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The basic senior citizens' contract of Minnesota Blue Shield is beginning its third year of operation. It has had fine acceptance in the State.

Prior to the over-65 plan, Blue Shield subscribers converted their regular group Blue Shield contract upon retirement to a nongroup contract. The cost was greatly increased, because the plan was of the nongroup type. Now a person who wants a noncancelable physician plan and did not have one before age 65, or a person who wants to convert his group plan upon retirement to another group plan for senior citizens may do so. Over 8,978 have subscribed to the senior citizens' contract.

Blue Shield's new service plan provides for comprehensive benefits for all individuals over age 65 whose income is $2,400 or less and couples whose income is less than $3,600 annually. An individual's net worth may be $20,000 or less and a couple's $30,000. The plan costs only $35.40 a year.

Blue Shield has a hospital expense rider plan for senior citizens, but few have taken advantage of it. The plan is very reasonable and provides excellent benefits. The aged person can purchase a nondeductible, or $50 or a $100 deductible policy. He may secure from 30 to 120 days of hospitalization coverage in a 12month period with a maximum room allowance of $10, $12, $15, or $20 per day. The premiums range from $4.70 to $11.75 a month. Over 2,600 aged persons are covered under this plan.

Hence, Blue Shield and its hospital rider plan can provide full service physician benefits, as well as 120 days of hospital care, at $20 per day for $176.40 a year. Nearly 79,000 persons in Minnesota over 65 have a Blue Shield contract.

Private health insurance has continued to expand in Minnesota. There are 41 companies now writing guaranteed renewable policies for the aged. Nationally, 3 companies alone write policies for 2 million people over 65. In 1961, 9.3 million of the 17 million Americans over 65 had some form of health coverage.

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The Taves senior citizens' report noted in 1960 that 60 percent of the persons interviewed had hospital insurance and that in the metropolitan area where hospital costs are much higher, 71 percent had such coverage. Over 50 percent had medical and surgical coverage. It should be noted that this survey was done before the Blue Shield and Blue Cross plans mentioned above were available. Minnesota's old-age assistance program is one of the best in the Nation. the fiscal year ending June 30, 1962, $26,821,810 was spent on medical care for Minnesota's old-age assistance recipients. Hospital and physician costs continued to decrease while nursing home costs have increased. The reason for the decreasing hospital costs while nursing home costs went up lies in the fact that more nursing home beds are now available to care for patients who do not need intensive hospital care. Actually, nursing home costs increased by $4.4 million over the previous year, and a major factor was the release of many of the State's institutionalized patients to nursing home care. Often these persons are senile but do not belong in the State mental hospitals where they have been under custodial care for many years.

Old-age assistance recipients in Minnesota receive comprehensive benefits and have free choice of vendor. In 1963, 42,700 persons over age 65 are receiving aid under this program. Almost 57 percent receive medical care at sometime during the year, and 52 percent of the total money spent for old-age assistance will be for health care.

The OAA health care dollar was divided as follows, as of June 30, 1962:

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Hence, in Minnesota, the senior citizen can purchase excellent health care coverage at nominal rates, and those who cannot afford such rates can receive comprehensive care under the old-age assistance or the new Minnesota assistance to the aged programs.

The wealth of the Minnesota senior citizen

The 1960 Taves study pointed out that over half of the persons interviewed had a net worth of $10,000 or more. Forty-nine percent stated they had enough income to live on comfortably; 35 percent had enough for subsistence only; and 16 percent did not have a living income. Under the Minnesota assistance to the aged plan, 38 percent would receive complete health care, while 12 percent are now receiving such care under the provisions of the present old-age assistance program.

In the current population report of the U.S. Department of Commerce, Bureau of the Census, it is pointed out that 91.8 percent of the families whose head was 65 or over had an income of over $1,000. In fact 27.7 percent had incomes over $5,000. The median income of these families was $3,382 annually.

The November 1960 Monthly Labor Review states that an adequate budget for a retired couple in Minneapolis in the autumn of 1959 was $3,135. This would indicate that aged Minnesotans who receive the national median income of $3,382 would have more than enough to live on. Included in the retired couple's budget mentioned above was $315 for health expenses. The Hennepin County Welfare Department figures a minimum budget is $1,854 annually for a couple.

