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through additional support for recruitment and training. Coordinated programs making available all these preventive and ancillary as well as medical services at the State level should be devised with proper precautions to assure high standards of quality. These steps, in addition to the continued extension of prepaid medical and hospital insurance, will be needed to improve the health situation of the elderly.

STATEMENT OF THE NATIONAL ASSOCIATION OF MANUFACTURERS WITH RESPECT TO

H.R. 4700 AND SIMILAR BILLS

The National Association of Manufacturers wishes to record its opposition to H.R. 4700 for the following reasons:

Protection for the aged against the cost of medical care should be provided by individual initiative. This protection should be obtained either through such instrumentalities as the insurance industry or the various service organizations or provided by the individual or his family through savings or other means of private initiative.

The Federal Government should not enter this field in any way. Such entry would be unnecessary and unwarranted. Further, such an action would impede or halt the very real progress now being made through voluntary methods.

American industry has already done much and will continue to provide such coverage. It will encourage the full development of voluntary efforts to the end that all individuals have available the opportunity to obtain such voluntary coverage.

Since it is recognized that no normal protection program can meet all situations, assistance on a needs basis through State and local programs should be continued.

The National Association of Manufacturers further believes that the basic "Reasons Advanced as to Why the Federal Government Should Not Take Action," expressed on pages 1, 2, and 3 of the report submitted to the Committee on Ways and Means by the Secretary of Health, Education, and Welfare on April 3, 1959, are valid and persuasive and should be accepted.

PROVIDENCE, R.I., July 15, 1959. Hon. WILBUR D. MILLS, Chairman, Committee on Ways and Mcans, House Office Building, Washington, D.C.

DEAR SIR: Associated Industries of Rhode Island, Inc., wishes to record its opposition to H.R. 4700, the bill introduced by Representative Forand which would amend the Social Security Act to provide for the Federal purchase of certain health-care services for social security recipients. The bill provides for compulsory hospital insurance for the persons collecting social security benefits and would be financed by the imposition of additional social security taxes on employers, employees, and the self-employed. It provides for an additional payroll deduction and is therefore inflationary in its effect, since it would inevitably result in demands for higher wages. Our older citizens are the ones who suffer greatly from inflation. Congress can best aid them by halting inflation which limits their access to the medical care and facilities which they may need.

We submit that the bill is the first step toward socialized medicine. In addition, there are now pending in Congress several bills for a complete socialized medicine program under which a national payroll tax would be levied and a system somewhat similar to that in England would be set up. The experience in England has not been good and it would be a mistake to set up a similar system here which would virtually destroy the remarkably successful voluntary health plans.

Great progress has been made in voluntary hospitalization insurance. In the State of Rhode Island 70 percent of the people over age 65 are members of the Blue Cross and 50 percent of them are covered by physicians service. What has been done in Rhode Island can be done in other States. Health need costs should be handled at the local State level. We urge you most strongly to defeat the proposed legislation. Very truly yours,

ASSOCIATED INDUSTRIES OF RHODE

ISLAND, INC.
By FRANK S. SHY.

STATEMENT BY WALDEN P. HOBBS ON BEHALF OF THE NATIONAL RETAIL MERCHANTS

ASSOCIATION REGARDING H.R. 4700 AND RELATED BILLS TO ENLARGE TIIE SOCIAL SECURITY PROGRAM BEFORE THE HOUSE WAYS AND MEANS COMMITTEE, JULY 20, 1959

INTRODUCTION

My name is Walden P. Hobbs. I am the chairman of the social security committee of the National Retail Merchants Association with offices at 100 West 31st Street, New York, N.Y.

The National Retail Merchants Association has a membership of over 11,500 department, specialty, and chainstores located in every State of the t'nion and many countries abroad. Its members provide empolyment for several hundred thousand of our citizens and do an annual volume of business exceeding $19 billion.

