The physicians of Tennessee respectfully submit that the real issue before this committee is not that of providing necessary medical care for the aged, because this need is being met through already existing programs. The real issue is whether medical care should be rendered for those needing it, or for a compulsory type of socialized care for all Americans. Kerr-Mills is working in Tennessee.

The above are the reasons that the Tennessee Medical Association, comprising some 3,000 physicians, is opposed to the provisions contained in H.R. 3920.

STATEMENT OF THE TEXAS MEDICAL ASSOCIATION ON H.R. 3920

(By Robert Mayo Tenery, M.D.)

I am Dr. Robert Mayo Tenery. I reside in Waxahachie, Tex., where I am engaged in the private practice of surgery. I am submitting this statement as president of the Texas Medical Association.

I will not impose upon this committee to tell you a tall Texas tale about a program which is the biggest, the best, and the most outstanding of all. Nevertheless, we are extremely proud of cooperative efforts by the State of Texas, by our physicians, by hospitals, by Blue Cross-Blue Shield, and by nursing homes to provide an effective program for the needy aged.

Texas is the first State to use the mechanism of voluntary health insurance to implement the Kerr-Mills Act. This unique program is providing extensive benefits to 227,500 needy aged representing more than 30 percent of the entire 65-and-over population of our State.

On the basis of our experience since January 1962, we can highly recommend to you and to other States the principle of voluntary health insurance in implementing the Kerr-Mills Act. It has provided OAA recipients with a program of high quality medical care. These patients enter our hospitals with dignity. They merely present their Blue Cross insurance cards at any hour, day or night, like thousands of others who have purchased coverage for themselves. The use of the principle of health insurance has provided the maximum of professional and scientific freedom. It has permitted the administration of the program by a carrier which has longstanding experience in dealing with physicians and hospitals. And very importantly, it has resulted in more enthusiastic partic ipation by Texas physicians and hospitals. I cannot emphasize the importance of this latter point too strongly. Obviously, it is difficult for any medical program to achieve success without the willing cooperation of physicians and hospitals.

As part of this statement, may I report, too, that Blue Cross-Blue Shield and commercial companies are offering special health insurance policies for the aged, These include both basic and major medical policies, such as the Texas 65 plans and the Senior Texan Service. These programs add up to a significant record of leadership. Texas ranks first among the States in the percentage of the aged who have one or more health insurance policies. An estimated 72 percent of the elderly in Texas are covered by health insurance as compared to the national level of 60 percent.

I would be remiss if I did not thank the House Ways and Means Committee, and other Members of Congress, for helping make possible these accomplishments. Most individuals are aware that the Kerr-Mills Act created an entirely new program, medical assistance to the aged, for those 65 and older who are not on a State's old-age assistance rolls but who do need help in meeting medical care costs. However, some overlook the important fact that the Kerr-Mills Act substantially increased the amount of Federal funds available to the States for initiating new medical care programs for recipients of old-age assistance, or for improving those already in existence. The State of Texas has used this provision to good advantage. Following enactment of the Kerr-Mills Act by Congress in 1960, the Texas Legislature voted the following year to implement the first portion of that act. It established vendor payments for inpatient hospital care, professional services in the hospital, and nursing home care for recipients of old-age assistance. The Texas Department of Public Welfare was designated as the State agency to carry out the program. That agency was authorized to pursue one of three approaches:

First, to administer the program itself in its entirety;

Second, to contract with a fiscal agency which would make direct payments for services rendered; or

Third, to employ the principle of health insurance.

As you know, the Kerr-Mills Act specifically allows the use of Federal and State funds for payment of insurance premiums for medical and other types of remedial care.

State officials and leaders of our State medical and hospital associations agreed to use private health insurance as the instrument to implement the program. After evaluating competitive bids, the State Departmen of Public Welfare awarded he contract to Blue Cross for a premium of $8.68 per month for each OAA recipient. Blue Cross guaranteed that it would not expend more than 3 percent of the total premiums for operational and administrative costs, and that it would make available the remaining 97 percent of each premium dollar for actual hospital, surgical, medical, and radiation benefits. The program was placed into operation on January 1, 1962. Coverage presently is provided for 227,500 recipients of old-age assistance.