In the Taves report, it was pointed out that 25 percent of the persons interviewed had spent up to $49 that year for health needs, 59 percent spent less than $200 and only 5 percent paid over $500 for such care. It is interesting to note that while some persons stated they needed care and that the care was too expensive for them, many did not know that free care was available to them. The survey pointed out that 45 percent of the aged did not know that the public health nurse was available to help them. About 34 percent said that they never, rarely, or seldom used the public health nurse in their communities.

After reviewing these statistics in Minnesota, we can conclude that the average aged citizen does have enough to live on; his health bills are reasonable; he does have health care facilities available for him to use, but he does not know about them. In most cases his home is paid for, his children are grown, and his living costs are about $3,000 a year.

How do Minnesotans pay for hospital bills?

A study has been made over the last 3 years of hospitalized patients in a rural Minnesota hospital. This hospital has 41 beds and 10 bassinets. Of the total admissions during the 3 years, 17.7 percent were over 65 years old and of that group, 14.1 percent were admitted for surgical operations and 85.9 percent for medical conditions.

Three-quarters of the patients over 65 paid their bills from private resources, including insurance payments, and one-fourth of the bills were paid by government programs. Each year the number of persons who had all or part of their hospital bill paid by insurance has increased. In 1960, 33 percent of the aged had insurance coverage. By 1961, the percentage increased to 40 percent and in 1962 over 46 percent had coverage. In the first 6 months of 1963, 51 percent secured insurance benefits.

During the 3-year period, 84.9 percent of all persons hospitalized over 65 received bills that were under $500 and only 5.3 percent spent over $1,000.

The most important point in this study, as it relates to the King-Anderson bill, is that by February 15 of each ensuing year only 3.5 percent or 11 people had not paid their hospital bills in full. Just a little over 1.4 percent or four people in the group had not made any payment at all on the account.

Another study was recently completed in the Minneapolis-St. Paul hospitals. This study showed that the average length of stay in the hospital was 7.9 days, the average bill per stay was $338.71, and the average bill charged per patient day was $42.84. The report noted that age, sex, locality, day of the week, etc., had an effect on the average length of stay.

Persons over 65 showed an average length of stay of 11.2 to 14 days. This is more than the overall average noted above. It was interesting to see that the longer the stay, the less the per day cost. The person who stays 14 days had an average per day cost of $39.56. The study further noted that "those over 65 are most significantly different in degree (from other age groups), but not so

much in kind." The report stated that after age 30, the average bill charge per stay increased with age but at a nearly constantly decreasing rate.

The Twin City hospital study pointed to the fact that older people pay their hospital bills faster than any other age group. The study, which included 11,029 discharges from the 25 short-term general hospitals, was a 5-percent probability sample. "Grandma and grandpa-at whatever age 50 and above you chooseare the lowest nonpavers of their bills in both percentage by number and percentage by amount," the report stated.

The age group of 20 to 29 accounted for the largest group of persons who did not pay their hospital bills. Over 6.71 percent of old billed charges from this group remained unpaid at least 6 months after discharge. In addition, their average bill is one of the lowest for any age group.

The Hennepin County Community Council's 1963 survey revealed that in a 60-day period, 17 percent of new admissions for all clinic services at the Minneapolis General Hospital were for persons 65 years and over. This would indicate that over 80 percent of the charity and emergency cases in Hennepin County involve younger persons.

All these studies show clearly that senior citizens in Minnesota can and do pay their hospital bills. Two of the studies indicate that younger couples seem to have a more difficult time paying these bills. Yet under the KingAnderson bill, the Government will tax the young couple and provide "free" health service to the aged. It is obvious that most older people do have the means to care for themselves and they want to do so.

Comparing the Minnesota medical assistance law with the King-Anderson bill

1. Who would be covered?-Under the Minnesota assistance to the aged program, 140,800 persons over 65 will receive comprehensive health services. The King-Anderson bill will provide institutional health benefits to 367,000 or nearly all of Minnesota's aged.

2 What benefits would the people receive?-We have already noted that benefits under the Minnesota assistance to the aged program would be comprehensive. As the committee knows, the King-Anderson benefits would constitute partial institutional care, plus some home health services and outpatient diagnostic services.