SOCIAL SECURITY: ITS PURPOSES AND PRINCIPLES

Before addressing ourselves to the legislative proposals now before your committee, to amend the Social Security Act, it appears appropriate to review the basic purposes and principles of the American social security program.

The overriding purpose of social security is to provide a means by which a person may be assured a minimum amount of income to support himself when unable to work because of old age. The American people through their elected representatives have deemed it to be in the national interest to protect our society from the adverse consequences—social, economic, and political of large numbers of our senior citizens being without means of support in their declining years through a program of social insurance.

The social security program, however, as originally conceived, was not to be administered, insofar as benefits were concerned, on a "needs" basis. On the contrary, benefits were to be related, at least to some degree, upon a past record of average monthly earnings. In addition, standards of eligibility were established for all persons which were to be met before an individual became entitled to receive benefits.

Another basic principle of the American social security program is that the system should be financed on a pay-as-you-go basis. Congress provided that benefits would be payable from a special trust fund to be established through the medium of payroll taxes levied (1) equally on employees and their employers, (2) on the income of self-employed persons, and (3) through interest earned on the trust fund. This fund, it was envisaged, would be sufficient to meet all benefits being paid currently so that over the long run receipts from payroll taxes plus interest would match the benefits payable.

WHAT H.R. 4700 PROVIDES

H.R. 4700 and related bills are entirely unique in the area of social security in that they go far beyond the usual provisions for increasing old-age benefits or broadening eligibility under OASI. Simply stated, under H.R. 4700, the social security trust funds are to be made available for the payment of hospitalization expenses incurred by anyone eligible for social security benefits, whether or not such benefits are actually received. The pertinent provisions of H.R. 4700 are as follows:

1. IIospitalization benefits would be available to men at age 65, to women at 62, as well as survivors of persons covered under the Social Security Act.

2. The social security fund would be available to pay hospital services for persons eligible up to 60 days in any one year. The term "hospital service" includes such services as are usually furnished in semiprivate rooms and includes bed and board, ambulances, operating room, drugs, etc. In addition to hospitalization services, nursing home care incident to hospitalization would be provided up to 120 days per year (less any ime spent in a hospital during such year for which payment has been received).

3. The patient may choose his own hospital or nursing home, provided the institution enters into an appropriate agreement with the Government.

4. The Government may not exercise any supervision or control over the administration of any hospital which enters into any such agreement with the Government.

5. Social security taxes for both employees and employers would be increased about 8 percent.

II.R. 4700 AND ITS IMPACT ON THE SOCIAL SECURITY PROGRAM

Let us consider H.R. 4700 in the light of the basic social security principles referred to previously. At the outset, it does violence to a basic tenet of the entire social security program in that there is lacking any relationship of benefits to a past record of earnings. For example, a beneficiary with average earnings of $100 per month could receive as much or more than a person with average earnings of $400 per month. In effect, a touchstone of “needs" rather than a past record of earnings would be applied in dispensing medical benefits.

Secondly, the social security trust fund is already actuarially deficient on a longrun basis by more than one-half of 1 percent measured against the total payroll upon which the tax is levied. It is readily apparent that an increase in payroll tax of one-fourth percent of wages over existing tax rates as provided in H.R. 4700 to finance additional benefits is far from adequate to meet the additional drain on the trust funds estimated at $600 million for the current year alone.

Third, and perhaps most important, the social security program was intended to provide cash benefits to a person who was unable to support himself due to advanced age. It might be questioned, therefore, whether cash benefits should be continued to a person while hospitalized or in a nursing home where under H.R. 4700 his needs would be fully met.

HOSPITALIZATION FOR THE AGED: IS THIERE A NEED?

Aside from the fact that H.R. 4700 has been demonstrated to be at variance with the basic principles upon which our social security program was founded, there is entirely lacking any compelling need for such an ambitious experiment in socialized medicine.

