(2) X-ray and radioisotope procedures: This service relates to diagnostic procedures.

(3) Intravenous solutions: This service relates to the administration of intravenous solutions, regardless of the size of the dose.

(4) Electrocardiograms.

(5) Minor surgery: This service includes biopsies, excisions of pigmented nevi, etc.

The foregoing services are available to single persons having an annual income not exceeding $1,300, or to a man and wife whose combined annual income does not exceed $2,100. Ownership of a homestead does not disqualify a recipient otherwise eligible. The cash loan or surrender value of an applicant's life insurance on the first $1,000 face value, if single, or $2,000 in case of a man and wife, are exempt from consideration of eligibility or from the requirement that it be applied to payment for care received under the program. Likewise, exempt are the first $500 of savings of an individual, if single, or the first $800 savings of a man and wife living together, and also the value of such personal property items as automobiles, household furnishings, and farm equipment.

According to the records of the department of public welfare, as of February 1961, there were in South Carolina approximately 150,600 people over the age of 65. Of these, there were 34,000 on the public welfare rolls (OAA). Fifty-four percent of the total, or 1,324, received an annual income of less than $1,000, some of whom may have been covered by OASDI. Generally speaking, it is the latter group, therefore, with which the Kerr-Mills program is concerned, although, obviously, considerably more than this number will be included under the higher annual income of $1,300.

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Now, let us look briefly at the extent of the service which has been rendered under the program. During the fiscal year ending June 30, 1962, the only full year of operation for which figures are now available, the program paid for hospitalization of 3,465 patients, a total of 42,435 patient-days, or an average stay of 12.2 days per patient, at an average per diem cost of $19.57. Nursing home care was provided for 221 patients, a total of 5,727 patient-days, at a total cost of $23,256.86.

Seventeen thousand three hundred and thirty-six dollars was paid for outpatient services to 2,245 patients.

According to the director of the department of public welfare, the extent and cost of services under the program are increasing steadily. While the figures are not yet available for the fiscal year just ended, the increase for the first 6 months of that year (July 1, 1962, to December 31, 1962) was approximately $200,000 over that of the same period in the preceding year. The foregoing information demonstrates

(1) The recognition by South Carolina citizens of their responsibility in the field of medical, nursing, and hospital care for the aged.

(2) Their willingness to cooperate with the Federal Government in providing the needed assistance.

(3) The fact that the benefits are available to the group for whom they are intended-those of modest income, able to provide for their ordinary needs, but unable to to bear the burden of serious illness and the cost of institutional care.

It is obvious, we submit, that such a program is vastly preferable to one which, through a substantial increase in social security taxes for everyone, would undertake to provide limited hospital and nursing home care for millions who would prefer to buy their own private insurance coverage from Blue CrossBlue Shield or other commercial companies, or whose financial circumstances are such that they do not need to provide insurance coverage at all.

ROBERT WILSON, M.D.,

President, South Carolina Medical Association.

STATEMENT OF THE SOUTH DAKOTA STATE MEDICAL ASSOCIATION ON H.R. 3920

Mr. Chairman and members of the committee, the South Dakota State Medical Association is a voluntary organization of physicians banded together to improve the general health of the public and to provide services as a group. Our association has been concerned with the health and welfare of the people of South Dakota, to the extent that we have spent much of our time and finances to determine needs and offer solutions to problems that may exist.

These services embrace a physicians placement service, sponsorship of a nonprofit voluntary prepaid health plan, establishment of a fiscal-agent arrangement with the State welfare department to provide medical care to old-age assistance recipients, school health services, advisory services to lay and professional groups, professional education programs, and many others.

In our endeavor to provide services, we have had the opportunity to study and evaluate the needs of the aged in South Dakota, as far as health is concerned. These studies have brought about evidence that the aged have many more resources for financing medical care than previously imagined.