In other words, after a small deductible, the King-Anderson benefits provide for the first 45, 90, or 180 days of hospital care in a benefit period. What happens to the patient who has an acute condition and uses up the 45, 90, or 180 days? If he doesn't have the money to pay for the health care, he must seek relief. The Minnesota assistance to the aged plan asks the recipient to pay the first $200 of health care in any 12-month period and after that, all remaining health care is paid in full. This is set up as a catastrophic plan, because this is the type of health care insurance the aged need. Nearly all persons over 65 can pay the first $200 but many cannot pay the next $200, $400, or $600 for their care. The Hennepin County study showed that, "Persons over 65 can expect an incidence of illness of 1.6 acute conditions per person per year, as compared with an incidence of 2.2 acute conditions per person per year among people 25 to 44. In the area of chronic or long-term illness, however, only 22 percent of those over 65 are entirely free from chronic health conditions, as compared with 59 percent of the total population under 65 in the United States." This again points up the need for long-term protection for the aged, not merely 45 days or 90 days of hospital care.

The Hennepin County study also revealed the fact that persons over 65 do not get proper dental care. According to this report, "studies (in Kansas and several other States) show that 15 percent require no treatment, 25 percent are not treatable, and 60 percent are treatable and in need of dental care. Ninety percent of those who are treatable have pyorrhea. One out of three need dentures. A total of 67 percent of those over 75 have no natural teeth."

The King-Anderson bill does not help persons over 65 to secure dental care. On the other hand, the Minnesota medical assistance plan provides complete dental care after the $200 deductible for all health care. Hence we must point out that the Minnesota assistance to the aged bill will do the best job in caring for the health needs of the people over 65.

3. Is it necessary to provide some health care to all the aged in Minnesota?We noted earlier that only 5 percent of the Minnesota aged stated they needed health care and did not have it because they could not pay for it. We also noted that 49 percent of the people said they had enough money on which to live com

fortably and over 50 percent had $10,000 net worth or more. The people of Minnesota are already providing complete health care to 12 percent of the aged population and are now going to make the same benefits available to 38 percent. We know that another 21 percent are covered by Blue Cross and Blue Shield, and that more than 50 percent of the aged in Minnesota can afford to buy health insurance because they have done so. The doctors of Minnesota feel that most of Minnesota's aged population can afford to buy insurance or they have already bought insurance and can use it to pay for their health care. It has been pointed out earlier and should be pointed out again, that most senior citizens want to be independent, they want to choose their own doctor, their own hospital, their own nursing home, and they want to pay their own bills.

4. What Government controls are placed on the doctor under both plans?— Under the King-Anderson bill, the Secretary of Health, Education, and Welfare or his assistants, sitting in Washington, D.C., or at regional offices, will administer the plan. In many cases they will not know the differences that exist in health care practices from county to county and State to State.

The individual doctor will be in constant jeopardy because the hospital utilization committee can force him to move his patient whether or not he feels it is in the best interest of the patient. If the hospital in which the doctor practices does not sign an agreement with the Government, the doctor cannot take his aged patients to that hospital unless the patient abrogates his right to free care in order to choose his own physician. The doctor cannot prescribe a new drug and have it paid for unless it is found in one of the four drug encyclopedias or approved by the local drug committee.

Because of the amount of Government interference, the intimate relationship of doctor and patient could completely disappear.

The Minnesota assistance to the aged plan is administered by the county welfare departments. Each patient is free to choose any doctor, hospital, or nursing home. The physicians, through the medical society, have agreed to service the Minnesota assistance to the aged plan at Blue Shield Plan A rates. Each local medical society has established a committee to review any questionable charges for the local welfare department, and the physicians have agreed to this procedure. The same type of structure has been established for the dentists and pharmacists, but hospitals and nursing homes receive full payment for their services. The doctor is free to treat the patient without Government interference.

5. Where will we find the personnel to care for all of the people who are sure to take advantage of "free care"?-One of the problems that would confront this country immediately if 17 million persons over 65 demanded their "right" for "free" health care would involve lack of the personnel to care for them. The Hennepin County study noted that, "A shortage of professionally trained people in the medical and paramedical fields, including social services and research, still remains as bottlenecks for the development of expanding health services in Minnesota and in Hennepin County.' The Minnesota Commission on Patient Care, an organization concerned with the lack of qualified professional health personnel, made a survey of the problem in 1960. According to the commission, the results of this study were as follows: "(The number following the listings by fields represents the professional persons that could be immediately employed if qualified and available.) Nurse anesthetists, 40; dietitians, 37; trained medical record librarians, 28; medical technicians, 119 registered and 57 trained laboratory assistants; physical therapists, 55. This shortage of professional persons in these positions cut down the capacities of respective hospitals and nursing homes in extending care to the aged and the chronically ill." The study did not cover the physicians, medical social workers, registered, licensed practical, and public health nurses.

