TENNESSEE'S PROGRAM FOR THE AGED AND VOLUNTARY HEALTH PLANS

The Tennessee Medical Association was one of the first to adopt a service benefit type of voluntary health insurance plan. This plan has been in effect since 1949. In 1961, the association established and put into effect its new Tennessee senior citizens plan covering health protection in the surgical, medical (including diagnostic), radiological, pathological, and anesthesia care for persons 65 years of age and over.

The Tennessee plan provides that participating physicians agree to accept as full payment of fees the amounts listed in the fee schedule of the policies sold by both nonprofit and commercial insurance companies to persons in low income classifications. Presently, 41 such underwriters provide service to more than 14 million persons in Tennessee. Specifically, persons eligible for service benefits are those single individuals whose annual income does not exceed $2,400 and families whose annual income is not more than $4,200 per year. The association's senior citizens plan offers coverage to persons 65 years old and over, with needed health care, whose income for single persons does not exceed $2,500 per year and senior citizens with dependents whose aggregate family income does not exceed $4,000 per year.

Thus, the physicians of Tennessee have taken action to provide a mechanism for persons of modest financial means of all aged groups to prepay a major portion of their medical cost.

The Tennessee Medical Association is and has been active in the guidance of Tennessee's mental health programs, welfare care standards, rural health measures, and rehabilitation services, to mention only a few of the public service projects initiated or sponsored by this association.

The Tennessee Medical Association developed and sponsored in the Tennessee General Assembly the program for hospitalization of medically indigent persons of all ages, which has subsequently been adopted by other States. The program provides that persons determined to be medically indigent by screening committes at the county level are admitted for necessary hospitalization-with the attending physician agreeing to make no charge for services rendered during the period of hospitalization. The hospitals are reimbursed by moneys made up of State and county funds with the individual counties participating on a voluntary basis. Of Tennessee's 95 counties, 93 have elected to participate and the nonparticipating counties have less than 1 percent of the State's population.

TENNESSEE SUPPORTS KERR-MILLS (PUBLIC LAW 86-778)

The Tennessee Medical Association vigorously supported legislation in the Tennessee General Assembly in 1961, to establish funds for implementing the Kerr-Mills law (Public Law 86-778).

Tennessee was one of the first States to implement Public Law 86-778 (KerrMills law) for medical care of the aged. Representatives of the Tennessee Medical Association acted in an advisory capacity to the Governor and State officials in the old-age assistance and medical assistance to the aged programs and have moved forcefully for expansion of these programs since the passage of Public Law 86-778 by Congress in 1960.

MEDICAL ASSISTANCE FOR THE AGED PROGRAM EXPANDED FIVE TIMES

According to the Social Security Bulletin, volume 26, No. 4, at the close of 1962, 32 States had taken legislative action to implement the 1960 amendment to the Social Security Act providing for medical assistance for the aged (MAA).

At the beginning of 1962, all but three of the States were providing vendor payments for the medical care for old-age assistance recipients (OAA) and now all 50 States are making payments.

The medical assistance for the aged program in Tennessee has been in effect since July 1, 1961. Since that date, through the diligent efforts of the Tennessee Medical Association, working closely with State officials, this program has been expanded five times. It is significant to point out that Tennessee physicians voted not to include vendor payments for their services under the program.

The medical assistance for the aged program, at its inception, included(1) Ten days of hospitalization per year.

(2) A limited drug formulary for diabetic and heart patients.

The program was available for persons over 65 years of age who were unable to pay for medical care. A practicing physician was required to certify the patient's need for hospitalization or drugs. A person could not be an inmate of a State mental or TB hospital, and the total income for a single person could not exceed $1,000 or $1,500 per year for married couples. There was also moderate limitations of equity in property for persons to be eligible for coverage. The program required that a person admitted to a hospital under the MAA program would pay the first $100 of the hospital bill; however he could apply toward this any hospitalization insurance he might own

In the first expansion of the program, following constant efforts by members and officials of this association, the program was broadened effective February 1, 1962, in the following manner:

(1) The deductible amount paid by the patient for hospitalization was reduced from $100 to $25;

(2) The value of real estate which an eligible person might own was increased from the $5,000 equity and total value of $7,000 to an $8,000 equity and total value of not more than $10,000; and

(3) The drug formulary was expanded to include tranquilizers.

antibiotics and

The second expansion of the program went into effect July 1, 1962. In this expansion, hospitalization per year was extended from 10 to 15 days. The criteria for hospitalization was broadened to permit a person to be admitted for life-endangering and sight-threatening illnesses.