FINANCING HEALTH CARE OF THE AGED IN SOUTH DAKOTA

Census figures indicate approximately 70,000 residents of South Dakota age 65 and over. Of these, 8,000 are on old-age assistance, where they receive cash allowances for housing, clothing, and food and where they have a program of medical care paid for by State and Federal matching funds. If this program for 8,000 people falls short of making comprehensive care available, the various counties are required by law to meet those needs. This group has no need for additional programs-the only improvement would be to make the State program more comprehensive, thus reducing the county portion of the cost.

In South Dakota there are approximately 10,000 veterans of World War I whose average age is 68. The needy veteran has the facilities of Veterans' Administration hospitals available to him when a catastrophe creates the need for such service. The World War I veteran thus has tax-financed medical care available to him-and it must be remembered that he constitutes a substantial segment of our age-65-and-over population.

Another often forgotten group of oldsters receiving health services from tax funds are those who reside in mental hospitals and related State institutions. In South Dakota, this totals 1,000 persons.

The Health Insurance Council, in its most recent figures, indicates that some 49 percent of people 65-and-over in South Dakota maintain some type of prepaid health insurance. We recognize that there are duplications in this area because those who have VA benefits available may also be counted in the insurance figures. However, with the recent rapid increase in prepaid coverage, indications are that 49 percent is probably too low a figure.

Another segment of the over age 65 population that never seems to get much attention is the well-to-do. This is the retired rancher, farmer, business or professional man who doesn't bother to insure and doesn't need the tax-supported programs. He has adequate reserves to meet any contingency. A fair estimate in South Dakota would put as many at this end of the economic scale as there are in the OAA category, or approximately 11 percent.

If these figures are acceptable and we would challenge anyone to produce some that are more acceptable-there appears to be a segment of the total age 65 and over group, constituting somewhere between 6 percent and 13 percent, who may have inadequate financial stature to pay the costs of health care. This group has been the subject of continued study by our association, and we have reached the conclusion that proper implementation of the medical aid to the aged portion of Public Law 86-778 can and should meet the needs of this group.

The South Dakota State Medical Association believes that the person who can meet the usual costs of housing, clothing, and food, but cannot provide for his health care, should have an opportunity, upon proof of need, to obtain care of a kind similar to that which his financially more fortunate brethren are able to procure. With this in mind, we recommended that implementation of the medical aid to the aged portion of Kerr-Mills be done on a prepayment basis. We recognize the problems engendered by this approach but feel that its very definite advantages far surmount the extent and severity of the problems. We therefore recommended that a pilot program be undertaken to prove the efficacy of such a program. A pilot program would serve to give the State a more accurate estimate of those in need of the program, and it would provide experience tables on which to base future appropriations.

THE SOUTH DAKOTA LAW

Our law empowers the State department of public welfare to set up a program to qualify for Federal funds and provides that:

1. A person to be eligible for aid must not be a recipient of old age assistance when he applies, must be unable to pay for medical or remedial care, may have an average annual income up to $1,500, or $1,800 for a married couple, and may have a net worth up to $10,000. If available funds are insufficient, the department may set lower limits on income and resources but may not go above these specified limits.

2. The department is empowered to accept applications and determine eligibility of those who apply. All individuals wishing to do so shall receive an opportunity to apply and assistance is to be furnished with reasonable promptness to those who are eligible.

3. The department may appoint county advisory committees to assist in recommending selection of applicants. Basic intent of this provision is to keep a local flavor to the selection where needs are best known.

4. The welfare department shall contract with Blue Cross and Blue Shield or licensed insurance companies to purchase prepaid health coverage which shall include the following:

Hospitalization up to 30 days per admission in semiprivate or ward accommodations. Said provision includes a $25 deductible clause, outpatient hospital care and services. Physicians' services are available for up to 12 office calls per fiscal year and for medical calls, surgical, and other services in a hospital for up to 30 days per admission. Laboratory, X-ray, and other special procedures are available for up to $100 per fiscal year. The latter procedures are subject to a $10 deductible clause. Physicians must agree in writing to participate in the plan.

5. A provision is made for the insurance company or Blue Cross-Blue Shield Plan to operate without profit or loss. A contingency fund was established not only to take care of the possibility of loss, but to provide services for individuals not on the program whose illness makes them eligible.

