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The Government-supervised, Government-financed provision of hospital, nursing home, and medical care as part of the public assistance programs under the Department of Health, Education, and Welfare is riddled with abuses on the part of both medical vendors and recipients. Indiscriminate authorization by Government agency of requests for medical care from medical vendors, without evaluation of need or purpose, is resulting in unwarranted and excessive spending of public funds.

The number of aged persons receiving OASI benefits is approximately four times the number of recipients of old-age assistance. Enactment of H.R. 4700 would expand the abuses, misuses, and excessive costs in that proportion.

There is no basis for assuming that Government agencies could operate a medical care program on the scale proposed in H.R. 4700, estimated to cost $1.1 billion in its first year of operation, with any greater efficiency than those agencies have demonstrated in the operation of a program on a smaller scale.

Furthermore, the estimated cost appears totally unrealistic. In the States of New York, 51.5 percent of the total amount spent for old-age assistance goes for hospital, nursing home, and medical care.

We are not suggesting that persons uninsured in private plans must do without medical care. We are stating our belief that a tax-supported, Government program of hospital care for all the aged is not justified when, according to the Secretary of the Department of Health, Education, and Welfare, 40 percent of the people 65 years old and older now have hospital insurance and “we can look forward to 70 percent of the aged having some form of hospital insurance by 1965."

Moreover, we are convinced on basis of our experience in the field that any Government-operated medical-care program will result in further spiraling of inflationary costs and increased taxation while at the same time failing to provide controlled, economical, and effective medical care.

Statement by Arthur V. Burrowes, president, Missouri Public Expenditure

Survey, on the Effects of H.R. 4700, Committee on Ways and Means, U.S. House of Representatives, July 13, 1959

If enacted H.R. 4700, the Forand bill, would establish a program of providing hospital, nursing home, and surgical treatment for all persons eligible for oldage and survivors insurance benefits, accompanied by an increase in social security tax rates.

Our social security tax rates are scheduled to increase substantially under the present law, even without the addition of the new tax proposed in the Forand bill. The Forand bill tax increase proposal is a relatively small one, but it could easily grow once the program is begun. Our wage earners are already heavily burdened by Federal, State, and local taxes.

In the light of the experience of our other social security programs and in view of the tendency to liberalize these programs after they have started, can the claim that the tax proposed in the Forand bill will be adequate be taken at face value? Even if the medical care program were not expanded or liberalized, it can safely be predicted that the Forand bill tax increase proposal would not bring in enough revenue to fully finance the program once it got underway. We would then be faced with the prospect of increasing the social security or some other Federal taxes, allowing inflationary boost in the national debt, or risking the impairment of the social security trust fund, to the detriment of all who are participating in the present social security program.

The experience in England indicates that when government-financed medical care is available, medical facilities are soon overtaxed with patients, not there because of medical necessity but because the treatment is available. Our hospital facilities and staffs would be unable to treat large numbers of such cases and still provide adequate care for those really in need, thus facilities would be taxed beyond their capacity, and the quality of treatment would suffer.

The American people have shown that they neither want nor need a general Federal medical care program. First, despite strong pressures, the proposal of a socialized medicine plan was thoroughly rejected a few years ago. Second, participation in voluntary health programs has increased at a remarkable rate in recent years. The people are selecting the medical care insurance programs that best fit their needs and purses. This method is in the American tradition and is infinitely preferable to a government program.

OKLAHOMA PUBLIC EXPENDITURES COUNCIL,

Oklahoma City, Okla., July 13, 1959. Hon. WILBUR D. MILLS, Chairman, House Ways and Means Committee, New House Office Building, Washington, D.C.

DEAR CHAIRMAN MILLS: It is my understanding that the House Ways and Means Committee is holding hearings on H.R. 4700, the Forand bill, this week, and as chairman of the National Taxpayers Conference and executive vice president of the Oklahoma Public Expend ires Council, I desire to register opposition to this proposed legislation.

Mr. Chairman, the National Taxpayers Conference is composed of 37 State taxpayer associations whose members represent virtually every interest and activity in our Nation and who are devoted to the twin principles of solvent government and sound money.