This was an important expansion in the program. It was stated by the Tennessee Hospital Association that this change could double the number of eligible persons. Any illness which in the opinion of the attending physician and medical review officer is life endangering is now covered in the Tennessee program under MAA. As an example, if two patients over 65 were admitted to a hospital, one with pneumonia and the other with cancer of the breast, the pneumonia would be an acute illness and the patient, therefore, would be covered, but the cancer patient would not qualify for assistance. With this expansion, the cancer patient is now also considered in a life-endangering condition and, therefore, would be covered.

The third expansion became effective December 1, 1962, with the adding of an additional category of service to cover nursing home care up to 90 days in any one year. This was one of the original recommendations made by the Tennessee Medical Association prior to establishing the program. Following this expansion, at the request of the Governor of the State, a consultative committee was named to advise with the Governor and State officials in the continued broadening and administration of the MAA program. As a result, in February 1963, the committee recommended to the Governor the following expansions: (1) To increase income limitations from $1,000 for single persons and $1,500 for married couples over 65, to $1,300 for single persons and $1,800 for married couples.

(2) That the payment for nursing home care be raised from $80 to $150 regardless of illness or condition.

(3) That, upon certification by a physician, an additional 5 days be added to the 15 days allowed for hospitalization.

(4) That a broadened drug formulary be approved.

(5) That the State employ a director for the MAA program, in order that it could be more effectively implemented throughout the State.

As a result of these recommendations, a fourth expansion of the program became effective July 1, 1963. This expansion included:

(1) Further broadening of the drug formulary.

(2) Increased the number of days of hospitalization from 15 to 20 days total provided in any one year.

(3) An increase in nursing home payments based on standard of service. The added nursing home payments represented an increase of as much as 50 percent over previous payments.

Also, under the provisions of the old-age assistance program, the State agreed to

(1) Expand the program to include life-endangering and sight-threatening illnesses.

(2) Provide the same drug formulary for OAA as for MAA recipients. (3) Increase the nursing home payments equal to the MAA program. 27-166-64-pt. 5-17

Representatives of the Tennessee Medical Association met with officials of the State government in mid-September to consider recommendations for broadening the MAA program.

As a result of this most recent meeting, the State of Tennessee agreed to raise income limits for MAA eligibility from $1,000 to $1,300 for single persons and from $1,500 to $1,800 for married couples. The Tennessee Medical Association's recommendation that a director of medical services be appointed was also accepted and this newly created position has been filled.

The above income limit revision went into effect November 1, 1963, and approximately 30,000 additional Tennesseans age 65 and over immediately became potentially eligible for benefits under the MAA program. This increase in potential beneficiaries brings the number to approximately 140,000 Tennesseans estimated, by the welfare department, to be within the income limits for eligibility.

This fifth expansion of the MAA program is by no means the last to be expected. State Welfare Commissioner Roy S. Nicks expressed hope that income limits could be raised again in early 1964 to $1,500 for single persons and $2,000 for married couples which would, in effect, be well above the average yearly income limits of both groups.

With these five expansions in just over 2 years, the Tennessee Medical Association has sought not only to broaden the scope of services provided, but to increase the number of citizens of the State who might qualify for benefits. Although the Tennessee program of medical assistance to the aged is just over 2 years old, over $1 million has been provided to pay cost of hospitalization, nursing home care, and drugs. The 1963-64 fiscal year appropriation was expanded to provide $2 million during the period. For the fiscal year 1964-65, there is allocated $2,500,000.

The combined total cases for the first 24 months of the program for which funds were paid amounted to 14,581 (total of hospital admissions, number of individuals receiving drugs, and number of individuals receiving nursing home care). Indicative of the expansion of the program in Tennessee are figures for the second year of its operation. Total benefits from July 1, 1962, to July 1, 1963, amounted to $783,526.48, more than four times the total distributed during the previous year. Approvals of applications for benefits under MAA increased 114.5 percent in June of 1963 over January of the same year.

