layman and not an expert, give real reason to doubt that they meet the requirements which you indicated should be in existence.

I have no desire to labor that point at this time but I think an examination by any intelligent person would bring that reaction. Perhaps this subcommittee will feel it advisable to recommend passage of legislation which would not straitjacket this type of operation. At least, Mr. Chairman, we could bring about a criterion by which we could proceed more objectively.

Senator MCNAMARA. Senator, I am sure you do not intend to imply the conditions are particularly bad here. This is a national problem, and I think you will find the same thing that applies in Washington, D.C., applies pretty generally throughout the country.

Senator RANDOLPH. Senator McNamara, I am sure that is true.

My only experience has been within the District of Columbia and the metropolitan suburban area. We know that those older folk many times must be I don't like to use the word "placed," but these older folk of their own volition and the assistance of others do need these nursing homes. We know that these persons realize that they must have around-the-clock nursing care and many times they are very understanding. When they are in the home of children of theirs, it poses a special problem.

I think this situation needs to be discussed. It is not a question of having someone leave the home of a son or daughter. That son's and daughter's home possesses the sincerest love for that father or mother but the presence of nurses, the care which is necessary to be given to the older person can, frankly, in many, many homes not be carried forward. There is this problem of a third generation involved, and I think the subcommittee is desirous of having expert testimony. Dr. Mattison, yours certainly can be included in that classification on this matter.

Thank you, Mr. Chairman.

Dr. MATTISON. Mr. Chairman, I would like just briefly to say one thing if I may.

Senator MCNAMARA. Certainly.

Dr. MATTISON. About this rehabilitation of some of these clinical patients in nursing homes-again it is an area which has not been sufficiently explored.

In New York State during the past 3 years, the health department and welfare department have cooperated on a series of rehabilitation attempts with a group of welfare patients who were thought to be completely incapacitated. There has been a very happy percentage of those who were brought back to the stage where they could help themselves and be pretty much independent.

Senator MCNAMARA. In your experience you mentioned a 3-year period. Is it not a fact that we probably have two or three times as many so-called nursing homes now than we had even 3 years ago? Are they not increasing in great numbers in most areas of the country? Dr. MATTISON. That it varies tremendously in one part of the country from another. In the part of the country I am familiar with there has not been that degree of increase.

Senator MCNAMARA. I am more familiar with Michigan than any other State and there is a tremendous increase there. It seems like every time I drive around the city I see new nursing homes and new

convalescent homes. It seems to me they are increasing in that area at a tremendous rate. This is probably due to the fact that we have a good many people there who get in retirement a little more than the social security payments because of contracts that have been negotiated between the automobile manufacturers and the automobile employees and such things. Maybe this is bringing about a financial condition where more people can live out their later years in these kinds of places. Some of them are pretty good and some of them are pretty bad.

Thank you very much.

Dr. MATTISON. Thank you, sir.

STATEMENT OF KENNETH WILLIAMSON, ASSOCIATE DIRECTOR, AMERICAN HOSPITAL ASSOCIATION

Senator MCNAMARA. From the American Hospital Association we have Kenneth Williamson, executive director.

Mr. Williamson, we are glad to have you here. I see you have a prepared statement. Would you care to have it printed completely in the record and summarize it for us?

Mr. WILLIAMSON. I would, Senator, if I may.

Senator MCNAMARA. Then it will be published at this point in the record.

(The prepared statement of Mr. Williamson follows:)

PREPARED STATEMENT OF KENNETH WILLIAMSON, AMERICAN HOSPITAL

ASSOCIATION

Mr. Chairman, my name is Kenneth Williamson. I am associate director of the American Hospital Association.

I will not dwell upon the organization of the American Hospital Association, its functions and its purposes, except simply to state that the association includes within its membership in excess of 90 percent of all the general hospital beds in the United States and its territories and approximately 77 percent of all listed hospitals of every type in the United States and its territories.

I appear before this subcommittee today in response to the letter of invitation received from the chairman.

I express our appreciation of this opportunity to participate in these hearings which we understand are to be devoted primarily to gathering information on the conditions and needs of the aging and aged in preparation for a Senate report to be submitted in 1960. The interest of the American Hospital Association in the subject matter of these hearings is of long standing. On June 2, a letter was directed to Senator McNamara in reply to a letter asking for comments and suggestions on a series of questions. At that time, we outlined at some length our concerns with the health needs of aged persons and submitted copies of a number of documents resulting from our studies and efforts.

I shall attempt, therefore, to avoid duplication of the information already submitted to the committee.

It is requested that we deal particularly with four questions pertaining to general areas of activity. I shall discuss these in the order in which they were presented.