At our annual 3-day meeting in Washington earlier this year, the conference unanimously adopted a program of objectives which included opposition to any new Federal domestic spending commitments until the budget was balanced and a start made toward reducing the huge Federal debt.

H.R. 4700, which would commit the Federal Government to a program of medical care for all persons eligible for old-age and survivors insurance benefits is in conflict with this objective.

In addition, H.R. 4700 proposes an increase in Federal taxes at a time when the great majority of our citizens are pleading for relief from an excessive tax burden. This tax increase would impose an additional hardship on the Nations' wage earners who are already paying more in taxes than for food, clothing, and medical care.

Based on the historical experience of other social security programs, it is only reasonable to predict that these proposed tax increases will fall far short of producing sufficient revenue to finance the proposed program once it reaches full bloom. This can only mean still further deductions from every worker's paycheck in future years.

Introduction of this legisaltion is, in our judgment, untimely since Congress has already authorized a White House Conference on Aging for the purpose of studying and reporting on the very problem it seeks to solve.

Mr. Chairman, our numerous studies of the many facets of the social security program would indicate the need for a complete review of the whole system for the purpose of eliminating the abuses which are now prostituting our efforts to care for our less fortuante citizens before loading it down with any new programs.

And above all is the compelling question as to how much responsibility the Federal Government can assume without impairing the ability to protect our Nation and preserve our freedom. There can be no security for anyone in a bankrupt or vanquished America. Respectfully yours,

STEVE STAHL Chairman, National Taxpayers Conference.

THE AMERICAN COLLEGE OF RADIOLOGY,

Chicago, Ill., July 14, 1959. Hon. WILBUR D. MILLS, Chairman, House Ways and Means Committee, House of Representatives, Wash

ington, D.C. DEAR REPRESENTATIVE MILLS: The opportunity to express an opinion to the Ways and Means Committee of the House of Representatives on the merits of H.R. 4700 is valued and deeply appreciated.

The American College of Radiology is an association of 4,500 physicians practicing throughout the United States. These doctors of medicine specialize in radiology, the use of X-rays and radioactive materials in the diagnosis and treatment of disease and injury. Each member has devoted a minimum of 3 years to specialized training in radiology following graduation from medical schools and a year or more of internship.

The American College of Radiology is persuaded that H.R. 4700 is well motivated, but attempts too much, much too soon. This is a legisaltive effort to solve the many health problems of the aged. These problems are social and

economic as well as medical. They vary from area to area, within cultural and ethnic groups, and almost from person to person. The dimensions of the problems are currently vague and the ways in which they can be best met are uncertain. We now lack the essential intelligence to wisely attack the many problems H.R. 4700 hopes to defeat. The program proposed by the bill seems to attempt to preserve the benefits of a system of medicine and hospitalization that is acknowledged to be amongst the best in the world, but the proposed solution is rigid and all embracing.

We would enter a plea for perspecitve. The people of the United States are in many age groups, have many problems and have many needs. A considerable percentage of the aged and most of the indigent are not covered by the social security system; they would not benefit from the enactment of H.R. 4700. Many Americans who are not yet aged would prefer, we believe, to attempt to solve their problems of future health care in other ways. H.R. 4700 would almost debar experimentation in mehtods to meet the many health problems of the aged because it would economically prevent people from participating in nongovernmental approaches due to the taxes they would be paying to support the H.R. 4700 program. It has been a proud boast in the United States that, “if you make a better mousetrap, the world will beat a path to your door." This has been generally true, but where any government has established mousetrapmaking monopoly, it is not true. A Government monopoly over the provision of health care benefits to the aged will, we fear, stiffle the ideas, talents, and initiative that are currently being devoted to solve the problems present.

The practice of radiology is approximately 85 percent diagnosis and 15 percent treatment. Diagnostically, the radiologist, inside or outside the hospital, consults with virtually all members of the medical profession. He sees perhaps 50 percent of patients who are hospitalized and has a good opportunity to make a judgment as to the necessity of their being in the hospital.

The great majority of the commercial and Blue insurance plans sold today will pay for radiologic services when rendered to bed patients in a hospital, but will not pay for these services if rendered in doctors' offices, or to hospital outpatients. Theoretically expenses are not covered if hospitalization is purely for the purpose of establishing a diagnosis. These plans are abused. There is no argument on this, though there are differences as to the extent of abuse.

