has already learned how best to do the job. The experience of planning and administering a program to provide minimum income for the bulk of persons 65 years of age and over should be turned to account now. This social security program is approved throughout our society, there being disagreement only upon how quickly increased financial assistance should be given our senior citizens and the amounts of such increased assistance.
We are called upon now to show how well we have learned. Our times dictate that we take immediate steps to broaden the Nation's social security program to include comprehensive health protection for our senior citizens.
It should be noted that as presently expressed in proposed legislation, the addition of health protection to the social security program does not come anywhere near providing a comprehensive health protection program for the aged. This can be illustrated in many ways, but there is no more vivid demonstration of this than the fact that minimum nursing home care today costs $2,400 a year, only one-third of which would be covered if the proposed legislation were law.
Yet, while H.R. 4700 cannot be considered comprehensive by any standard of medical needs, it does embrace the principle of broad-based prepaid insurance particularly geared to the hospital, surgical, and nursing home needs of the aged.
Governor Robert B. Meyner has spearheaded the endorsement of this principle. In remarks delivered last month before the First National Conference of the Joint Council to Improve the Health Care of the Aged, he succinctly summarized the health problems of persons 65 years of age and over. He then endorsed a program of the kind proposed in the Forand bill, pointing out that the addition of health protection to the social security program would be attacking the problem of health protection for senior citizens through the American principle of insur
The New Jersey Commission on Aging joins with Governor Meyner in endorsing that principle.
Members of the special committee :
Chairman: David S. Davies, executive assistant to the commissioner, New Jersey Department of Conservation and Economic Development.
Lawrence 0. Houstoun, Jr., executive assistant to the commissioner, New Jersey Department of Labor and Industry.
William J. Joseph, assistant director, division of pensions, New Jersey Department of the Treasury.
AMERICAN ASSOCIATION OF WORKERS FOR THE BLIND, INC.,
Washington, D.C., July 20, 1959. Hon. WILBUR D. MILLS, Chairman, Committee on Ways and Means, House Office Building, Washington, D.C.
DEAR MR. MILLS: In accordance with the request of the American Association of Workers for the Blind; I am enclosing for your information, a copy of a resolution expressing their views concerning your bill H.R. 4700. This resolution was adopted at a recent convention in Detroit, Mich.
If possible, I would like this resolution included as a part of the printed hearings on this bill. Thanking you, I am Sincerely yours,
GEORGE E. KEANE, Chairman, Legislative Committee.
Whereas many recipients of old-age and survivors insurance are financially unable to meet the expenses of hospital and adequate medical care; and
Whereas Congressman Forand has introduced a bill into the Congress of the United States to assist such persons: Therefore be it
Resolved, That the members of the AAWB, in convention assembled on July 10, 1959, do hereby endorse and urge passage of the said Forand bill, H.R. 4700.
STATEMENT OF IRVIN P. Schloss, LEGISLATIVE ANALYST, AMERICAN FOUNDATION
FOR THE BLIND
I am glad to have this opportunity to state the views of the American Foundation for the Blind on H.R. 4700 and related bills, which are designed to establish an insurance program under the social security system to cover the cost of hospitalization, surgical service, and nursing home care for persons 65 and over who are entitled to receive social security retirement pensions.
The American Foundation for the Blind believes that this proposed legislation is desirable, timely, and meritorious if certain modifications are incorporated. The modifications we respectfully recommend to the committee are: (1) broadening of the benefit to include medical service rather than just surgical service, so that beneficiaries would be able to have the cost of nonsurgical medical care covered ; (2) inclusion of medical rehabilitation for physical restoration purposes as a benefit, with the requisite extension of the 120-day maximum hospitalization period for such cases; and (3) broadening the basis for eligibility to include disability insurance beneficiaries between the ages of 50 and 65.
The concept of the proposed legislation is sound, practical, and in the best interests of the American people. By making it possible for persons to provide during their optimum years of employment through a contributory insurance pla for their medical care needs after retirement age when their income is substantially curtailed, this legislation would enable our senior citizens to receive adequate medical care for which they themselves had paid. At present, many older persons must do without the medical care they need because they cannot afford it, or else they must seek it on a charity basis--a demoralizing prospect for an individual who has spent his productive years as a typically independent American citizen contributing to the growth and development of our national economy.
The typical retired worker finds himself in a difficult position today. Steadily increasing living costs force him to make every penny of his social security retirement pension stretch as far as it can. He and his wife begin to do without many small pleasures they enjoyed a few short years before the retirement he had so keenly looked forward to. He views with alarm the steadily increasing payments for doctor bills and medicines-expenses not covered in the legislation being considered—as the chronic ailments which attend the aging process become more persistent and frequent. An acute health situation requiring surgery or hospitalization for a period of 2 or 3 weeks arises and virtually wipes out his savings; and as a result, he and his wife live in dread of another similar occurrence because they do not have the financial resources required for today's medical care. I know that the situation I have just described is duplicated many times over in our country today. With an adequate medical care insurance pro gram under the social security system, it need not happen.