STATEMENT OF DR. RALPH S. EMERSON, NASSAU COUNTY (N.Y.) PHYSICIANS'

GUILD

My name is Ralph Emerson. I am a physician residing in Roslyn Heights, Long Island, N.Y.-the heart of Nassau County, one of the Nation's fastest growing population centers. I am appearing today on behalf of the Nassau County Physicians Guild, an organization comprising some 1,000 doctors.

I should like to indicate, very briefly, the basic reasons for our opposition to the legislation currently under consideration and to offer some alternative suggestions.

First, we oppose the King-Anderson bill (and the entire concept known popularly as medicare or hospicare) because

(1) The tax provisions are fiscally unsound and burdensome;

(2) It would lead to Government control of hospitals and of the practice of medicine;

(3) It would be unwieldy to administer;

(4) There is a decreasing need each year with the rapidly growing voluntary insurance covering a larger percentage of those in the over-65 group;

(5) Present voluntary insurance programs have personnel who are trained in this highly technical field, and who are better able to administer them than would be the personnel of any newly created Government agency;

(6) The proposal would encompass those who are not in need, at the expense of the taxpayers and of our youth;

(7) It would prohibit free choice of hospitals and freedom of the patient to choose his own physician;

(8) It would be compulsory;

(9) Countries which have had experience with nationalized health care are experiencing difficulties and becoming disenchanted with their programs. I respectfully suggest a reference to U.S. News & World Report magazine for November 4, 1963, pages 63-66, for the latest report.

Secondly, we believe firmly that voluntary insurance plans can provide the necessary protection. However, the Government can enlarge the scope of its present program in the following beneficial ways

(1) Improve Kerr-Mills by liberalizing the restrictive provisions relating to beneficiaries of K-M funds;

(2) Provide for administration by the Health Department instead of the Department of Social Welfare;

(3) Utilize Kerr-Mills funds to purchase basic hospital-medical insurance coverage for those who meet the law's requirements;

(4) Revise IRS regulations to allow a tax credit where the aged, a dependent, or an employer purchases insurance coverage for individuals 65 years of age and over.

A COMMUNITY SURVEY OF HOSPITAL COSTS FOR RENVILLE COUNTY HOSPITAL, OLIVIA, MINN., FOR MEDICAL CARE TO PATIENTS OVER 65 YEARS OF AGE DURING 1960–62, TO JULY 1, 1963

(By J. A. Cosgriff, M.D., president, Renville County Hospital staff, and Miss Helen A. Gorman, R.N., Renville County Hospital Administrator)

With the cooperation of members of the medical staff and the administrator of Renville County Hospital, Olivia, Minn., a study was made of the costs of medical care to those patients over the age of 65 years who were hospitalized in this typical community hospital during 1960, 1961, 1962, and to July 1, 1963. Ours is a general hospital of 41 beds and 10 bassinets, located in an agricultural community of west-central Minnesota. The majority of patients treated are residents of Renville County.

This information is provided for consideration in the current discussions concerning financing the costs of hospital care for the aged. We believe that our own data furnish a sound basis for the conclusion that this particular problem is being well met under existing circumstances. They indicate also the fact that each year more and more elderly patients are obtaining some type of hospital insurance protection. Members of our medical staff know of no individual in this area who is not receiving proper medical or hospital care because of financial inability to pay for such care.

The data now presented summarize the findings of our study of those patients receiving care in the Renville County Hospital.

DEAR CONGRESSMAN DEROUNIAN: As a member of the House Ways and Means Committee, I am writing to respectfully request that you consider opposition to all medicare legislation, particularly the one that you are considering at this time known as the King-Anderson bill. I would also appreciate your including this letter and supplement in the testimony of your committee.

My opposition to this bill is based on the following:

1. It is compulsory.

2. The cost of the program would be increasingly great. 3. The proposed bill is discriminatory.

4. It is not based on need.

5. There is no need for any such legislation.

6. Most of our senior citizens don't want the program.

7. The legislation is extremely dangerous.

8. Even if the principles of the King-Anderson bill were good, which is not true, it would still be bad legislation because in spite of the terrific cost of the program as outlined it would provide only approximately 25 percent of the health needs of those it seeks to help.

Enclosed with this letter is a supplement which is an explanation of the points taken above concerning the opposition to this legislation.

I realize that your time is extremely busy and I appreciate this opportunity to present my views. Your consideration will be appreciated.

Sincerely,

C. E. BOYD, M.D.

EXPLANATION OF POINTS OF OPPOSITION

1. The King-Anderson bill is compulsory. This is against basic American principles. It would force everyone who pays social security to provide certain financial benefits for a smaller group of individuals. Would ultimately lead to the control of the practice of medicine by a bureaucratic central government. In spite of what the bill says, it is well known by even grammar school children that what one pays for, one controls.