There is little evidence of a national problem generated by the inability of the aged to receive proper medical care. Those of our older citizens who need medical attention are obtaining it. We are convinced, moreover, that the responsibility for giving adequate medical care is best dispensed at the local and State levels.

The record is replete with evidence to indicate the tremendous expansion in private hospitalization, surgical, and medical insurance coverage. According to figures collected by the Department of Health, Education, and Welfare for example almost one-half of those persons 65 or over now have some form of private health insurance protection.

Would not II.R. 4700 merely shift, what is essentially a private and community responsibility, onto the Federal Government? As citizens we must come to realize that the Federal Government, already staggering under the largest budgetary deficit in peacetime, can ill afford to take on this increased responsibility at this time.

SCHMARY AND CONCLUSION 1. H.R. 4700 to provide hospitalization benefits out of the social security trust fund is at variance with the fundamental principles upon which the social security system was founded.

2. The proposed increase in social security taxes fall short of providing the additional funds necessary to finance such benefits and will result in a further drain on the trust funds already actuarially deficient.

3. Private institutions, communities, and States have demonstrated their ability to properly administer to the medical needs of the aged.

4. It would be ill timed for the Federal Government, already burdened with substantial budgetary deficits to assume the staggering financial burden implicit in the program outlined in H.R. 4700.

We oppose the enactment of H.R. 4700.

I wish to thank the committee on behalf of the National Retail Merchants Association for giving me the opportunity to express these views.

STATEMENT OF GEORGE H. FRATES, WASHINGTON REPRESENTATIVE, NATIONAL

ASSOCIATION OF RETAIL DRUGGISTS

My name is George H. Frates. I am the Washington representative of the National Association of Retail Druggists, an organization composed of 36,000 small, independent, retail pharmacists-practicing their profession in every

State of the Union and the District of Columbia. Our local office is at 1163 National Press Building. Dr. John W. Dargavel is general manager and executive secretary of the NARD, with headquarters at 205 West Wacker Driver, Chicago, Ill.

We wish to go on record in opposition to the Forand bill, H.R. 4700, which would amend the social security and the Internal Revenue Code, so as to increase the benefits payable under the Federal old-age, survivors, and disability insurance program, to provide insurance against the costs of hospital, nursing home, and surgical service for persons eligible for old-age and survivors insurance benefits.

H.R. 4700 is a proposal that would create a vocal point of agitation for extension of the benefit to include everyone in the population. The outcome would be a compulsory national health insurance program centered in the Federal Government.

Under this bill, the Government would make contractual agreements to reimburse hospitals, nursing homes, physicians, and dentists for specific services rendered to approximately 13 million social security claimants—which may be expected to be as many as 22 million by 1975. Payment would be made directly to hospitals, physicians, dentists, and nursing homes. No payments would be made to the individual claimant.

May we emphasize at this point that the pharmaceutical services, including prescription dispensing, by the retail pharmacists of the Nation would be completely bypassed. Retail pharmacists, representing an important segment of the health team, would be taxed again to put government in competition with themselves and the free enterprise system.

Why is it that in drafting legislation calculated to be of benefit to the aged, retail pharmacists are completely ignored, while at the same time the Congress continues to say that “small business in the backbone of the Nation"? Registered pharmacists are graduates of accredited colleges of pharmacy-who previously have served their apprenticeships. They then must take an exacting examination before their respective State boards of pharmacy before they are permitted to compound and/or dispense prescriptions issued by licensed practitioners.

Are we rapidly approaching the day when the small, independent retail pharmacist will have to close his doors because of government competition? Because his own government saw fit to channel taxpayers money into avenues calculated to destroy the only professional man on Main Street ?

These are serious trends which the Congress should recognize and, at the same time, it should be remembered that the “power to tax contains the power to destroy."

The Forand bill projects the principle of Government regulation of professional fees, wages, and prices. Only those hospitals, nursing homes, physicians, and dentists entering into agreements with the Federal Government would participate in the program. Experience has proved that virtually every qualified doctor and hospital insists on independence from Government control-for they know that Government control limits the quality and quantity of medical facilities available to the beneficiaries.

