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It is our opinion that this legislation threatens an erosion of the independent and individual physician-patient relationship which, like the relationship be tween client and lawyer, is essential to sound professional guidance and care.

We oppose this and all other legislation which puts the Government into competition with private business.

Our study of the amendments convinces us that the evils born of this legislation far outnumber and outweigh the hoped-for benefits. Please convey this expression of disapproval to the members of the committee. Sincerely,



Oklahoma City, Okla., July 11, 1959. Mr. LEO H. IRWIN, Chief Counsel, Ways and Means Committee, New House Office Building, Washington, D.C.

DEAR MR. IRWIN: The Executive Council of the Oklahoma Bar Association, in session duly assembled on July 9, 1959, by unanimous vote, went on record as opposing H.R. 4700, the Forand bill, and the principles involved in legislation of this character, and directed me to call your attention to its opposition. Cordially yours,

Executive Secretary.



The American Mutual Insurance Alliance is an association of 107 mutual insurance companies. A substantial amount of accident and health insurance is written by its members.

This statement is filed in opposition to H.R. 4700, which would amend the Social Security Act so as to provide for the payment of the cost of hospital, nursing home, and surgical care for persons eligible for old-age and survivors insurance benefits. In view of the number of witnesses appearing at the current hearings and the large amount of information already made available to the committee, no attempt is being made to repeat the arguments already made. The purpose of this statement is to register opposition to H.R. 4700 and to outline the chief reasons for such opposition. They are as follows:

1. The need for this legislation has not been demonstrated. Various studies have shown that aged people generally are able to finance their health care costs and would prefer to do so on a voluntary basis, through insurance or otherwise.

2. Voluntary health insurance is available to cover the health care costs of older individuals. In the last 20 years voluntary health insurance has had a phenomenal overall growth. During the last 5 years this expansion has been particularly notable with respect to persons of age 65 and over. At the present time nearly all senior citizens can secure coverage on an individual policy basis or through continuance after retirement of group insurance plans which covered them in their working years.

3. The enactment of H.R. 4700 would constitute a long step toward an allinclusive system of national compulsory health insurance. History demonstrates that social insurance programs, once they are established, never diminish in size or scope. On the contrary, they grow steadily and encroach into more and more areas of private enterprise. Provision of health care benefits for a specific group of citizens—OASI beneficiaries—would open the door to demands for similiar benefits by other groups. This could eventually lead to compulsory national health insurance for all citizens and a preemption by Government of a field now occupied by private insurance. Each step taken toward nationalization of industry is another step in the direction of a socialistic state.

4. A system of governmental health insurance, whether on a limited scale or all inclusive, represents a type of socialized medicine and leads to an interference with the traditional professional relationship between doctor and patient.

5. H.R. 4700 would result in an increase in the already heavy tax burden borne by U.S. citizens. It has been clearly shown that the taxes so raised

would be entirely inadequate to finance the program. This means that the ultimate tax burden would be far greater than provided in the bill and stated by the proponents.

6. The Federal Government has already made provision for OASI beneficiaries and others who lack funds for payment of hospital or surgical care costs. Through matching Federal and State funds, aid is available to them through State assistance programs. Being administered at the local level, these programs are more flexible and economical than a new national system would be and benefit many who would not be protected under H.R. 4700.

7. As long as the individual risk of health care costs can be shifted to private insurance, there is no valid basis for adopting a compulsory or governmental program. Private enterprise has two inherent qualities which a governmental plan lacks: flexibility, and that standard for judging efficiency which competition alone can provide.

8. Private insurance is meeting the challenge of providing coverage for older citizens and it should be given every opportunity and encouragement to continue to do so.

The American Mutual Insurance Alliance therefore respectfully urges that the committee not give favorable consideration to H.R. 4700.



The Insurance Economics Society of America, an organization devoted to the study of all forms of social insurance, desires to wholeheartedly endorse the testimony given in opposition to H.R. 4700 by Mr. E. J. Faulkner representing the American Life Convention, Life Insurance Association of America, and the Health Insurance Association of America, and respectfully submits additional points of testimony for the hearing record.

No one will disagree with the lofty ideals this proposal attempts to attain but sheer prudence demands that we examine the situation both past and present and ascertain whether we can have our cake and eat it.

The first question, I believe, we must face is whether the country, and I mean business as a whole and the individual citizen is in position to absorb another tax increase or I may say any further tax increases of any kind.

The second thought which comes to mind is the question of the present financial situation of the OASI trust fund and whether it is a wise move at this time to further expand, with new benefits, a program that is now questionable as to its further financial stability to administer what is already covered in the act.

On the question of social security taxation to support new and enlarged benefits we must question how far can we go with these programs. How much taxation can workers, employers and the self-employed bear? When we discuss a program as broad as social security we must concern ourselves with the future as well as the present. How will it affect our future economy and will the coming generations tolerate an extremely high tax burden that we, the present generation, may pass on to them.

Let us not forget our own present problems of taxation. The Federal Government is heavily in debt. We had a deficit of nearly $13 billion on June 30 of this year. This may mean higher income taxes. In view of this dreary prospect should social security taxes also be increased?