In July, August, and September, the latest months for which complete figures are available, 4,700 patients received hospitalization, nursing home care and drugs with benefits totaling $287,024.42. Funds provided by the State of Tennessee, along with matching moneys from the Federal and county governments, will allow expenditures of approximately $170,000 a month during the current fiscal year and approximately $212,000 a month in 1964–65.

Most of the funds expended through the MAA program went for hospitalization. During the fiscal year 1962-63, as an example, hospitalization payments amounted to $658,131.28 compared with $83,942.66 for drugs, and $41.452.54 for nursing home care.

Estimates by the Welfare Department of Tennessee are that 140,000 Tenneseans 65 years of age and over are within the income limitations for eligibility under the State's MAA program. Applications totaling 14,783 had been approved at the end of September, for persons qualifying under MAA provisions. The number of days for hospitalization of eligible patients during the first 24 months of the program totaled 36.179'; drug prescriptions filled totaled 18,414; and the program provided some 18,084 days of nursing home care.

In addition to these benefits to recipients of MAA, the old-age assistance (OAA) program in Tennessee provided hospitalization for 9,405 patients, costing $838,473.77 during 1962. Also, 16,378 patients were provided nursing home care costing $210,864.88. The total number of recipients of OAA in Tennessee in 1962 was an average of 50,638 persons per month, and the total program cost was $27,649,848.50.

ADMINISTRATIVE COSTS

Statements have been made by proponents of H.R. 3920 that the MAA program in Tennessee is costing approximately 60 cents in administrative costs for each dollar paid in benefits. This is not true.

During the initial fiscal year of the MAA program (1961-62), administrative costs did reach this proportion. This is understandable since some 20 additional

employees were added to the welfare department for handling the program, plus the additional costs of setting up an entirely new program. The figure for the fiscal year 1962-63, the second year in which the program was in operation, was 27 cents, a reduction of 55 percent.

Commissioner of Welfare Roy S. Nicks has stated that the dollar cost per dollar benefit type of comparison is not valid, since the MAA program will always have a great many more people certified for benefits than will actually require or receive them. Thus, the cost of administration based on recipients' benefits only is a false one. The administrative cost of caseworkers who screen, investigate, and certify thousands of applications yearly plus the administrative cost of maintaining thousands of previously certified persons, who have not required aid but must be carried on the program, is not taken into consideration.

Commissioner Nicks has stated that the MAA program in Tennessee has the lowest cost per case per month, which is the accounting method used for the four other programs (old-age assistance, aid to families with dependent children, aid to the blind, and aid to the disabled), administered by his department. In comparison, the aid to families with dependent children program cost 112 percent more to administer than did the MAA program for the first 6 months of 1963. It is also noteworthy that the Department of Health, Education, and Welfare does not issue cost per month per case figures for MAA as they do for the other categories, with the explanation that these figures would have little value.

ASSISTANCE TO THE AGED IN OTHER AREAS

This association has devoted time and effort to other phases of care for the aged in Tennessee. It has been instrumental in establishing the Tennessee Council on Aging which is a separate organization made up of 25 organizations working with aged persons. Housing, recreation, and rehabilitation are examples of the program in which the council is engaged. The principal work and purposes of the Tennessee Council on Aging are to identify and analyze the health, social, and economic needs of Tennessee's aging, to appraise available resources for the aged, to suggest programs to improve the well-being of the aged, and to stimulate interested organizations and agencies to implement such programs. In addition, through the efforts of the Tennessee Medical Association and the Tennessee Council on Aging, the Governor of the State established a Governor's Committee on Aging. As an outgrowth of this, in 1963 the Tennessee General Assembly established a Commission on Aging, which is now an integral part of the State government.

Supplementing the health care programs previously listed, there are others including those offered by: (1) The Veterans' Administration; (2) the State government, through its mental and tuberculosis hospitals-the latter which also admit nontuberculous indigent patients suffering from chronic chest diseases; (3) city and county governments, through their hospital and clinic services; and (4) numerous private and teaching hospitals in Tennessee, which provide inpatient and outpatient clinical services to needy persons.

These examples of services establish that adequate facilities are available in Tennessee to provide medical care to those who need it. The Tennessee Medical Association has been effective in seeing that medical care is available regardless of the ability of a person to pay for such care.