The first 18 months of operation has been a real success story. The program is operating efficiently and effectively, and it has been extremely well received by the aged, by their families, by State officials, by physicians, and by hospitals. More than 83,000 hospital admissions, representing approximately 37 percent of the entire OAA caseload, have been recorded during the past year. The average hospital stay of patients has been 92 days. This is 3 days longer than the average stay for patients in general hospitals in our State, but it is 2 days less than had been anticipated in the OAA program. Blue Cross is paying approximately 80 percent of the total hospital bill. The remaining hospital charges have not placed a burden or a hardship upon the patient. In some cases, OAA recipients have additional health insurance policies of their own. Some children and relatives of the aged are willing to pay the remainder, or a part of it. Several local municipalities and counties provide some funds for health services for their needy. In other instances, the hospital itself has been "charging off" the difference between customary charges and benefits provided by Blue Cross.

Texas physicians have been most willing to contribute to this most worthy program. It is significant that almost all of our association members are accepting Blue Shield benefits as payment in full. These insurance payments have represented about 55 percent of the usual and customary fees charged by physicians.

The total cost of hospital and professional services for the first year of operation has been $16 million. Even though more than one-third of the OAA caseload is being hospitalized each year, it is highly comforting that this insurance approach is financially sound, and that expenditures actually have been less than had been anticipated. As a result of the favorable experience during the first year, it was possible to increase benefit schedules paid on behalf of patients, effective January 1 of this year.

A major factor in the success of the Texas program has been its very efficient administration by Blue Cross-Blue Shield.

I mentioned earlier that Blue Cross had guaranteed to the State of Texas that it would administer the program for not more than 3 percent of the total premium. That pledge has been fulfilled. We doubt if any medical program financed by tax moneys can be administered more economically or more effectively.

Texas' comprehensive program also includes nursing home benefits. This phase of the Kerr-Mills program is being administered directly by the State department of public welfare. Payments in the amount of $6 million were made to nursing homes last year. Thus, the total cost to taxpayers was $22 million. Benefits to OAA recipients in Texas is considerably greater than would be available to recipients of social security under the King-Anderson bill. Yet, this proposed legislation would cost Texans an additional $69,300,000 in new taxes the very first year. This evidence corroborates the sound judgment of the 86th Congress in making possible a broad plan of health care for the needy aged who require assistance. It also points up the wisdom of Congress in not permitting the pattern of health care to become rigid by applying an irrevocable, monopolistic system of financing in a field in which great continuing change requires maximum flexibility.

Complimenting our Kerr-Mills program are two fine voluntary health insurance plans which have been especially tailored for the aged. Those plans are underwritten by Blue Cross-Blue Shield and by the Texas-65 Health Insurance

Association. They reflect the great progress which has been made in the past few years in offering good coverage to the elderly at reasonable premiums. In October 1959, Blue Cross conducted a special 1-month promotional campaign to enroll the aged. That campaign was most successful. Since that time, Blue Cross-Blue Shield has intensified its efforts, and it now offers a comprehensive plan of health care benefits prepared exclusively for the aged. This plan, called senior Texan service, offers medical and surgical benefits for a premium of $3.20 a month, and hospital and nursing home services for a monthly premium of $8.75. It is noteworthy that more than 100,000 persons over age 65 have purchased coverage from Blue Cross-Blue Shield.

Just this past month, a special program of low-cost health insurance was introduced to the Texas aged by a group of leading insurance companies. The Texas-65 plan was made possible by the State legislature which authorized companies to pool their resources, and to form a health insurance association. As a public service, 61 companies are underwriting the benefits of two special policies-a basic plan of hospital and medical care with a premium of $9 per month and a program of major medical or catastrophic coverage for a monthly premium of $10.

These plans are available to all residents of Texas 65 years of age and over without physical examination and with no health questions asked. Even those with preexisting illnesses can enroll. After a reasonable waiting period, they can qualify for coverage for a recurrence of those illnesses.

More than 50,000 elderly Texans purchased health insurance policies during the initial enrollment period last month. Fifty-eight percent selected the major medical expense plan. Twenty-six percent chose the basic coverage, while the remaining 17 percent purchased both.

Thus, on the basis of our experience in Texas, voluntary prepayment health insurance is proving to be an effective mechanism for financing health care costs for the aged.