From time immemorial the confidential, personal relationship between the doctor and his patient has been kept inviolate but this proposal would end that highly ethical, traditional, moral concept.

H.R. 4700 provides raising the social security tax base from the first $4,200 of income to the first $6,000. The tax rate would also be increased one-half of 1 percent for employer and employees and three-fourths of 1 percent for selfemployed persons. By 1975, under this bill, an increase in Federal taxes of up to $213 annually ($106.50 for the employee and $106.50 for the employer) would result. This 59-percent increase would terminate in annual payments of $285 each by 1975. The tax increases of self-employed persons by 1975 could be as much as $159.75 a year.

There is no yardstick by whic the cost of the program can be measured, but calculations have been made which indicate that eventually it will be more than $2 billion per year and taxes would have to be raised accordingly. This could bankrupt the social security program and jeopardize the basic retirement income of millions of Americans. The proposal that eligible persons be furnished medical and hospital service instead of cash benefits would permit the Federal Government to spend social security funds as the Government wishes rather than to permit the beneficiary to choose how he will spend his money.

The National Association of Retail Druggists subscribes to the thinking of the American Medical Association in its protest relative to H.R. 4700, thus: “The Forand bill proposes a political solution to a health problem. It is a health-care bill sponsored by nonmedical people."

Voluntary health insurance plans have proved capable of handling the extensive insurance needs of our growing population. Approximately 50 percent in the 65 and over age group have some coverage now as compared with only 20 percent in 1950. Enact H.R. 4700 and you will destroy the one method through which older citizens can take care of their health needs on a free choice basis and maintain their independence. Compulsory health insurance and socialized medicine are synonymous.

ARKANSAS STATE CHAMBER OF COMMERCE,

Little Rock, Ark., June 29, 1959. Hon. WILBUR D. MILLS, Chairman, Committee on Ways and Means, House of Representatives, Washington, D.C.

DEAR WILBUR: It is my understanding that a witness for the Council of State Chambers of Commerce is scheduled to appear at an early date before the House Ways and Means Committee in opposition to H.R. 4700 by Mr. Forand.

Please be advised that the council witness in opposing this measure will be representing the views of the Arkansas State Chamber of Commerce, which has adopted a position in strong opposition to this measure.

At a time when everyone's taxes are burdensome, this bill not only increases taxes to finance additional Government spending but would also move substantially in the direction of socialized medicine. With best personal regards. Sincerely yours,

FRANK CANTRELL, Managing Director.

AMERICAN BAR ASSOCIATION,

July 1, 1959. Re H.R. 4700. Hon. WILBUR D. MILLS, Chairman, Ways and Means Committee, House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: I understand that hearings will begin later this month on the above bill. The provisions of this bill are practically identical with the hospital, nursing care, and surgical payments provisions contained in H.R. 9467 in the last Congress.

At the 1958 annual meeting of the American Bar Association held in Los Angeles, August 25-29, last, the following recommendations of the committee on unemployment and social security were adopted by house of delegates :

1. That the American Bar Association go on record as opposing the Forand bill (H.R. 9467);

2. That this action be communicated at the proper time and in the appropriate way to the appropriate committees of Congress.

This is transmitted for your information and whatever action may be appropriate. Sincerely yours,

EARL F. MORRIS, Chairman, Standing Committee on Unemployment and Social Security.

ARKANSAS BAR ASSOCIATION,

Little Rock, Ark., July 20, 1959. Re H.R. 4700, 86th Congress, 1st session. Mr. LEO H. IRWIN, Chief Counsel, House Ways and Means Committee, New House Office Building, Washington, D.C.

DEAB SIR: The Executive Committee of the Arkansas Bar Association has directed me to write you expressing its opposition to the social security amendments of 1959 introduced by Representative Forand.

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