6. What are the costs of the two plans?-The total cost for providing complete care for 140,800 aged Minnesotans under the MAA plan would be estimated at $13,700,000 a year. Of this amount, Minnesotans will pay about $2 million a year, plus Minnesota's percentage of the $11.7 million which will come from Federal funds. One fiftieth of $11.7 million is $234,000. We realize that $234,000 is only an estimate, but it is safe to predict that the total cost would be about $2,234,000 a year in new taxes. On the other hand, we know that the people of Minnesota will pay at least $19,180,000 in additional social security taxes each year for the King-Anderson bill. In 1962, 1.4 million people in Minnesota paid social security taxes. The average annual wage on which the social security tax was levied was $2,740. To finance the King-Anderson plan, social security

taxes would be raised one-quarter of 1 percent on the employer and one-quarter of 1 percent on the employee or one-half of 1 percent overall. One-half of 1 percent of $2,740 is $13.70, the average tax increase per individual. Multiply this figure by the 1.4 million who pay this average tax increase, and $19,180,000 is what Minnesotans will pay to the Federal Government for partial institutional care for all persons over 65, whether or not they can pay for their own care. should also be noted that the Federal Government, in so doing, is taking another $19.18 million of Minnesota's disposable income.

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Hence, in Minnesota we can give complete care to 140,800 persons who may need health care for $2,234,000, or we can give partial health services to 367,000 people, many of whom can pay for their own health care for $19,180,000 under the King-Anderson plan.

No need. In view of the factual material presented in this testimony, it is abundantly clear that there is no need for the King-Anderson program in Minnesota. The physicians, with the help of God, have created the problem of care for the aged; and the physicians working with others, but without the help of te King-Anderson bill, will solve the problem. We feel that within 1 year all persons in Minnesota over 65 will have the finest health care available, and they will not need to be impoverished to get such care. The doctors in our State feel that this is the way it should be. Older people should not be made class 1, class 2, or class 3 citizens. They should be able to keep some resources, and yet when they need health care, they should be able to get all of the care they need. All studies point to the fact that those who can afford health insurance are buying it. Nearly everybody wants to be self-sufficient. They do not want the Government deciding whether or not they have stayed in the hospital too long. The fact is, our programs are so good in Minnesota that we do not want the Federal Government to come in and take more of our tax dollars to give us less service than we now receive.

Physicians continue to strive for outstanding health care for the aged

We are all proud of the health services available to the aged in Minnesota, but we physicians will nevertheless continue to lend our energies toward making the United States a healthy place for all the aged. We pledge our dedication to the following program:

1. The Minnesota State Medical Association's statewide advisory committee will cooperate fully with the Minnesota Department of Welfare to perfect the MAA plan and to strengthen the State's unlimited medical care program for OAA recipients.

2. The physician members on the Governor's citizens council on aging will continue their work on behalf of the aged. Physicians have been participating in many of the local community councils this past year. They will continue to share in this project as well as to cooperate at State and regional meetings.

3. As noted earlier, many senile patients have been released from State hospitals and returned to nursing homes when new beds were made available. We will help in furthering this project.

4. For years now, our association has been actively engaged in recruiting men for medicine, as well as helping the allied professions find people for their own paramedical fields. The shortage of professional personnel is one of the greatest problems facing those who are responsible for health care of the aged and others who are ill, as well. Physicians talk regularly to many high school students at career festivals and elsewhere, urging them to consider the health careers. To encourage students who are interested in medicine as a career, we offer scholarships and long- and short-term loans.

5. We have set up a joint labor, management, hospital, and physician committee to try to control the cost of medical care plans. Also we have adopted and published a relative value study which has been made available to insurance companies, as well as the doctors in Minnesota.

6. Physicians who serve on the association's committees such as cancer, diabetes, heart diseases, etc., continue to devote their time and research to helping the aged.

7. We are proud of our record of improving the health facilities in our State. In the last few months, the Hill-Burton advisory committee which is largely staffed by association personnel has approved funds for another metropolitan hospital for Minneapolis. During the past 2 years, we have reached 93 percent of the ideal number for first-rate general hospital beds in our State.

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