Individuals will search for the circumstances within insurance under which their bills are paid. In this instance, they seek hospitalization. They will eventually find a physician who will afford such hospitalization and then their bills are paid bythe insurance plan.

The medical profession, hospitals, insurance plans and companies, some State insurance commissioners-all are seeking methods of policing this abuse. The problem are, however, complex in that they involve ex-post facto decisions as to motivation of patient and physician, the medical situation at the time of hospitalization, the patient's psychological state and matters of this sort. Studies of abuse are necessarily oriented toward the innocence of the parties doctor and patient—until they are proven guilty, and are thus of limited value. Radiolo gists have estimated that approximately one-third of patients seen in hospitals having insurance of this sort could be attended on an ambulatory, not-hospitalized basis. This too is but a highly educated guess by a group of physicians who are in a position to make this judgment.

It seems clear, however, that this inate abuse is probably perpetuated in H.R. 4700, if radiology is covered under the terms of the bill. It is not crystal clear whether radiological services are so covered within section 226(b)(1) “Descrip tion of Hospital, Nursing Home, and Surgical Services." While "laboratory services” are cited in the language of the bill, radiology is not. However, the bill states, “The term 'hospital services' means * * * other services, drugs and appliances as are customarily furnished by such hospital to its bed patients either through its own employees or through persons with whom it has made arrangements for such services, drugs, or appliances; the term 'hospital services' include such medical care as is generally furnished by hospitals as an essential part of hospital care for bed patients."

If radiology is intended to be covered within this language, the legislation requires hospitalization of the patient as a condition precedent to payment for radiological services.

This will have a profoundly adverse affect on the financial stability of the program, the ratio of necessary hospital beds to population in many communities, the practice of radiology in hospitals and the teaching of radiology.

Persons covered by the terms of the legislation who need radiological services will seek hospitalization so as to avoid personally paying for these services. On the basis of present practice within insurance, we predict that they will obtain such hospitalization which will surcharge the cost of necessary radiology services with the cost of unnecessary hospitalization at from $25 to $45 per day.

Unnecessary hospitalization will artificially inflate community-bed require ments and lead to the building of more beds than needed at approximately $25,000 each. It is predictable that some of this cost will be borne by the communities involved and some by the Federal Government through the Hill-Burton hospital construction program.

The influx of patients who are currently receiving radiological services in offices into hospital radiology departments will retard speed with which the examination of all patients can be accomplished (thus increasing the length of stay for all hospitalized patients and the overall costs of hospitalization); delay the examination of persons acutely needing inhospital radiology services; neces sitate the building of more radiological installations in hospitals; imbalance the training of resident physicians in radiology by causing an abnormally high influx of elderly patients and an abnormally high proportion of negative examinations because many of them will be accomplished simply for the diagnostic workup of the patient.

We state with a good deal of certainty that these things will occur because they have already occurred under the terms of much of the medical care and hospitalization insurance written in this country. The passage of H.R. 4700 in its present form will aggravate the current situation.

Parenthetically, insurers are attempting to remedy the situation described in a number of ways.

For all of these reasons, we would urge considerable caution and just a bit of patience. There is little doubt that we all owe Representative A. J. Forand and this committee a debt for forcefully imposing the necessity of solving the health problems of the aged on all of us. This debt is freely acknowledged, but please do not blind your eyes to the response that the introduction of this legislation has occasioned, nor to some of the long-range experiments that have been undertaken to reach the best solutions. The health problems of the aged did not appear in the sky as some newly launched medical-economic sputnik. They have de veloped over the years and are subject to change. Please do not freeze their solutions into a governmentally sponsored, predetermined mold. Please allow the American initiative and freedom of enterprise the opportunity of blazing new trails toward better ways of doing the job. Sincerely yours,

WILLIAM C. STRONACH, Executive Director.

