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Augusta, Ga., November 12, 1963. COMMITTEE ON WAYS AND MEANS, U.S. House of Representatives, Washington, D.C.:

Since there are so many aged people in the States that do not have proper hospital and health insurance and a burden exists against the State and Federal Treasurer to assist these aged people, we suggest that this matter be handled through the insurance companies and a recording fee of $1 be assessed against each subscriber, this money to be turned into the Federal Treasury and paid to the insurance companies when proper bills are presented showing such expenditure or any other way that may be agreed upon by the insurance company and Federal authorities in the handling of these funds.

The insurance company or companies to insure all aged people regardless of their physical condition, allowing them hospital care, health benefits and nursing care when necessary, also doctor's fee not to exceed $5 per visit to home or office.

With the $1 register fee, we will have some $20 million in the Treasury to start the bill operating and an assessment of one-half of 1 percent payroll tax against all employees and employers would keep this bill operating.

Manufacturers and other payroll payors would be allowed to deduct such amounts paid into this fund from their income tax and they would not have any objections to such legislation, too the American Medical Association would or should approve of such a plan.

Many insurance companies have expressed themselves in favor of such a plan and we feel sure they would join us in such an endeavor and we would have one of the most urgent problems solved for our aged people and reduce the welfare cost of our taxpayers and help restore the dignity and self-respect to those that have to give up everything to get any assistance from the Kerr-Mills Act. Your consideration will be appreciated.

F. S. GRIFFIN, Chairman, Legislative Committee.



I am Samuel Heller, legislative representative of the Retail Clerks Council, District 20, R.C.I.A., AFL-CI0.

I speak in behalf of our council representing 50,000 members, in support of the King bill, H.R. 3920.

It is a well-known fact that the great majority of Americans 65 years of age and older have insufficient income and are more prone to illness than younger people, and thus cannot afford the high cost of hospital and medical insurance and care.

We confirm this from our own experience and therefore earnestly urge this committee to approve this bill and recommend it to Congress, where all our elected representatives may have an opportunity to vote on it. And we are certain it will become law this year.



My name is Geo. M. Harrison. I am the chief executive officer of the Brotherhood of Railway & Steamship Clerks, Freight Handlers, Express & Station Employes, with offices at 1015 Vine Street, Cincinnati, Ohio. I am filing this statement as chairman of the Social Insurance Committee of the Railway Labor Executives' Association and I represent the 24 standard railway labor organizations comprising that association and having in membership substantially all railroad employees in the United States.

For the convenience of the committee, I list these railway labor organizations :

American Railway Supervisors' Association.
American Train Dispatchers' Association.
Brotherhood of Locomotive Engineers.
Brotherhood of Locomotive Firemen & Enginemen.
Brotherhood of Maintenance of Way Employes.
Brotherhood of Railroad Signalmen.
Brotherhood of Railroad Trainmen.
Brotherhood Railway Carmen of America.
Brotherhood of Railway & Steamship Clerks, Freight Handlers, Express

& Station Employes.
Brotherhood of Sleeping Car Porters.
Hotel & Restaurant Employees & Bartenders International Union.
International Association of Machinists.
International Brotherhood of Boilermakers, Iron Shipbuilders, Black-

smiths, Forgers & Helpers.
International Brotherhood of Electrical Workers.
International Brotherhood of Firemen and Oilers.
International Organization Masters, Mates & Pilots of America.
National Marine Engineers' Beneficial Association.
Order of Railway Conductors & Brakemen.
Railroad Yardmasters of America.
Railway Employees' Department, AFL-CIO.
Sheet Metal Workers' International Association.
Seafarers' International Union.
Switchmen's Union of North America.

The Order of Railroad Telegraphers. These railway labor unions strongly favor bill H.R. 3920. Title III of the bill relates specifically to railroad employees, and I shall discuss the provisions of this title very shortly.

The reasons that we support the bill as a whole may be very briefly summarized.

The problem of elderly people in paying for, or in insuring themselves against the costs of hospital and other related medical services is a very real problem that is growing in scope and magnitude day by day as these costs mount and the aged population increases. It is a pressing problem and one which, as the events of the last 3 years have shown, is not going to be answered with the kind of inadequate approach made by the Kerr-Mills Act.

It is a fact that only about half the aged population is covered by private hospital insurance, and much of this protection is woefully inadequate. Moreover, although the annual income of persons over 65 is only a fraction of that of younger persons, their annual medical bills are more than twice as large. One of every six aged persons goes to the hospital each year; average medical costs for an aged couple where one or both are hospitalized during the year are over $1,200.

We support the social security approach to providing medical benefits for the aged. The other approach—the Kerr-Mills Act-has already been shown to be inadequate and unsatisfactory. This is demonstrated clearly by the fact that only 28 States and 4 other jurisdictions have adopted plans under that act, and even in those States the benefits provided are lamentably inadequate. In the State of Tennessee, for instance, the maximum limit on hospital care under the Kerr-Mills program is 15 days per fiscal year. But even this is denied to anyone with a gross annual income in excess of $1,000 for a single person and $1,500 for a married couple.