We also are prepared to present documentation that nearly all of the elderly in our State who want and need help in financing health care costs now are receiving it. Shortly after the Kerr-Mills Act was implemented in 1962, Belden Associates, of Dallas, conducted an extensive study of the Texas aged and their attitudes on health care. Belden's survey was concentrated on the aged who are not recipients of the old-age assistance, as well as the younger adults who are associated with them. The study by this independent research firm was particularly significant, inasmuch as it focused attention on the 524,000 remaining aged and their possible needs and desires for medical care.

According to Belden, 23 percent of these aged said that they did without necessities during the previous year because of lack of money. Three percent stated that they did without medicine, 4 percent without medical care, and 1 percent without surgery.

With regard to the attitude of older persons on providing health care needs, 61 percent expressed the view that it was a responsibility which should be borne by the aged person or by the family. Eighteen percent were inclined to lean on the local and State governments for help, while 19 percent indicated that it was the responsibility of the Federal Government.

Younger adults associated with these older people expressed themselves even more forcefully in favor of the principle of individual responsibility. Seventytwo percent felt that the responsibility should be that of the aged person or the family. Only 12 percent expressed the view that it was a local or State respon. sibility, and 14 percent a Federal obligation. Perhaps I should point out that these views were voiced before the OAA program was well established and prior to the introduction of the Texas-65 insurance plan. We believe that there is even less support today for Federal medical programs.

Belden also uncovered factual data on the extremely high percentage of the Texas aged who presently have one or more health insurance policies. Based upon the study findings, and a conservative estimate of changes during the year since the study, an estimated 537,000, representing 72 percent of our entire aged population, now have health insurance coverage. In view of others with sufficient incomes and savings, those who are helped financially by their families and by their children, and those who have expressed the belief that they should take care of themselves, Belden has concluded that there remains approximately 3 percent of all aged Texans who still need and want outside help. Legislative machinery already has been started to assist this small remaining percentage. Earlier this year, the Texas Legislature authorized the submission of a constitutional amendment to the voters of our State in November 1964. This

proposal, if approved, would provide similar vendor payments for those elderly not on old-age assistance who are unable to pay for necessary medical services. This is the second phase, or MAA portion, of the Kerr-Mills Act.

In summary, gentlemen, we feel that significant progress has been made in just a few short years. The State of Texas has an effective, economical program for 227,500 needy aged. Our State leads the Nation in the percentage of the aged who have one or more health insurance policies. The Belden study has shown that almost all aged who need and want help are receiving it, and leg. islative machinery is operating to help those few who still need help.

While supporting highly effective programs, we remain firmly opposed to using tax dollars of Texas employees and their employers to finance medical care for those individuals who are able to pay for it themselves. We vigorously oppose H.R. 3920 because it undermines individual, familial, community, and State responsibilities for health care, and hands it by statute to the Federal Government. We oppose the King-Anderson proposal because it would be a great blow to voluntary health insurance which has filled a great need and which is widely accepted by the people of our State. We oppose this legislation because it is a compulsory program of Government medicare neither wanted nor needed in Texas. Six Texas Congressmen have conducted public opinion polls among their constituents, and they have reported grassroots opposition to social security financed medical care for the aged. This is not surprising at this time when the people are so tax conscious. While all of us are looking forward to the possibility of a reduction in Federal income taxes in 1964, it is estimated that the King-Anderson bills, if enacted, would cost Texans more than $69 million in new taxes the very first year.

Thank you very much for your attention.

UTAH STATE MEDICAL ASSOCIATION,

Salt Lake City, Utah, November 15, 1963.

Hon. WILBUR D. MILLS,

House Office Building,

Washington, D.C.

DEAR MR. MILLS: The Utah State Medical Association respectfully submits the following as written testimony against King-Anderson bill No. 3920 now before your committee:

DOCUMENTATION ON IMPLEMENTATION AND OPERATION OF PAA AND MAA WITHIN THE

STATE

The 1959 session of the Utah Legislature passed a bill enabling Utah to take advantage of the previously passed Federal bill, the Kerr-Mills law. They appropriated $1,250,000 to be used, matched with Federal funds, during the first biennium. The estimate of the Federal share was 64 percent of the estimated total monthly cost.