(The following resolution from the East Tennessee Radiological Society was received by both Hon. Albert Gore, U.S. Senator from Tennessee, and Hon. Estes Kefauver, U.S. Senator from Tennessee, who asked that this resolution be included in the record of the hearings :) RESOLUTION SUBMITTED BY THE EXECUTIVE COMMITTEE, East TENNESSEE RADIO

LOGICAL SOCIETY, JULY 2, 1959 Whereas the East Tennessee Radiological Society recognizes the medical care and needs of the aged are posing an increasing number of problems which must be met; and

Whereas the medical profession of Tennessee has amply demonstrated its interest in the provision of the medical care for the medically indigent, including the aged, its sponsorship of the indigent hospitalization program, by which doctors agree to treat without fee, persons determined to be medically indigent by local screening committees during periods of hospitalization; and

Whereas the East Tennessee Radiological Society is opposed to the expenditure of tax moneys which furthers the move toward medical socialism; and

Whereas the East Tennessee Radiological Society believes that certain basic points should be met by any legislation which proposes to spend Federal funds for medical care, i.e., (1) That the need for proposed expenditures be determined

by careful studies, not only by representatives of Federal agencies, but by qualified persons representing groups of citizens concerned with the problems of the aged; (2) that the responsibility for the disbursement of Federal funds for medical care be delegated to that agency within the respective States best qualified to perform this function, and not necessarily to the State agency responsible for the administration of other welfare programs dependent to any extent upon Federal moneys; (3) that the appropriation of any such Federal funds be made contingent upon such funds being matched by the States; and

Whereas recent experience in Tennessee with the welfare hospital service program, administered by the Tennessee Department of Public Welfare; has proved that the welfare department program has been wasteful because of the hospitalization of patients without regard to medical need and prognosis, and has led to the overburdening of hospital facilities by careless selection of cases, thus depriving others of needed attention: Now, therefore, be it

Resolved, That the East Tennessee Radiological Society opposes H.R. 4700 as an expanded method of governmental encroachment into the field of medical service; and be it further

Resolved, That the East Tennessee Radiological Society feels that H.R. 4700 is detrimental to the welfare of the country in that it relegates to the Federal Government the responsibility for providing that type of care and comfort to individuals which, in many instances, could be and should be provided by the individual's immediate family or by his local community, thus further leading in the direction of the welfare state; and be it further

Resolved, That the East Tennessee Radiological Society further condemns H.R. 4700 in that it makes no provision for important factors which vary from area to area and region to region throughout the United States, and is an attempt to impose a uniform system of benefits upon our Nation's citizens without regard to the ethnic, social, and economic conditions prevailing within the regions in which they live.

E. KENT CARTER, President.

STATEMENT OF VERNON HERNDON, GENERAL MANAGER, PALMER HOUSE, CHICAGO,

AND VICE PRESIDENT, HILTON HOTELS CORP.

Mr. Chairman and gentleman of the Ways and Means Committee, may I address you as a spokesman for the Governmental Affairs Committee of the American Hotel Association, with reference to H.R. 4700.

All of us who have had the privilege of knowing the author of this bill, Congressman Forand, have the very highest respect for him personally. He has always given sympathetic attention to the problems confronting our industry. However, we do have some misgivings about the expansion of the social security program to include hospitalization, nursing care, and surgical benefits.

Our industry is not averse to seeking methods by which hospitalization, nursing care, and surgical benefits can be provided for workers. As a matter of fact, a great number of our more progressive hotels have long since provided this type of protection for their workers. In one large city, the hotel association has constructed its own medical center. Not only the employees of the hotels, but their entire families, are offered hospital and surgical services without cost, as one of the fringe benefits of their employment.

More and more hotels are providing disability insurance for their employees to tide them over when injury or accidental illness strikes. It is indeed a fine, Christian gesture to seek ways by which employees can be protected against the vicissitudes of life. We wonder, however, whether, by broadening the benefits of the OASI program, we might not impair the solvency of the reserve funds which have been accumulated under that program. Nearly 65 million people have a stake in those reserves. These workers must not be unduly penalized in an attempt to be overgenerous with a selected group of employees.

I have not been able to come by any estimate of the probable disbursement required to indemnify workers who would be eligible for benefits, growing out of hospitalization, nursing care, and surgical expenses. It would seem to me that a careful appraisal of this estimate would need to be made to ascertain whether it would imperil the actuarial soundness of the whole social security program.

Any step-up in benefits must naturally be underwritten by an increase in the premium rates to the employer and the employee. In our industry, a careful

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