6. The usual provisions are included in the law which make it effective simultaneously in all political subdivisions, prohibit payment by the recipient of enrollment fees as a condition of eligibility, reserve the right of the State department of welfare to cancel a contract within 30 days' written notice, provide safeguards against use and disclosure of information concerning applicants for or recipients of assistance, and provide a penalty for fraudulent information given by the applicant.

It is the considered opinion of the South Dakota State Medical Association that this type of implementation fills the gap in services to the various segments of the over age 65 population in our State, thus leaving no demonstrated area of need for legislation of the type of H.R. 3920.

It might be of interest to the committee to note that during the 18-month period of study conducted by the South Dakota Legislative Research Committee and during the legislative hearings, the State received no assistance from Federal authorities on developing an acceptable plan, and received active opposition from the State welfare department.

A news story dated February 8, 1963, indicates the opposition given this program, although all of the criticisms could have been voiced for a year and a half, but were not mentioned until the measure had passed the State house of representatives unanimously. An editorial from the Huron, S. Dak., Daily Plainsman is excerpted to indicate public reaction to that criticism:

"We expected, but were disappointed, to see the State welfare department and its director, Matthew Furze, object to the medical aid to the aged plan that was approved last week in the South Dakota House of Representatives ***.

"The measure, introduced by Representative Ellen Bliss, Republican of Sioux Falls, passed the House by a 74 to 0 vote—a resounding endorsement of the plan. The medical aid proposal has the support of Governor Archie Gubbrud and the South Dakota Medical Society * * *.

"We believe that States can solve the problems of the medical needs of their elderly better without depending on the help of an all-encompassing Federal program such as would be set up under the King-Anderson plan. It is because of this that we hope the Bliss bill will receive full legislative support and that in the next session it will be deemed advisable to expand the medical aid program beyond the pilot program stage ***.

"It would appear that the welfare department is attempting to maneuver the State legislature into disregarding any medical aid plan. This would give the U.S. Senate and House of Representatives further ammunition to push for enactment of King-Anderson and social security deductions for medical aid. As each State fails to pass enabling legislation under Kerr-Mills, the reasons mount for enactment of King-Anderson.

"We hope the legislature evaluates the reasoning of the State welfare department properly and gives the medical aid plan its vote of approval."

On February 11, 1963, a representative of the regional office of the Department of Health, Education, and Welfare spoke to a meeting of the South Dakota joint House-Senate Committee on Health and Welfare, and this meeting gave rise to this news story, carried statewide by Associated Press:

"A medical aid to the aged measure, already given a clean bill of health by the South Dakota House, apparently will have to undergo major surgery before it is acceptable to the Federal Government * * *.

"The measure would establish a pilot program of medical aid to some 1,000near needy persons over 65 who do not qualify for old age assistance payments. "Information gleaned from the pilot study during the next biennium would be used to determine whether the State should embark on a full-scale Kerr-Mills medical aid to the aged program ***.

"Indications that the proposed program might not be acceptable to the Federal Government were contained in a letter to State welfare director, Matthew Furze from Alfred E. Poe of Kansas City, regional representative of the Department of Health, Education, and Welfare.

"Poe, who also attended the meeting, had said in his letter that the South Dakota law does not appear to contain any provisions in conflict with the Federal law.

"But he said that conditions specified in the bill for administration of the plan 'would make it extremely difficult for the State welfare department to develop a plan which would meet the conditions of Federal law for Federal financial participation in payments under the program.'

* *

*

"Poe said that Federal sharing in insurance payments on behalf of assistance recipients is permitted under Federal law.

"However, there are serious, if not insurmountable technical and administrative problems in setting up a plan for medical assistance for the aged exclusively based on an insurance program,' he said.

"Poe said that several State agencies have considered insurance features in medical care plans, but to date there are no approval plans which include such provision.

"It is very difficult to see how a plan based on a contract with an insurance carrier for prepaid insurance could operate to cover every eligible aged individual in the State,' he said.