ECONOMIC STATUS OF THE AGED

The 1960 census reported there were 301,031 persons age 65 or over in Tennessee. The average income for single persons over 65 was $639 per year. The 1960 census also reported 94,442 husband-wife families with the head of the family 65 years of age or over. The average income for all these families was $1,969. Fifty-one percent of this group have incomes of less than $2,000 per year; 66 percent have incomes of less than $3,000 per year; and 10 percent haye incomes of over $7,000 per year.1

According to the Social Security Office in Nashville, Tenn., at the end of December 1962, there were approximately 235,000 aged Tennesseans drawing social security benefits totaling $13,984,293 per month.

1 Social Security Bulletin, vol. 26, No. 1, p. 4, table 1.

SPECIFIC OBJECTIONS TO H.R. 3920

It is entirely consistent with these facts that the Tennessee Medical Association vigorously opposes the passage of H.R. 3920. The bill (H.R. 3920) would change the social security philosophy to include the provisions of "health services" along with cash payments. From the beginning of these "services" standards must be established and the bill outlines specific standards and gives the Secretary of Health, Education, and Welfare the power to enunciate and enforce any additional standards that he deems necessary. Proposals which would create a system of compulsory health care for one segment of our population, with benefits provided irrespective of need, must be recognized as one to initiate socialized medicine in the United States.

It is estimated that Tennessee taxpayers will be forced to pay $21 million more taxes the first year alone if the King-Anderson bill (H.R. 3920) is enacted by the Congress.

Tennessee workers now earning $4,800 or more a year are paying $174 in social security taxes. An additional social security tax increase is already scheduled to go into effect in 1966, and another in 1968, which will further boost their payroll deduction to $222. Tennessee workers paid $146,200,000 in social security taxes in 1961 and will pay $198,800,000 in 1965 under the present law. If H.R. 3920 becomes law, and goes into effect by 1965, Tennessee workers will be compelled to pay $216.700,000 in social security taxes. The Tennessee Medical Association is opposed to this proposal as it is staggeringly costly since it provides benefits for all persons over 65, regardless of financial status. The heavy tax will fall on those persons least able to pay.

By providing limited, standardized, across-the-board benefits, H.R. 3920 would ignore the great variety of individual needs in the wide range of State and local situations. It would undersupply both the medical and financial needs of those aged who are most in need of help. As an example, H.R. 3920 provides nursing home care if the nursing home of the patient's choice is an "eligible provider." To qualify as an "eligible provider" the nursing home must be affiliated with, or under common control of, a hospital which has a signed agreement with the Federal Government. Tennessee currently has 172 licensed nursing homes providing skilled nursing care, plus 77 homes for the aged. Of these, only eight are affiliated with, or under control of, a hospital. The maximum number of nursing homes that could be utilized under the proposed bill, in Tennessee, would be eight.

By giving the Federal Government major responsibility for the health care of nonneedy persons-and providing services rather than cash benefits—the social security financed type of plan would radically alter the fundamental concept of social security. It would open the way for expansions which would continually add to the tax burden of our working population.

The Hospital Insurance Act of 1963 is unnecessary because there are already existing mechanisms-voluntary, flexible, and dovetailing together-which can do the job more efficiently. more economically, and in a manner more fitting to the American tradition and viewpoint.

Even though the aged population of the United States has increased 5% million since 1950, the percentage of the aged population receiving OAA benefits has dropped from 22.8 percent in 1950 to 12.3 percent in 1963.

SUMMARY

Physician members of the Tennessee Medical Association are opposed to H.R 3920 because

(1) It is totally unnecessary. The Kerr-Mills law (Public Law 86-778) will do the job.

(2) The proposed law would mean poorer-not better health care for the aged.

(3) It would lead to the decline, if not the end, of private health insurance which has made such great strides in recent years.

(4) It would mushroom into compulsory national health insurance for every American. What would start out as socialized medicine for the aged would eventually become socialized medicine for every man, woman, and child in this country.

(5) It would be staggeringly expensive. Social security taxes are already scheduled to reach 94 percent of payroll in 1969. This would increase them further. It is well to remember that such bills as these are irreversible in nature. The tendency is to expand them-never to contract them.