The proposed medical benefits would pay for hospital, nursing, and surgical care for 120 days in a 12-month period for OASI beneficiaries and survivors. Just how much this added protection would cost is anyone's guess. Careful independent students of social benefit plans seriously doubt that the increase in the tax rates as proposed in this bill would yield the sufficient funds required to provide the medical care. Furthermore it is questionable whether such services can be furnished by the payment of a fixed tax expressed as a percentage of wages or self-employed income.

Such a fixed percentage would not take into account the rising costs of hospitalization. Government cannot avoid such increases any more than any other provider of such benefits. If the latter are compelled to increase their rates from time to time, will not the Government be compelled to increase its social security taxes for the same services?

It has been shown over and over during the past 22 years that cost estimates by the social security actuary have been too low. They have been based on full employment and high wages. Unfortunately, things have not always turned out that way.

Have we any idea of the costs of these medical benefits say in 1975 when we are expected to have 22 million social security beneficiaries? Will it be so costly that we may jeopardize the retirement security of millions of Americans who depend on social security for their basic retirement needs?

One danger of this proposal is the question would it encourage overutilization of available facilities by social security claimants thus elimiting beds for the actual ill of all ages in the community. Statistics in the field of the aged are not available to gage this problem.

If we were to grant such medical benefits at this time to social security bene ficiaries would it not create demands by all covered workers for similar benefits regardless of age ?

No one will quarrel with the objective of adequate health care for our aged citizens. However, one can question whether the solution lies at the Federal or State and local level. Federal legislation has aided the States in meeting the responsibilities of medical care for those needing it. Why should the Federal Government go any further and cover everyone, without regard to need.

In this last fiscal year it is estimated that over $400 million of Federal, State, and local funds were paid for medical and health needs under public assistance. It would appear from these statistics that the question of medical care for the needy oldsters is being answered on the State and local basis where the traditional local autonomy of the hospital and the free exercise of professional judgment of the physician can be preserved.

When we discuss the free exercise of professional judgment by the physician and the hospital we must recognize that such medical care as proposed under this bill would call for controls to be established over the purveyors of the services—the hospitals and the doctors. This bill devotes several paragraphs to free choice by the patient. This freedom of choice would be limited to selection from among physicians who have signed up with the Government and who agree to follow the rules and regulations which the Secretary of HEW may promulgate. We must not lose sight of the fact that the ultimate authority is vested in the HEW Secretary. He prescribes the regulations for physicians, hospitals, and the patients. When we reach this point I am afraid we will have laid the groundwork for a comprehensive compulsory Federal medical care plan.

During 1959 State legislative sessions, bills were introduced in the legislatures of the States of Minnesota and Washington endorsing the Forand bill. Both State legislatures evidenced no interest in the subject and the bills died in their respective committees.

Voluntary insurance in the field of financing health care for the aged has made tremendous strides in recent years. It is estimated that 50 percent of the Nation's aged people desiring this protection now have some form of voluntary health insurance and that by 1960 that figure will be 65, and 80 percent by 1965. These figures are based on the fact that of the Nation's 15 million persons 65 years or older, 4 million for one reason or another are not interested in health insurance. Furthermore, 15 percent of the 65-and-over age group are public welfare recipients under the Federal-aid public assistance programs. Voluntary insurance is the answer to this problem with its flexibility and responsive ness to changing needs which no compulsory system could ever achieve. Voluntary insurance is meeting the challenge of making health protection available to our senior citizens. Voluntary insurance will continue to solve this problem and demonstrate within a reasonable period that this area is not one requiring governmental interference.



This statement is made on behalf of the National Association of Insurance Brokers in opposition to H.R. 4700 which has been introduced by Hon. Aime J. Forand to amend the Social Security Act and on which your committee is presently holding a public hearing.

The National Association of Insurance Brokers is a nonprofit organization composed of sustaining members and member associations from coast to coast. Such sustaining members and members of member associations are individuals, partnerships, or corporations who are licensed as insurance brokers by the insurance departments in the various States.

The stated purpose of H.R. 4700 is to amend the Social Security Act to provide insurance for the cost of hospital, nursing home, and surgical services for persons eligible for old-age and survivor's insurance benefits. The insurance industry of the United States has in the past and is presently making available to such persons private insurance for such needs. Thus, this proposed amendment would squarely and needlessly put the Government into direct competition with private business.

Our membership in the past has consistently opposed such invasion by the Government into those fields of private enterprise where private industry has shown itself willing and able to operate. Although it is true that not all those persons who would receive limited insurance under the proposed amendment have chosen to purchase private insurance coverage, yet a growing number have been purchasing such coverage during recent years. As you already have been informed by representatives of the insurance industry, great strides have been made in this coverage during the past year due to the concerted effort by private industry to make such protection available at reasonable rates.

In view of the fact that private industry is making such rapid progress in providing adequate coverage in this field and it is being purchased by more and more persons, we urge your committee to report unfavorably on H.R. 4700 at this time. Private industry should be given an adequate opportunity to further develop this type of insurance coverage and not be subject to the unfair burden of Government competition which is against the public interest.