A. A SUMMARY DESCRIPTION OF YOUR INTEREST AND WORK IN THE FIELD OF AGED AND AGING

The association was the major advocate of prepaid voluntary health insurance and has encouraged the development of Blue Cross plans on a communitywide basis with the specific purpose of enrolling all segments of the population and continuing the benefits for members throughout their working years and on into retirement. Blue Cross plans now report that close to 3.5 million persons 65 years of age and older are enrolled in these plans.

The association was a sponsor of Federal legislation which resulted in the Hospital Survey and Construction Act to provide matching grants for the construction of health facilities needed by all segments of the population. Within this program the general hospital facilities needed in the care of the aged, as well as facilities for long-term care in chronic disease facilities and in nursing homes, are provided.

The association in 1951 sponsored the organization of the Commission on the Financing of Hospital Care, as an independent study commission, made up of leading citizens from all walks of life to study the financing of hospital care in the United States and to project its recommendations into the future. We believe these studies have given basic guidance to all groups concerned with the financing of hospital care.

The association has participated in a number of other studies directly related to the care of patients with long-term illness. Such studies are concerned not only with the types of facilities needed but the programs of care required and the feasibility of their effectiveness. Long-term illness is, of course, a problem particularly associated with aged persons.

Committees of the association, beginning in 1954, began a series of studies devoted particularly to financing the health care of the aged. The work of the first committee resulted in the association's adopting a position in favor of a program of Federal-State subsidies to assist voluntary programs to meet the increased cost of care. The second committee, after extensive study, completed its work in 1958 and this led to the present policy position of the association, embodied in the principles adopted by our house of delegates in September 1958, attached hereto. This policy, among other things, urges continued exploration of the voluntary approach.

Just during the past year, the association has continued its work in this field. A committee undertook a thorough analysis of the OASDI mechanism as a means of financing the hospital care of retired aged persons. From this, a statement was developed outlining specific advantages and disadvantages we could see in the use of OASDI in financing hospital care of the aged. This report, "An Examination of the Use of the Social Security Mechanism To Meet Hospitalization Costs of the Retired Aged," was approved by our board of trustees and was widely distributed. We believe this is an important educational document to create understanding of the issues involved. I have copies with me for distribution to members of this committee if you desire them.

The board of trustees of the association established an ad hoc committee with leading representatives of the Blue Cross plans and private insurance companies. This committee's mission was to explore the extent to which voluntary health insurance could be extended to provide adequate health coverage for aged persons. The work of this committee, we believe, will stimulate further progress toward a solution.

The association is participating as one of the members of the Joint Council To Improve the Health Care of the Aged. This council provides a forum of exchange of information among its participant members and is intended to encourage research. It has also stimulated interest and activity at the State level that have already resulted in action within local communities.

This association has urged congressional committees to increase Federal expenditures for needed health facilities for the aged. We have expressed particular concern that in undertaking a program of voluntary health insurance for Federal employees and their families, that the Government give real leadership in providing benefits to retirees. We have urged the increased appropriation of funds for research in the health problems of the aged. We have also urged that increased attention be given to the provision of health services for aged public assistance recipients.

This association established a committee which is at work studying the health facility needs and services of aged persons and is developing programs to insure quality of care. We sponsored jointly with the U.S. Public Health Service, a national conference of carefully selected authorities to probe and to suggest sources of action with respect to the care of the chronically ill.

Criteria for measuring the ability of nursing homes to provide at least a minimal level of acceptable care have been developed. These criteria will be used as the basis for a program that ultimately will provide a national list of such facilities.

B. SOME ANALYTICAL EVALUATION OF YOUR ACTIVITIES WITH AN INDICATION OF ADDITIONAL RESPONSIBILITIES YOU MIGHT LOGICALLY UNDERTAKE

The association is continuing its efforts to promote a full utilization of voluntary health insurance approaches to financing the health needs of retired aged persons. We believe it is essential that every effort be made to give voluntary approaches a full opportunity to solve the problem.

We shall continue to exercise every effort in encouraging the provision of health services for the indigent aged. At the present time, there remain a good many States and local communities where government has not assumed its responsibility in meeting the needs of such persons. The lack of financing available for the care of such persons is a serious drain upon the resources of our voluntary hospitals. We believe there will have to be increased State matching in financing the health needs of aged persons who are indigent, certainly if this problem is to be solved.

We believe a great deal more work needs to be done in planning for the particular kinds of facilities needed in the care of the aged and in the organization of the health services required. In addition to participation in numerous studies, we believe hospitals can become a primary force in furthering experimental projects in home care programs and in programs for ambulatory patients. Much thought needs to be given to the use of various programs which will meet the health needs of the aged without concentrating upon hospital and other institutional programs.

It is our belief that an important problem faced by older persons, for example, arises from inadequate housing. We have urged the Congress to proceed with nonprofit programs to stimulate the provision of good housing for the older citizens. It is our intention to urge hospitals to make particular effort in encouraging sponsorship of such needed housing and to develop programs for relating health services to housing needs. Thus, a great many aged persons may be kept out of hospitals, nursing homes, and other institutions.