The reasons that so many State legislatures have not adopted the necessary supplementary legislation under the Kerr-Mills Act may and probably do vary. Financial considerations are plainly involved for many States are facing serious financial problems aggravated by inadequate revenue systems. But certainly had there been any substantial support for the Kerr-Mills approach at the State level, the progress of enabling legislation would have been far, far greater than anything we have seen in the last 3 years.

A glaring fault with the Kerr-Mills law, of course, is the means test which requires that before an old person can receive benefits he must expose his privation to the public authorities and ask for what is essentially charity, a requirement that robs old age of its dignity and introduces shame into the sick room.

A pertinent evaluation of the Kerr-Mills program appears in the recent report by the Subcommittee on Health of the Elderly to the Special Committee on Aging, U.S. Senate. In brief, the report reveals clearly that the Kerr-Mills program has proved to be, at most, an ineffective attempt at a solution of the problem of the Nation's 18 million older citizens as to the need for health services. The report shows that the program is far from national, and that there is no reason to expect that it will become one in the foreseeable future.

1. Stringent eligibility tests, “lien type” recovery provisions, and requirements as to responsible relatives have severely limited participation where the program is in effect. In July of 1963, only 148,000 people, less than 1 percent of the Nation's older citizens, received assistance under the program.

2. The duration, levels, and types of benefits vary widely. Except for four States, benefits under the program are nominal or inadequate;

3. Administrative costs are too high in most jurisdictions;

4. The distribution of Federal matching funds have been grossly disproportionate. A few wealthy States have received a lion's share of the funds;

5. The congressional intent has been frustrated by the practice of several States in transferring nearly 100,000 already on other welfare programs, mainly old-age assistance, to the Kerr-Mills program. The States have done this to take advantage of the higher matching grant provisions of Kerr-Mills, saving millions of dollars in State costs, but diverting money meant for other purposes ; and that

6. The "welfare” aspects of the program, including cumbersome investigations of eligibility, plus the requirement in most States that resources of participants must be depleted to a point of near dependency, have further reduced partici. pation.

We believe that the sensible and characteristically American way to handle this problem—the problem that so many of our old people are unable to afford the costs of hospital and related medical care-is through the same prepayment plan that has been employed so successfully in the social security system. There is nothing in the program of prepayment of health costs under the social security system which may properly be characterized as socialistic. The cry of socialism in connection with this bill is the same old cry that was made against social security in 1935. It is the same cry that was made against the addition of disability benefits in the social security system during the last administration. It is the same old cry that was made against Blue Shield and Blue Cross. And it is being made by the same people.

This weary old cry of socialism sounds out of an age that is past. Today the Government itself accepts the Blue Shield and Blue Cross for its own em. ployees. During the last administration, not noted for radicalism, considerable progress was made in liberalizing the social security system, particularly in the field of disability benefits, and today it is clear that the system is accepted by both political parties alike.

Moreover, in this bill every effort has been made to allay the fears of these prophets of doom. The bill spells out, as clearly and explicitly as words can be used, that there will be no governmental supervision or control over the practice of medicine by any licensed doctor, or over the manner in which medical services are provided by any recognized hospital. The right of every person to choose his own doctor and hospital is made crystal clear. Many conservative organs of the public press whose immunity from socialistic association is beyond question have endorsed the social security approach to medical benefits for the aged.

This approach will meet the costs of the program through small increases in the contributions of both employers and employees. It is in essence a method by which people pay during their productive years for the protection against medical costs that will be afforded them under this bill when they become eligible. Since it is a new program, those who have already retired will be extended the benefit of the act's protection in accordance with long-established social security principles and precedents. In a nation which has sought to govern itself in accordance with the precepts of religion and morality a proper concern and respect for the problems of its aged persons is fundamental. We believe that the program offered by the bill, H.R. 3920, is in accordance with such precepts.

27–166—64—pt. 5—8

With reference to title III of bill H.R. 3920, which relates specifically to railroad employees, the matters I wish to discuss are

1. The efforts which have been made by the railway employees and their labor unions to secure for retired railroad workers and their dependents needed hospitalization and other related benefits ;

2. The failure of these efforts to secure such benefits; and

3. How title III of bill H.R. 3920 would provide railroad workers and their dependents, age 65 or over, with needed hospitalization and other related benefits.



First, let me state that as of the end of September 1963, the total number of beneficiaries, age 65 and over, on the rolls of the Railroad Retirement Board was 711,000 (366,000 retired employees; 147,000 wives; and 198,000 survivors), and the weighted average monthly annuity to all in this group was $102 ($137 to retired employees; $57 to wives; and $71 to survivors). Considering the health problems of persons in this age group, it is quite obvious that the monthly annuity is totally inadequate to meet both living expenses and the cost of medical care.

In 1954 many of the labor unions, representing railroad employees, through collective bargaining, negotiated a nationwide plan for providing hospital, surgical, and medical benefits for active employees. Under this plan, on railroads where hospital associations were in existence the arrangements were adapted to provide the negotiated benefits. With respct to the nonhospital association railroads a single national insurance policy was negotiated to provide specified benefits at specified premiums. Under this policy the Travelers Insurance Co. was the primary insurer and reinsured varying percentages of the risk with other qualifying companies desiring to participate.