Between passage of the bill and the date it became effective in Utah, July 1. 1961, the State welfare department, the Medical Service Bureau (Blue Shield), and the Utah State Medical Association negotiated. Due to hesitance on the part of the State welfare department, the benefits were quite limited and there was a deductible clause. As originally set up, the MAA program was administered by the Utah State Medical Association with Blue Shield as the fiscal agent. The same setup was in effect with the PAA program, although they are administered separately.

As effective on July 1, 1961, the eligibility requirements were as follows: (a) Each applicant must be at least 65 years of age.

(b) Each applicant must be a resident of the State of Utah on the date of application.

(c) The net value of liquid assets may not exceed $1,000 for a single applicant or $2,000 for a couple or family.

(d) The net value of other personal and real property may not exceed $10,000 (a home owned and occupied and one necessary automobile are exempt).

(e) The amount of net income may not exceed $110 if the applicant is single, $170 for a couple, or $210 for a three-person family.

Medical services to be paid were limited to the cost of physicians' services and hospitalization. Hospitalization was limited to 30 days.

A deductible factor of $20 per quarter was set on physicians' fees and outpatient hospital services and a $50 deductible factor was placed on inpatient hospitalization.

Rate of payment for hospitalization was set at the Blue Cross rate plus 5 percent, or the actual billing, whichever was less.

During the first 3 months MAA received only 161 applications and only 68 were approved. They paid out in benefits $12,861. Due to this small demand for services, the eligibility requirements were liberalized and the deductibility factors were eliminated.

On March 31, 1962, the State welfare department revoked their agreement with the USMA and took over administration of both PAA and MAA.

In November 1962, 1,200 PAA patients in nursing homes were transferred to MAA. This number has grown to 1,300 in 6 months.

In the period of time since MAA became effective, the benefits have been liberalized considerably, as have the eligibility requirements. They are now as follows:

Eligibility requirements for (a), (b), (c), and (d) are the same as above.

(e) The amount of net income may not exceed $125 if the applicant is single, $200 for a couple, or $210 a three-person family.

Medical services to be paid now include $15 per month for drugs, cost of nursing home care, some medical requisites, dental care, and eye care. Nursing home care is broken down into four categories ranging from $120 to $200 per month plus $10 per month personal expenses. Hospitalization is now limited to 15 days.

The deductibility factor has been eliminated on both physicians' fees and hospitalization.

Rate of payment is now the amount billed by hospitals and 80 percent of Blue Book to physicians.

The MAA program currently gives complete medical coverage to some 18,000, or 30 percent, of Utah's 60,000 persons over 65.

The bulk of the remaining senior citizens are covered as follows: 6,000, PAA; 10,000, covered by Blue Cross-Blue Shield; and 15,000, covered by private insurance carriers. It is interesting to note that the number on PAA or public assistance is declining rapidly. In June of 1961, there were 7,675 recipients under PAA as compared with 5,582 under the same program as of February 1963. During 1962, the number of recipients decreased by 13.4 percent and the expenditures decreased by 15.3 percent. Some of this is attributable to the fact that the broadening social security coverage is being reflected among those now attaining the age of 65 and, as a result, fewer need public assistance.

On the other hand, utilization of the MAA program in Utah is increasing. Approximately 300 persons per month are using the program outside nursing homes and approximately 1,300 nursing home patients have availed themselves of this program. In April 1963, there were 1,750 on the MAA program.

It is extremely interesting to note that roughly 25,000 of the 60,000 persons over 65 in Utah carry either Blue Cross-Blue Shield or some private medical care coverage. In addition, it is to be noted with interest that companies such as Kennecott Copper, which employs some 7,000 people in Utah, and Geneva Steel, a subsidiary of United States Steel which employs a similar number, now include prepaid or health care coverage in their pensions. More and more corporations are including medical coverage as a pension benefit as more and more unions are demanding such coverage in bargaining with employers.

NURSING HOMES

Utah's nursing home situation is presently in very good condition. The council on aging 1960 report listed a total of 127 homes with 2,096 beds available. They listed a need for 918 additional beds. According to Mr. Dalebout of the Utah Nursing Home Association, there are presently 147 homes with 2,895 beds. All but three of these are privately owned. There is one owned by a county, one by a church, and one by a joint county and citizen group. None of Utah's nursing homes are hospital affiliated; however, many have a close working relationship with hospitals. About 95 percent of the beds are occupied. In 1960,