untary insurance are such that they will inevitably end with the old people carrying the burden of the old people, and it is therefore self-defeating.

The nonprofit insurance, the Blus Cross and others, as well as the commercial insurance, now bear this common characteristic and it is impossible for this vehicle ever to be used successfully to meet this problem. This I don't believe Secretary Flemming recognizes. He doesn't recognize the inherent characteristics of nongovernmental insurance that puts on it this frightful limitation, and he is telling us then to wait a little while.

In other words, he is saying in effect, "If you will just wait a little while, this hippopotamus is going to learn to fly. Just give it time." But the hippopotamus is never going to learn to fly. It is just the nature of the beast.

And nongovernmental insurance is never going to learn to carry this burden. It is just the nature of the beast.

There are important social effects that would flow from the enactment of such a proposal as the Forand bill. There are five of them that are cited in my statement here and I will review them briefly. First, it would ease the financial problems of hospitals by providing payment for much of the care that now they must give to charity cases without charge, or at rates far below cost. This is an increasing burden to hospitals. This bill would relieve the hospitals. Second, Blue Cross plans would be relieved of the high cost load and therefore could hold down their rates and compete more effectively with commercial insurance plans.

In other words, gentlemen, I submit that if this bill were to become law today, rather than putting an end to the voluntary insurance programs like Blue Cross, it would mean their continuance. It is the one thing that can save them from disaster.

Third, it would relieve private welfare organizations and Government agencies of a welfare load now financed by taxpayers.

We saw how, when the amendments of 1950 were passed to the Social Security Act, which was the biggest forward step in the benefit structure, benefits were improved by an average of 77 percent, both for past and future beneficiaries, and from that time on the public assistance load has gone steadily downward, relatively speaking, while the OASI load has gone up.

In short, we are asking for a payroll tax-supported plan which will relieve the public assistance and the public charities of this particular burden of the older people.

Fifth, the measure would force greater attention by the medical profession and the community to the present relation in quality and the kind of care being given.

Now, I want to skip over the part in my testimony that describes the operation of the program, because I think you are familiar with. that, and summaries will be submitted for your committee, but I want to speak about this matter of costs, and I wish to address myself to it particularly in view of what Secretary Flemming said yesterday about costs.

In the first place, I would like to present a breakdown of the costs. Secretary Flemming gave you figures, I believe, as to what the shortrun and the longrun costs would be of this program, and I

believe that he estimated that in the year 1960 the total cost in millions of dollars, would be $1,120 million. This is broken down as follows: $860 million would be hospital benefits; $13 million for nursing home benefits; $193 million for surgical benefits; and the cost of administration, $53 million.

I don't know whether these are correct costs or not, but I do know that generally speaking, over the years we have been able to rely pretty much on the accuracy and the integrity of figures that have come out of the Department of Health, Education, and Welfare, and I believe that is still true.

He presented that shortrun cost as representing 0.53 percent of payroll. This would be just a little in the red from the provisions of the bill which provide for a 0.5 percent increase on the payroll tax. However, in the long run he presented higher costs, and he presented that in terms of a 0.79 percent of payroll on a level premium cost. That is broken down as follows: Hospital benefits, 0.63 percent; nursing home benefits, 0.01 percent; surgical benefits, 0.12 percent; and cost of administration, 0.03 percent.

Your reaction may be to this, and the question can well be raised, "Here is a bill which proposes a 0.5-percent increase in the payroll tax for all except the self-employed, which imposes a 0.375 increase." Yet the overall long-term level premium figures of cost are 0.79 percent, and this appears to leave a deficit of 0.29 percent.

However, that can very easily be balanced out. Between the $4,800 ceiling on payroll taxes now imposed and $6,000, there is 23 percent of the payroll of covered workers of people under social security.

If you just apply the present social security tax schedules plus the amount proposed in the Forand bill up to the $6,000 limit, tax that other 23 percent of payroll and make no other adjustments except the automatic adjustments in cash benefits that would result from increasing the wage base you make a gain of 0.33 percent of payroll on a long-term level premium basis.