To the Chairman and Members of the Committee on Ways and Means:

We recommend that your committee thoroughly investigate the operation of hospitalization and nursing home care provided under the federally aided public assistance programs, particularly old age assistance, before taking any action to further advance the proposals contained in H.R. 4700 for provision of hospital and nursing home care for old age beneficiaries under the old age and survivors insurance program.

A Government-supervised program of payment out of tax-raised funds for hospital and nursing home care of the aged has been in operation for more than two decades as part of old age assistance. It is unnecessary to look beyond the experience under that program for a clear demonstration of colossal misuse and fantastic waste of public inherent in a Government-operated medical care program.

The Gibs Consultants, a management specialists firm of Syracuse, N.Y., whose members have extensive backgrounds in the field of public administration and have specialized in public welfare, was employed in 1958 by the Board of Supervisors of Oneida County, N.Y., to make a management survey of the Oneida County Department of Public Welfare. The report of that survey was submitted to the Oneida County Board of Supervisors in December 1958.

The disclosures of maladministration and abuse in the Government-operated program of hospital and medical care made public in that report prompted the Citizens Public Expenditure Survey to request the Gibs Consultants to present a summary of their findings on the operations of the hospital, nursing home, and medical provisions for the consideration of your committee in its hearings on H.R. 4700.

As a result of our survey, we found and reported that:

Review of requests for care in nursing homes raises questions of whether this type of care is actually required by the patient.

1. At least 64 percent of the renewals of requests for nursing home care in a 2-month period did not contain sufficient medical data to substantiate the need for such care. In about 60 percent of these, the physician had stated that there were no restrictions on activities, and there were no recommendations for specific nursing care. However, these were signed by the medical director without further information and evaluation as to the possibility of a substitute form of living arrangement which would be less expensive but provide adequate supervision of the patient.

2. The fact that no medical care requiring the service of a registered nurse, and no restriction on activity, as found in so many instances, would indicate that these people could receive adequate care at less cost in boarding homes providing general services.

Review of authorizations for hospital care for 1 month showed that 16 percent lacked the evaluation of need for care and 10 percent did not substantiate the duration of care in relation to the diagnosis.

For example:

1. Three aged persons had remained in a private hospital for more than 314 years at the taxpayers expense, while they received what appeared to be no more than the the usual nursing home service. No attempt had been made to discover why hospital care was necessary.

2. One individual had been receiving continuous hospital care for a period of over 6 years. More than a year prior to the management survey the attending physician had stated that hospital care was not required. I'p to the date of the survey no action had been taken by the agency.

3. Nine days hospital care was provided for a boy with a broken forefinger. 4. Sixty days hospital care was provided for a "possible hip dislocation.”

Tremendous abuse was found in the matter of physicians' services, for instance:

1. Some patients were found to have had a physicians' call at the home, together with a visit to another physician at his office on the same date.

2. One doctor was paid for 289 visits in 1 month in only 33 cases-an average of nearly 9 visits a month to each case.

3. A group of 39 cases in which 330 visits were billed in 1 month by 16 doctors, again an average of nearly 9 visits a month. The diagnoses were quite simple, in no way indicating care of a complex nature.

4. Four thousand two hundred and eighty-five individuals averaged forty-two doctors' visits per year. If the need for (are were properly evaluated, such a volume of doctors' visits would be impossible.

Indiscriminate authorization and issuance of prescriptions added further to the abuses of the medical care program. Here, the average was 14 prescriptions annually at a total cost of $67,30 for approximately 4,300 individuals.

1. Drug payments in the amount of $54.30 were made for one person to cover 71 prescriptions over a period of 22 months or an average of more than three prescriptions per month. There was no medical report on record substantiating such expense or need.

2. Eight prescriptions were issued to one person in an 8-day period, in the amount of $30, again without a medical report justifying the need.

3. One doctor issued 114 prescriptions in a 2-week period totaling $506.49 to 36 patients. All were ordered on the same drugstore.

4. In a 2-day period the agency processed for payment 1,000 prescriptions, of which 320 were for common household items, such as shampoo, Ex-Lax, aspirin, gargle, Geritol, castor oil, etc., even whisky was noted on a prescription.

5. For these items on prescription, the cost billed to the welfare department by drug vendors, was higher than would be paid by an individual in an overthe-counter transaction. In addition, payment was made for a doctor's visit in each instance where the above prescriptions were issued.

The foregoing examples of excessive costs and abuses of medical care under government administration are not limited to the Oneida ('ounty Welfare Department. Furthermore, the situation is not new; it has existed for years. We cite in evidence a report on the Washington County (N.Y.) Welfare Department which states that as far back as 1919, drug costs showed an overcharge of 19.25 percent. The same study also revealed that welfare patients remained longer in hospitals than private patients, and that available medical records did not substantiate the need for this care.

We cite further a statement from an official of the New York State Department of Social Welfare, made in December 1958, relative to the exposition of conditions in Oneida County : “This is not new to us."

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