2. The cost of the program would be increasingly great. Expert testimony before the House and Ways and Means Committee on July 31, 1961, estimated that it would cost $1.4 to $2.5 billion the first year. England's health care program cost nearly five times its original estimate. This fact is seen in the London Evening News of March 15, 1963. On an individual basis, it is shown that workers making $5,200 a year would pay an increase of $27.50 on their social security taxes the first year and the employer would pay a like amount, or a total of $55 per year. This is just the first year. Five times this would be a sizable sum, which far exceeds the average being spent by those over 65 for all medical needs at this time.

3. The proposed act is discriminatory. It provides benefits for those over 65 under social security and nothing for those under 65 or for those who might not happen to be under compulsory social security. It is further discriminatory in that the young workers are paying an increased tax to take care of everyone who would like to avail themselves of the benefit after age 65 under social security.

4. The proposed bill is not based on need. A millionaire under social security would be just as entitled to the benefits as a pauper.

5. There is absolutely no need for such legislation. This Nation enjoys better health than any comparable group in all the world in spite of anything which all the do-gooders, socialists, or Communists have to say. You are aware that all of these groups are for compulsory health care. The records are replete with such testimony. Former Congressman Forand, who introduced a similar piece of legislation several years ago, stated in 1961: "If we can only break through and get our foot inside the door, then we can expand the program after that." An extensive appraisal of foreign programs was made in 1962 by Helmut Schoeck, Ph. D. The title of his book is "Financing Medical Care." An impartial appraisal of the world system shows that the present system of the United States of America, is far better than any other, regardless of all propaganda to the contrary.

6. The majority of our senior citizens don't want the program. There is a very loud and rancorous minority who are for it and I concede them their right under our free enterprise system. However, I wonder how long a free enterprise system can exist when those who are enjoying its benefits are doing everything they can to destroy it?

7. The King-Anderson bill is extremely dangerous legislation. As pointed out previously, the initial cost is only a fraction of what the ultimate cost would be. This supposition is borne out by the history of the cost of similar plans in foreign countries and is clearly pointed out in Dr. Schoeck's book previously referred to. It is likewise dangerous due to the fact that social security taxes would be so increased that it would materially affect the cost of living decrease the purchasing power of the young people, and increase the cost of living. It is foolish to assume that any competitive business can stand an increase in taxes without passing this cost on to the consumer.

HARVEY J. DWORKEN, M.D., Cleveland Heights, Ohio, November 19, 1963.

Hon. WILBUR D. MILLS,
House Office Building,
Washington, D.C.

DEAR CONGRESSMAN MILLS: At the suggestion of Mr. Leo H. Irwin, I am submitting herewith a statement to the Committee on Ways and Means on the subject of medical care for the aged. I am sorry that my request for an appearance before the committee was received too late for consideration. The press release was not printed locally until the day following the deadline set by the chairman. My statement follows:

My name is Harvey Joseph Dworken. I am a resident of Cleveland Heights, Ohio, and have been engaged in the private practice of medicine in that com

munity since 1952. I am an active member of the Academy of Medicine of Cleveland, the Ohio State Medical Association, the American Medical Association, the American College of Physicians (fellow), and the American Gastroenterological Association. I hold the rank of assistant professor of medicine at Western Reserve University, and have been certified by the American Board of Internal Medicine and the Subspecialty Board in Gastroenterology.

My interest in the problem of medical care for the aged stems largely from serious health-care difficulties which I have encountered in my own practice and as a physician in charge of the gastrointestinal clinic at the University Hospitals, Cleveland.

(1) Despite claims to the contrary, many elderly persons are covered by various health insurance policies which are completely inadequate to meet the high costs of hospital care today. Many carry no health insurance whatever and are unable to do so because of its high cost. When hospitalized, these patients and their families often face seizure of their homes and property to pay their medical debts.

(2) Those elderly persons fortunate enough to carry a Blue Cross policy, whose coverage for hospital care is excellent in this community, are constantly faced with increasing premium costs. These have risen 33 percent in the last 3 years, and will doubtless continue to rise, while the income of pensioners remains fixed in most cases.

(3) The Kerr-Mills law does not operate in this State. Instead, Ohio has an aid for the aged law which requires an oath of penury as well as transfer of lien rights to the State. Moreover, the committee is well aware of the fact that Kerr-Mills coverage is most uneven, and in many States is totally inadequate to cover the needs of serious illness.

(4) Blue Cross has shown itself to be an utter failure in providing an acceptable contract for the aged. At present, the insured over 65 receives the poorest coverage at the highest cost, and has no guarantee against rising premiums.

(5) The provisions of the King-Anderson bill are admirable in terms of coverage and equality throughout the country, as well as financing through the Social Security Administration. The major objection to this bill is the fact that it would establish a large, complicated agency which would, in truth, be largely duplicating a function now carried on quite well by Blue Cross offices in many cities.

