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So the proportion of our aged is increasing. And of course, as you can see from the chart, the number of the aged as our population grows is very tremendously increasing and by 1970 it will reach nearly 20 million people.

Now one point that is of great importance that I am going to dwell on that this committee has heard from others, and I believe it has heard from me from time to time, is the basic problem of public policy that is presented as to whether you wish to have people's economic and health needs met through public assistance or through social insurance. If you will recall, this committee has on a number of occasions dealt with that fundamental problem of public policy.

When you enacted the two programs of old-age assistance and oldage insurance in 1935, old-age assistance was the primary program because insurance had not started. At that time as shown by chart III there was about 22 percent of the aged people in the country getting old-age assistance. It dropped a little bit during the war years, rose in the postwar period. Then by the very important amendments reported out by this committee in 1949 and enacted in 1950, a very major change in policy was taken; namely, to improve the old-age insurance programs, which in 1951 for the first time in our history took care of more aged people than assistance.

The result of that policy, as you can see by chart III, is a very important one; that today in the United States nearly 60 percent of the aged are taken care of through old-age insurance and around 15 percent through old-age assistance.

Now why do I present this chart? I present this chart for this reason which I ask the committee to consider. If there is not a more adequate way to deal with the health needs of the aged, this line shortly is going to begin to increase. I will develop that in some more detais later. I think the fundamental public policy question that is presented this committee is, that if you wish to have this public assistance line continue to go downward, which is what I think we all would like to see, then something new must be added to present policy, because otherwise from the experience that we have this line is shortly going to turn up as more and more older people have to come to the public assistance authorities for medical care purposes.

Now another matter of public policy which has been presented here is that we all know that there are a substantial number of aged people who do have hospital insurance. There is no question about that. There is no question that it is growing. There is no question that it will continue to grow. I think that is very satisfactory.

But the problem that is presented is, as shown by chart IV, that while there are something like 45 percent of the social security beneficiaries who have hospital insurance by a recent study, what do we find when we analyze that by the income of these people? We find that only 21 percent of the people who have income under $1,200 a year have hospital insurance. As might be expected, it rises very quickly with income, 35 percent for the people between $1,200 and $1,800 a year, 44 percent for the next group, 55 percent for the next group, 60 percent for the next group, and for people $5,000 income a year and over, 65 percent.

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CHART IV
HOSPITAL INSURANCE COVERAGE OF AGED OASI BENEFICIARIES

Married couples Having Hospitalization Insurance

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Now the problem is, that voluntary insurance, unless it is either subsidized or some other method is introduced like requiring the employer to pay it all or some other matter of financing it over the lifetime, we are going to find that the lower income people are not going to have voluntary insurance even if we reach 70 percent as has been predicted. The 30 percent without insurance will be the people who will have to go on public assistance and this committee will be financing that cost out of general revenues because you have already committed yourselves to the principle in the 1950, 1956, and 1958 legislation to pay part of the cost of medical care that State public assistance agencies now give.

I will dwell on that in a little bit more detail in a minute. The other big problem that we are faced with is the fact that it is true that a significant proportion of aged people have voluntary health insurance, but a great many have either inadequate health insurance and some of them who have it have to drop this insurance as their incomes decline in retirement and as they become older.

In other words, if you look at the proportion of the aged population that has voluntary health insurance you will find that it declines with age, as might be expected. The older the person gets, the more he uses up his income; the more he has greater health needs, the greater is the likelihood that he does not have this protection.

Let us look for a moment at chart V made from a study of the social security recipients, which brings out that 54 percent of the social security beneficiaries did not have health insurance. Now

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