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I would like to say on the use of the word "compulsory," many of the contributions to voluntary plans are now compulsory. This business of saying the voluntary plans have voluntary contributions and social insurance is compulsory is a very unfair comparison.

In many cases because of collective bargaining, because of prevailing wage patterns, fringe benefits are compulsory in these plans.

Finally, benefits are not cancelable under the bill. Benefits under the bill are not limited during a person's lifetime as some voluntary plans are. The benefits are mode adequate than under some of the private plans and the administrative cost would be less.

Finally, may I say in answer to Mr. Forand's request, over the last 2 years I have consulted with some of the 20 or 25 leading students of medical economies, including doctors in the United States, and out of that we have made some specific suggestions for improvement in your bill to insure both comprehensive coverage and high quality of medical service.

I have included those in my testimony. They are the product of a vast amount of discussion among people who believe that the approach that you have in the bill could be made really effective to give comprehensive health protection to the American people.

The CHAIRMAN. Does that conclude your statement, Mr. Cohen! Mr. COHEN. Yes, Mr. Chairman.

The CHAIRMAN. Would it be convenient for you to return at 1:30 for questions?

Mr. COHEN. Yes.

The CHAIRMAN. Without objection, the committee will recess until 1:30.

(Thereupon, at 12:25 p.m., the committee recessed, to reconvene at 1:30 p.m., the same day.)

AFTERNOON SESSION

The CHAIRMAN. The committee will please be in order.

I first want to express my own appreciation for your appearance and your presentation of the thoughts of the American Public Welfare Association on the legislation before us. Your statement was very interesting and presented certain information that had not been brought to the committee's attention prior to your presentation. Mr. FORAND. Mr. Cohen, I realize, of course, that you have a num

, ber of charts that you have not been able to get to and I hope as a result of some of the questions from the committee that you may have an opportunity to discuss them.

I also was wondering whether or not you had those charts reproduced in smaller form for members of the committee.

Mr. COHEN. Yes, I do, Mr. Forand.

Mr. FORAND. If you would leave those with the clerk of the committee it would be very helpful.

Mr. COHEN. I have three additional charts and I will leave them with the clerk.

The CHAIRMAN. Are they capable of being reproduced ?
Mr. COHEN. They are.

The CHAIRMAN. Without objection, they will be made a part of the record.

(The charts referred to follow :)

OHART VI
SOURCES OF INCOME-AGED PERSONS IN THE UNITED STATES

15.2 Million Aged

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CHART VII

INDEPENDENT MONEY RETIREMENT INCOME OF AGED OASI* BENEFICIARIES - MARRIED COUPLES

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* Old-Age and Survivors Insurance

DISTRIBUTION BY SELECTED DOLLAR INTERVAL OF OASI* BENEFITS TO RETIRED WORKERS,

BENEFIT AMOUNT

ges 6076

20

36

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80

90

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$28.60-49.90

Females - 2,334,000

Males - 2,446,000

AGED WIDOWS

1,250,000

=

CHART VIII

RETIRED COUPLES, & AGED WIDOWS at end of JANUARY, 1959

44432-5923

50.00-69.90

OLD-AGE INSURANCE

BENEFICIARIES

70.00-89.90

90.00-116.90

33.00-49.90

50.00-69.90

70.00-81.40 2

49.503-99.90

AGED COUPLES 2 million couples

100.00-149.50

150.00-174.00

1/ Includes actuarially

reduced benefits for women
2/ $81.40 is maximum
3/ $49.50 is minimum

* Old-Age and Survivors Insurance

Mr. FORAND. Do you think experience to date with the administration of social insurance indicates that the Federal program can be adapted to administer the proposed health benefits effectively and constructively as set up?

Mr. COHEN. Yes, Mr. Forand. I have studied the problems involved in the administration of this particular program very carefully and I would say two things:

First, it would be possible to administer this program at less cost than can be administered under the voluntary programs. I do not think that is a major reason why Congress should take action along this line. The policy questions are much more important.

Let me expand on that for this reason: It would be very natural that it could be done more cheaply by the Government than the voluntary plans for a major reason; namely, by covering all these people in under the existing social security program, you do not have to pay for the acquisition and salesmen's costs that voluntary insurance has to pay for. It so happens when you develop an insurance plan like you have here the additional cost of collecting these premiums would be nil because you would add them onto the regular social-security tax schedule.

This, of course, is a very substantial item in the cost of voluntary and commercial plans.

Secondly, the problem of administration as far as the hospital bene. fits are concerned is no different than the way in which the Blue Cross administers and pays the hospital costs and this could be done by giving every individual who is insured a card just like Blue Cross gives you a card now if you are under Blue Cross and this would give you, when the doctor authorized you into the hospital, admission into the hospital so the administration involved would follow the Blue Cross patterns using substantially the same accounting devices that are used, the same techniques, but could be done at less cost because of the salesmen and no acquisition costs.

As you know, the administrative costs of social security are less than 2 percent of the premiums collected, which is most efficient and economical and I am sure this could be done exactly on the same basis.

Mr. FORAND. What do you think of the AMA's estimates on how much the bill would cost and on its financial threat to the socialsecurity system?

Mr. Cohen. As you heard Dr. Larson say, the AMA actually has not made the costs as far as I know. The costs they are citing are the costs given by the Health Insurance Association of America, which is a private commercial insurance organization.

I think their costs are away too high, based on present price levels. I think the reason why they have high costs is they make the assumption that if this plan goes into operation, many more people who are not now getting hospital care will get it and, therefore, the costs will be greater.

To make the assumption that they do, you have to follow one or another line. You either have to assume that there are a lot of aged people today who are not getting hospital care who would get it if the plan were put into effect and, therefore, it would increase costs substantially.

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