(6) I believe that the ideal solution for Americans age 65 and over would be the provision of a fixed-premium insurance, covering all hospital and nursing home expenses uniformly in all 50 States. The premium would be one which a pensioner could afford, and the program could be administered by Blue Cross or any equally reputable private company providing such insurance. Whatever amounts these companies lose on this program, could be repaid them by the Federal Government. Finances for this reinsurance project could be obtained through predictable increases in social security taxes. This program would, with one sweep, solve the problem of providing medical care for the aged, using independent insurance companies to the best of their abilities, avoiding the problem of increasing Federal complexity, and providing for adequate financing as costs of medical care rise.

I wish to thank you and the members of the committee for giving their consideration to this statement.

Very sincerely yours,

HARVEY J. DWORKEN, M.D.

AN ANALYSIS OF HOSPITAL AND MEDICAL INSURANCE AVAILABLE TO PERSONS OVER 65-PRIVATE SECTOR

(By Dr. Paul E. Hanchett, Chicago, Ill.)

HOSPITAL INSURANCE FOR SENIOR CITIZENS

Over recent years the costs of hospitalization and medical care have escalated more rapidly than any other major class of expenditure for the general population of the United States including persons over 65. A pertinent example is the recent elevation in rates for the complete package of Continental Casualty Co.'s golden 65 plan from $21 to $25.50 per month. A letter from this company to all policyholders explains that medical costs have risen 31 percent since inception of the plan and that, consequently, a rate increase of 28 percent has become

mandatory in order to make the plan self-sustaining. Similar experience has been reflected in intercompany pools in Connecticut (Wall Street Journal, Dec. 30, 1963). And from the hedging operations that have been evident in New York and the other State pools, it seems quite probable that we may expect similar increases there.

But inordinate levels of premium costs are not the only problem.

All proposals for medical care have to be judged in terms of two mutually determining factors, cost and coverage. It is a simple matter to provide insurance at any particular level of cost by shrinking the effective coverage or to provide any particular pattern of coverage irrespective of the cost. The real trick is to produce an adequate coverage within the bounds of reasonable cost. It seems very clear that this has not yet been done. In fact it seems quite doubtful whether on a profitmaking and acturially sound basis, it even can be done. The attempts of the insurance industry to resolve this dilemma have moved along two main lines:

1. Offering of policies issued subject to the limitations of medical requirements (frequently referred to as senior citizen plans).

2. Guaranteed-isue plans offered only during open enrollment periods, without regard to the applicant's medical history.

Policies issued under the first approach must necessarily be restricted. This is because in order to put them on an actuarially sound basis it has been necessary to put severe limitations on the maximum claims that might have to be paid in the aggregate. Explicit limitations that are practically universal include

(a) Number of days of hospital confinement (30 to 120).

(b) Miscellaneous hospital benefits ($50 to $200).

(c) Maximum surgical schedule ($100 to $500).

(d) Specified underwriting requirements including :
1. Exclusion of preexisting conditions;

2. Frequent declinations on the basis of individual medical history.

(e) Waiting periods before initiation of benefits.

(f) A deductible feature (between $0 and $50) to limit the cost to the buyer and to restrict the use of medical care to more serious illness.

(g) In-hospital benefits only.

A low-cost policy (under this type of coverage) for a married couple both at age 65-limited to $15 per day, $45 days maximum hospital benefit, $145 miscellaneous benefit, and $400 maximum surgical-would be $104.70 per person per year with no deductible (table I). To this would have to be added the purchase of some catastrophic expense plan.

Unfortunately none of the 10 major life underwriting companies in the United States yet offers such a plan to persons aged 65 and older (table II). But such plans can be obtained from a few other companies limited to a maximum benefit of (say) $5,000 with a 20-percent coinsurance factor and a deductible of between $50 and $500. The cost per person per year for such plans would range between $90 and $210 (Tables III, IV).

Thus the annual cost to a married couple insured at age 65 under this first first type of program would range from a minimum of about $415.40 to $629.40. This would be only the cost of insurance, however. Total medical expenditure would be higher by the amount of deductible expenses, coinsurance requirements, and the numerous expenditures that are totally excluded from the insurance coverage. Thus there would be very substantial hidden costs in addition to the explicit insurance premiums.

All of these plans have the prerequisite of a medical examination for all applicants, a structure of rates that depends upon entrance age, and sales commissions paid to agents (who thus may stand ready to render claims assistance and other services). In the past few years, the insurance industry has evolved a radically different approach which to date has taken either of the following two forms:

1. The intercompany pool (as in New York, Connecticut, Massachusetts, Texas, California).

2. The guaranteed-issue open enrollment plans (such as Continental Casualty Co.'s golden 65 plan).