Subtract that from your 0.79 cost which the Secretary submitted yesterday and you have a net cost of the Forand bill of 0.46 percent, well under the cost estimate, so that the cost estimates submitted by the Secretary, which we will take at their face value, are not at all frightening, and by raising the wage base to $6,000 you are only going about halfway toward covering all of the wages which were covered in 1935 when the Social Security Act was passed.

The CHAIRMAN. Mr. Cruikshank, I didn't notice carefully. You have run over your time just a little. There are about 8 minutes remaining.

Mr. CRUIKSHANK. Thank you, sir. I would like to use that time in speaking about the relation of this program to improved quality of care.

We recognize that today many Federal, State, and local governments are engaged in activities that involve responsibility for quality of medical care, and this is inescapable. This has been historically true from all the longtime interest of the Federal Government in the matter of the quality of medical care since the very founding of the U.S. Public Health Service.

Your committee will well want to consider various methods of shaping health benefit bills so that the resulting program will move in the direction of furthering high quality of care.

We recognize that this isn't just a matter of quantity, getting hospitalization, and surgical benefits, and nursing home care out to x millions of people. It is a question of the quality of medical care that is given.

You will be told that the provisions of health benefits contemplated in the Forand bill will lead to abuses. We would be the last to deny that the possibility of abuse exists in a health insurance program. It exists in the present programs. The possibility exists whether you have a private insurance program or a governmental insurance program.

To deny this would be to fly in the face of our many years of experience in this whole field. But the problem is to design your insurance program so that it lends itself to encouragement of quality of medical care rather than to the deterioration. This is not easy, but it is not impossible, and I don't believe this Congress or the American people are ready to shy away from a problem just because it is not

easy.

If it is necessary and if it is possible, we tackle the job and get it done.

We believe your committee will want to explore additional types of benefits. Hospitalization is important but hospitalization is only one element in the complex pattern of good health care, and we think that you may want to well contemplate, as you continue to study this proposal, the following elements:

1. Preventive care built into this program, providing early and effective diagnosis.

2. Readily available continuing care for acute and chronic diseases alike.

3. Advice and assistance with maintaining individual self-care and with steady rehabilitation for people after their illnesses.

Two additional types of benefits that you will want to consider particularly are, I believe:

(1) Diagnostic benefits: Diagnostic benefits would support early diagnosis and preventive care. A patient's physician could prescribe essential tests, such as electrocardiograms, X-rays, and so forth, without hospitalizing his people.

(2) Home nursing services: In our consultations with members of the medical profession, we have found without exception a great deal of reliance placed on the high quality of the existing home nursing services, and they have advised us that much could be done by providing home nursing services as an additional benefit, which would have also the effect of reducing the cost of the home program.

Then I believe that you could well add demonstration projects in a few key points that would enable the medical profession and the hospital administrators to experiment with different kinds of approaches to this very complex problem so that they could from time to time come back and report to you on additional changes that would be needed to be made in this new social security problem.

No further study is needed or required to show that the older people have a problem. No further study is needed to show that this is acute, it is pressing, and it calls for action now. The Forand bill has many wise provisions in it that should allay the fears of Government controls.

One, it provides for an advisory council to be consulted in the development of regulations, such as are required by the act, and on this members of the medical profession should sit, hospital administrators should sit, and people who represent the consumers of hospital services should sit.

It also permits the Secretary to make use of voluntary nonprofit organizations in the administration.

The existing machinery of Blue Cross could be very well integrated into the administration of this whole program and we believe that their vast body of experience and their trained core of skilled workers should be utilized to the utmost in the administration of this program. If I have just a moment before I close, I would like to speak of a letter which we received recently from a doctor friend. In fact, we received several copies. It is called a legislative alert and I think it may explain to you gentlemen some of the mail that you are now getting. It was sent by Dr. Louis M. Orr, president of the American Medical Association, and I am informed that it was sent to every doctor in the United States. It is called the legislative alert, and it encourages, and in fact it encourages in the strongest way, let us say, every doctor to write his Congressman, write the members of this committee, especially the chairman, telling them of their opposition to this "dangerous and gravely harmful precedent."