"Among other things, Poe said that all persons certified as eligible must receive services provided in the plan when the medical need arises, and there can be no exclusion of any financially eligible person from coverage.

"Asked by the Governor whether Poe's remarks ruled out the possibility of a pilot study, the Federal representative replied:

"No. The problem is how to determine eligibility under a pilot study. How the limits would be applied would determine whether or not a pilot program would be possible.' * * *"

Despite this activity by welfare representatives, which tends to bear out some of the editorial thinking of the Huron Daily Plainsman, the bill passed and became law.

On June 14 the plan for South Dakota's unique program was submitted to the regional office of Health, Education, and Welfare for approval.

OPPOSITION TO H.R. 3920

The foregoing discussion of the situation in regard to health care of the aged in South Dakota leads us logically to opposition to H.R. 3920. It has never been demonstrated that a recognizable need exists for this legislation, except to create a "foot in the door" for a more comprehensive health care program.

A representative of South Dakota's Governor, attending the annual conference of State executives in Washington in April, reported to the Governor that he "was impressed with the statement made several times by people very active in the field of aging that there was no real ground swell or local agitation for

some of these programs, but that it was incumbent on all of us to educate the oldsters to their needs."

This type of comment made by people who are active in programs on aging should be considered judiciously by this committee to determine whether or not the basic premise for the bill is erroneous. If the flow of public opinion in favor of the bill must be triggered by Federal employees who want the program, rather than by people who need it, then there is an aura of suspicion created as to just what constitutes a need.

H.R. 3920 should be challenged on several counts:

1. There has been no demonstrated need for it.

2. Figures which attempt to portray need have been embellished with distortions.

3. A plan which uses all income from the employed to give care to the retired cannot be called insurance, when no reserves are created for the person paying into the fund.

4. The persons who are agitating for the bill are being prodded themselves by Government employees who prefer to plan others' lives, rather than allowing them to live their lives as they wish.

5. H.R. 3920 is not actuarily sound, and no juggling of figures can make it so. These, and many other points, should continue to be challenged. Until private initiative has been proved to be a failure, the South Dakota State Medical Association respectfully urges opposition to this proposal.

Mr. Chairman, we appreciate the opportunity to include our statement in the record.

Respectfully submitted.

R. H. HAYES, M.D., President, South Dakota State Medical Association.

STATEMENT OF THE TENNESSEE MEDICAL ASSOCIATION ON H. R. 3920, 88TH CONGRESS

INTRODUCTION

The Tennessee Medical Association represents some 3,000 physicians in Tennessee. It has been in existence since its original organization in May 1830. From its inception the association has diligently worked for the extension of medical knowledge, the advancement of medical science, the maintenance of medical ethics, and the competence of the art of medical practice. It has strived for the elevation of standards of medical education, the enforcement of just laws that have to do with the health and welfare of the people of Tennessee. It has attempted to enlighten and direct public opinion with regard to health and medical care and the promotion of understanding between the public and the medical profession. The association, representing the medical profession in Tennessee, has enabled physicians to render ever-expanding public service in the prevention and cure of disease and in prolonging and adding comfort to life.

HEALTH PROGRAMS INITIATED

The association has helped to initiate State programs which provide health care for medically indigent and near needy people in Tennessee. It works constantly to improve these programs and services. Councils and committees of the association examine State and National medical problems and attempt to aid in their solution. Officers and members of the association confer regularly with officials of the State government and its various agencies, thus resulting in a better understanding of mutual problems that lead toward the settlement of differences, resulting in more efficient and less expensive medical care by physicians for the people of Tennessee.

The Tennessee Medical Association represents approximately 96 percent of the physicians of Tennessee who are actually treating patients. The medical profession of Tennessee is aware of the problems involved in providing needed medical care to persons in low income groups and to the aged and has moved vigorously and effectively toward solutions to these problems.

With this testimony, it is intended to establish that the existing programs in Tennessee obviate the necessity for passage of any further Federal legislation in the area of health care at the present time; particularly such legislation as H.R. 3920, the Hospital Insurance Act of 1963, a bill to which the Tennessee Medical Association is opposed.