Initially this plan was applicable only to the protection of employees on a 50–50 contributory basis and separate arrangements had to be made to make insurance for dependents available on a voluntary basis at the expense of the employees. Subsequently, however, renegotiations have provided for the employee and dependents benefits to be on a noncontributory basis and the dependents benefits for hospital association railroads and nonhospital association railroads are now included in the one insurance policy.

The arrangements above summarized deal exclusively with employees at work and their dependents. We have thus far not been able, through collective bargaining, to provide for the continuation of any such benefits for the employee or his dependents after retirement of the employee. This presented a most serious problem.

To meet this situation as best we could, the railway labor unions obtained a separate group insurance policy making available benefits on a voluntary individual application and premium payment basis for retired employees and their dependents. The opportunity was thus made available to all employees covered by the collectively bargained plan while in active service to secure protection upon retirement, on a reduced benefit basis, at their own expense. Where hospital associations are in operation retired employees are generally permitted, by making payments under varying arrangements, to continue protection for themselves, though their dependents are generally not covered. In instances where retired employees on hospital association railroads do not have this opportunity, they are eligible upon retirement to be covered by the group insurance policy obtained by the labor unions for both employee and dependents benefits and all employees on such railroads are eligible to be covered for dependents benefits.



It is clear from our experience that the adverse circumstances inherent in the type of arrangement we now have make it impossible to achieve really satisfactory results by this approach. The administrative costs involved in handling individual applications, checking eligibility for participation and receiving and properly crediting individual premium payments necessarily absorb a disproportionate share of the premium. Individual choice as to participation results in coverage of a very small segment of the group eligible to participate and probably involves a considerable degree of adverse selection.

The present premium rates under our policy for retired employees are $5 per month for employee benefits only, $5 per month for dependents only, and $10 per month for employees and dependents benefits. The benefits are limited to an allowance of up to $12 per day for hospital room and board but not to exceed $840 for each period of disability which is inadequate to meet presentday costs. Benefits for hospital extras are restricted to a maximum of $100 for each period of disability. An allowance for ambulance service is limited to $25. Allowances for surgery are made pursuant to a schedule with a $150 maximum.

Under this plan, 49,550 aged retired railworkers subscribed for this protection and of this number, 34,200 included their dependents in the coverage. There are 17,857 additional wives and/or widows covered on a dependent-only basis. This coverage for aged retired employees and their aged dependents or survivors totals only 101,607.

The number participating in relation to the total eligible group is too small to achieve results that can be regarded as a real solution to the problem. Perhaps there is a very high degree of adverse selection. Perhaps the nonparticipating eligibles feel that their income is not sufficient to afford any insurance premium payments and that they must therefore run the risk of incurring expenses and hope that this does not happen. Or perhaps they consider the benefits available relative to the premium rates inadequate to give them their money's worth. Whatever the reason, it is apparent that our intensive efforts under these circumstances have not succeeded in developing needed hospital, surgical, and medical insurance benefits for retired employees and their dependents. ACcordingly, we believe that it is readily apparent from an examination of these premium rates and benefit limitations that some better method of providing hospital, surgical, and medical benefits for retired employees must be found.



Title III of bill H.R. 3920 would, by amendments to the Railroad Retirement Act, extend to aged railroad employees and certain of their dependents, the same rights (subject to the same conditions and qualifications) to health insurance benefits as are provided by title I of the bill to eligible social security beneficiaries.

More specifically, the benefits of the bill would be extended to every individual, age 65 or over, who, as an "employee" as defined in the Railroad Retirement Act, or as the spouse of such an "employee", or the survivor of such an employee, is eligible to receive an annuity (or “pension”) under the Railroad Retirement Act. Also covered would be any person, age 65 or over, whose relationship to a railroad employee is such that it has been or would be taken into account in calculating a minimum annuity under section 3(e) of the Railroad Retirement Act (which is in the nature of an overall family minimum provision). This latter provision would in general mean coverage of a deceased employee's parents in some cases.

Under title III of the bill, these persons would have precisely the same rights to health insurance benefits as eligible social security beneficiaries would have under title I, except that in addition to health services furnished in the United States, services furnished in Canada would also be covered under title III.

As you may know, employment of certain Canadian citizens by U.S. railroads is employment subject to the Railroad Retirement Act and these Canadians become eligible under our system to all benefits available to other railroad employees. The amount of payments for health services furnished in Canada, however, would be reduced under this bill by the amount payable for like services furnished pursuant to law in effect in the place in Canada where such services are provided.

The Railroad Retirement Board would administer the hospital benefits program for the railroad people and in so doing would be subject to the same provisions of title I of this bill under which the Secretary of Health, Education, and Welfare would act, and would, in general, have the same authority to determine the rights of railroad employees, annuitants, and their specified dependents, to the health benefits provided for by the bill, that the Secretary would have with respect to the social security beneficiaries. However, the direction to the Secretary

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