They don't say in this letter what is wrong with the Forand bill, and I want to comment on that for a little bit.

I am just telling you now why you may have received some of this mail. They don't say what is wrong with it, but they do say that if this bill is passed, then it would be the first step to the Federal Government running medicine, the Federal Government operating the hospitals, and, above all else, the danger of national health insurance.

In other words, it isn't just this bill that is wrong, but what it is going to lead to. A causes B, and B causes C, and on down to G, and when you get to X, the king's whiskers are going to be cut off or some horrible calamity. And the doctors are put on the alert.

But the interesting thing is this: This letter, dated July 7, calls for immediate action, and it says to be effective your letters must be sent in immediately. Action is vital now.

Then they go on to say in the July 13 issue of the News of the American Medical Association the reasons for opposing the Forand bill will be provided you.

In other words, doctors, proceed with the treatment. Go ahead with the operation. The diagnosis will follow later.

(Letter referred to follows:)

DEAR DOCTOR: U.S. Representative Wilbur Mills, chairman of the House Ways and Means Committee, has announced that the committee will conduct hearings on the Forand bill, H.R. 4700, beginning July 13. These hearings are scheduled to continue for 5 days.

As you know, this legislation would establish a dangerous and gravely harmful precedent that would undermine the patient-physician relationship and would open the doors to the eventual socialization of medicine. Under this legislation, some 16 million persons eligible for social security payments would be entitled to receive hospital, surgical, and nursing home treatment under a

program run by the Federal Government. Should this bill become law, its proponents would then undertake an allout drive to extend compulsory national health insurance to all segments of the population.

Consequently, it is urgent that you contact your Congressman immediately, asking that he register your opposition to the Forand bill with the members of the House Ways and Means Committee. Please ask him to urge the committee to oppose this bill.

To be effective, this must be done immediately. Action is vital in the next 2 weeks.

Please write, wire, or telephone your Congressman now, and urge your friends to write also. In any written communication-either letter or telegramplease send a copy to Congressman Mills.

A description of this bill and detailed reasons why it would be harmful to the Nation and to the practice of good medicine will be contained in the AMA News dated July 13.

It is our responsibility to speak out now, the sooner the better. This is essential if we are to continue the sustained and heartening progress that we are making toward our fundamental goal: The best possible health care for every American, emphatically including the older citizen.

Sincerely,

LOUIS M. ORR, M.D., President, American Medical Association.

The CHAIRMAN. Mr. Cruikshank, you have consumed your 45 minutes.

Mr. CRUIKSHANK. My 45 minutes are up?

The CHAIRMAN. Yes.

Mr. CRUIKSHANK. I will end on that note with just a word by saying that we are glad that the members of the American Medical Association don't practice medicine like that.

Thank you very much, Mr. Chairman.

Could we also add to the record the full resolution of the AFL-CIO Second Constitutional Convention in support of this and a statement adopted by the executive council on February 19 of this year, and a summary of the bill as we analyze that?

The CHAIRMAN. Without objection, that will be included at this point in the record.

Mr. CRUIKSHANK. Thank you.
(Information referred to follows:)

RESOLUTION No. 85-OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE

Adopted December 1957 by the Second Constitutional Convention of the American Federation of Labor and Congress of Industrial Organizations Labor's legislative accomplishments are reflected in the monthly benefits being received under old-age, survivors, and disability insurance by 11 million people. The program continues to be soundly financed and economically administered, paying benefits related to earnings as a matter of right from trust funds built up through specified contributions.

Increases in monthly benefit amounts are badly needed to offset higher living costs and permit more adequate levels of living. A new program is required to meet the costs of medical services which weigh very heavily on the aged and on widows with young children, groups who are least able to obtain protection against these hazards through private insurance. After the AFL-CIO Executive Council had urged that legislation to meet these most urgent needs be given priority by Congress, a bill for this purpose, H.R. 9467, was introduced by Congressman Aime J. Forand of Rhode Island.

The Forand bill would, among other things—

1. Increase all primary monthly benefits by 10 percent on the average, giving present beneficiaries $5 to $10 more.

2. Liberalize ceilings on total family benefits.

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