We believe our association has a responsibility to present its thinking to the Congress on any legislation with respect to the health needs of aged persons. Even though we may not approve of particular legislation under consideration, we believe it is incumbent upon us to advise in those matters where we have special competence and where the Congress has a right to expect us to provide responsible comment. Therefore, we shall continue to study and evaluate carefully legislation dealing with this whole subject. And as we believe we should comment on proposed legislation, so do we feel also a great responsibility to assist in effectuating any legislation so that it might work in the best interests of the people of the country and of hospitals.

C. THE SPECIFIC PROBLEMS OF AGING AS YOU SEE THEM OUT OF YOUR OWN
ORGANIZATIONAL EXPERIENCE

Characteristics of the aged

All of the information available to us points to the fact that retired aged persons face a pressing problem in financing their health care. We know that, by and large, the aged are an economically disadvantaged group. They are particularly hard hit by inflation. They have little opportunity to augment the purchasing power of deflated dollars, and they are a direct economic concern of all families that share in the financial responsibility for their maintenance. A major illness spells exhaustion of savings, perhaps a call for help upon relatives and, in many cases, a resort to public assistance. Ill health is a major cause of destitution among the aged.

The problem is made greater by the fact that retired aged persons require much greater amounts of hospital care than do other groups in the population. By and large, they require these increased amounts of care at a time when their income is greatly reduced. The problem is further complicated by the fact that the cost of care is increasing and is likely to continue to increase for some time on an average of at least 5 percent per year. The overall financial circumstances surrounding hospitals indicate that for the future, the kind and amount of hospital care the aged receive will be directly related to the adequacy of the financing. Hospital care must be paid for by someone. There is no way to dis

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count the cost of care without adding the cost of that discount to someone else's hospital bill.

It has been demonstrated that, by and large, the working population is not able to finance the cost of a major hospitalized illness out of their pockets at the time of illness. The financial solvency of many employed persons, therefore, has been safeguarded by their investing in prepaid health insurance. The same situation is likely to be even more true for the retired aged.

The figures available on income indicate the likelihood that a substantial portion of the retired aged may be unable to purchase out of their current income an insurance program that approaches adequacy.

Possible sources of financing

It has been suggested that this excess cost should be borne by the younger groups who are covered by voluntary health insurance.

Another proposal is that employers pay a substantial part of the premium for their retired workers. This would require such payments not only for the workers but for their spouses. It would require a willingness on the part of management and employee organizations to allocate funds for retirement which might otherwise be used for wage increases or expanded fringe benefits for active employees.

Following out the principle of voluntary health insurance, it seems logical to believe that the individual might provide for this substantially increased financing by advance payments throughout the working years so that the premium during retirement could be substantially reduced. Our studies of this question indicated that the amount of the increase would have to be fairly sizable and a number of other difficulties would be encountered.

The success of voluntary health insurance in meeting this problem will be measured by the extent to which it is able to answer the kinds of questions set forth here. Although there has been a sizable increase in the percentage of aged persons who have some form of voluntary protection, it appears that much of the insurance available to them is inadequate. The resulting burden of the costs of care that is not covered by inadequate insurance may be passed on to hospitals and, therefore, to other patients. This is a matter on which no precise figures are available.

It must be observed that the competitive situation between the nonprofit plans and the private insurance company programs, sharpens the problem. The Blue Cross plans have made great effort to maintain their own membership. However, there is little reason to believe that the Blue Cross plans, for example, can enroll aged persons who, upon retirement, lose their protection under a private insurance contract. Certainly there is no reason to believe that Blue Cross plans can add the increased costs of protecting such persons to the premiums paid by their younger members.

Adequacy of care

A question often posed is the extent to which the aged are failing to receive the care they need. It is impossible to answer this question conclusively.

On the basis of the study and thought we have given to this question, we concluded that a significant number of aged persons are not at present receiving adequate health services. Of the many thousands of aged persons in nursing homes, a great part of them are in facilities which are grossly inadequate to meet their needs and provide neither the nursing care nor the medical supervision necessary. A major cause for this condition is that the payments are insufficient to finance the care they need.

It is repeatedly stated that any program of widespread government financing of hospital care of the aged is likely to result in an increased use of hospital facilities by the aged to an extent which may make facilities unavailable to meet the needs of the rest of the population. Lacking nursing homes and other subsidiary facilities, sufficient neither in number nor quality, the aged will of necessity use general hospitals.

It is also reported that approximately 600,000 OASDI beneficiaries are receiving supplemental income from public assistance funds and that, to a great . extent, the supplement is needed to provide for health services which are beyond the ability of the individuals to purchase from their meager funds.

Students of the problems of old people agree that they are strongly inclined to husband their resources and that they do not wish to burden their families or children with their problems.

It is our belief that there are undoubtedly many old people who do not receive the care which they need.