Unfortunately, also, no precise measurement exists of the effect of illness costs upon aged persons and their families. The extent to which health insurance meets their needs and the extent to which the shortcomings of the insurance require supplemental financing is not known and neither is the source of the supplemental financing.

Two sources have been suggested: the adult children and such capital assets as the aged themselves may have. Since, by and large, the working members of the population are unable to finance their own health needs out of their current income except through insurance, it is not likely that they would be able to finance the health needs of old parents out of their current income.

As to the capital assets of older persons for a large part of the population, the major asset is a home. Disposal of the home, we believe, is a socially unacceptable means of defraying health care costs.

The means test approach

A suggestion has been made that the problem of that portion of the aged population which may suffer hardship could be handled by expanding public assistance approaches and by possibly even easing the definitions of eligibility so as to include a larger number of aged persons. To force aged persons into a state of indigency as a basis for their receiving health care is unacceptable. Without doubt there will always be a portion of the aged who will become indigent and for them a means test will undoubtedly continue to be necessary. We see no justification, however, in an approach which would increase the proportion of the aged who would have to be subject to a means test in order to receive health care.

State and local action

Present indications are that Government will have to finance the costs of care for increasing numbers of the aged, either through public assistance out of the general tax funds, or through some other means.

With respect to public assistance, the extent of the financing presently provided in areas where the payments approach adequacy indicates clearly that the vast majority of the States would have to increase this financing very substantially. It is apparently impossible to fully document the ability or the willingness of States and local communities to undertake sizable increased financial burdens at least on a nationwide basis. The economic interdependence of States and communities in this country and their varying economic abilities, as well as the broad reach of the Federal Government's taxing power, must be considered. We concluded, therefore, that the Federal Government would have to increase its participation in the financing of facilities needed, in the education of personnel needed, and, as far as we can see, in the financing of the health care provided to aged persons.

Summary

1. By and large, the aged face serious difficulties in providing adequate financing of their health needs.

2. The financing of care in hospitals and in nursing homes may be quite different from the problem of financing the cost of physician services.

3. With rising hospital costs, it is becoming increasingly difficult for hospitals to pass on to other patients the costs of care rendered to aged persons.

4. The extent of the care required by aged persons demand substantially additional financing.

5. The source of the additional financing required remains the basic question. 6. It seems clear that the problem will grow as the numbers of aged persons increase, as inflation reduces the value of their income, as costs of health care increase, and as the total need for services continues to increase.

7. Voluntary health insurance faces great difficulties in meeting this problem. The extent of its ability to overcome these difficulties needs further careful appraisal.

8. The goal should be to develop a program which will keep individuals in their old age financially self-sufficient rather than to drive them into a state of indigency because of their health needs.

9. The financial solvency of the aged is of great importance to hospitals and the whole community.

10. The continued and increased support of voluntary health insurance by the working population must be encouraged and no program for meeting the health needs of the aged which harms voluntary health insurance is a satisfactory answer.

11. To the extent that Government financing is needed for a satisfactory solution, the Federal Government will have to participate in such financing.

D. THE RELATIVE RESPONSIBILITIES OF VOLUNTARY GROUPS, LOCAL COMMUNITIES, THE STATE AND FEDERAL GOVERNMENT IN MEETING THESE SPECIFIC PROBLEMS AS YOU HAVE OUTLINED THEM

It is difficult, if not impossible, to disassociate the health needs of aged persons from their other needs. We believe the problem is such that it cannot be satisfactorily solved except by the participation of all concerned. It will re quire the attention and energy of the individual and his family, the local community, all of the various voluntary agencies, and of government-local, State, and Federal. There are numerous activities which can be undertaken at the local community level which can have an important effect upon reducing the need of aged persons for care in hospitals and other institutions.

We believe the voluntary agencies and organizations in the health field can and must do even more than they are doing at present to provide for the health needs of aged persons. Voluntary health insurance organizations are increasing the numbers of aged persons to whom they offer protection. Certain of them are also increasing the scope of the protection offered. Various procedures used by organizations providing voluntary health insurance, and which frustrate the aged persons' attempts to obtain health protection, should ve eliminated as far as possible. There is also evidence of some increased participation of employers in the cost of health insurance for retirees. We believe all such efforts should be encouraged and assisted.

Hospitals must increase their efforts to make available services to aged persons as ambulatory patients and their efforts to provide the care needed so that it may be less costly than acute general hospital care.

Efforts by hospitals and by others to provide nursing home facilities are essential. Great effort must be made to increase the level of the quality of care rendered so that aged persons entering facilities called nursing homes may be assured basic health services. The States have real responsibility to improve the standards for nursing homes and to strengthen their enforcement. A differentiation should be made between purely custodial institutions and health care facilities.

Increased participation on the part of Government is necessary if the problems of aged persons are to be dealt with satisfactorily. With respect to the health field, we would not suggest at all that Government take over completely. We believe Government should participate and that participation should be devised so as to encourage rather than stifle voluntary efforts. We believe that the facility needs of aged persons for acute hospital care, for nursing home care, for care in chronic disease facilities, and for necessary housing, cannot be provided for without the participation of the Federal Government. Substantial increase in Federal funds is needed through grants-in-aid and through the provision of long-term, low-interest loans.

We have concluded that the Federal Government will have to participate with State Governments in financing the costs of education of nursing personnel needed for the future. The situation is such that we are not likely to see an increase in the number of schools of nursing needed unless the financing of such education is borne by the whole community rather than by hospital patients. In large measure, the increased health personnel needed will be necessary for the care of aged persons. This situation applies to other groups of health personnel as well as to nurses.

It is essential that there be increased public funds to pay for the care of indigent aged persons in most States.

We have concluded that it is not likely that the problem of financing the health care needs of the aged population as a whole can be met satisfactorily without the participation of the Federal Government. We have explored a variety of approaches by which the Federal Government might arrange its participation but we have not as yet found any satisfactory answer to the problems involved. Though there has been a great deal of discussion as to the use of social security for the direct purchase of care, thought should be given both to other possible uses of the social security mechanism and also to ways and means by which the Federal Government might participate in financing the hospital needs of retired aged persons without resort to the use of the social security mechanism.

Mr. Chairman, as I consider the overall problem of aged persons, I believe there are two fundamental issues to be considered. The first of these is the very difficult question as to the basic validity of earmarking 65 as the date when an individual is said to become "aged." As I heard recently, there is no

wondrous magic that takes place during the night when an individual passes from age 64 to age 65 that makes him a different sort of person. What is the basis today of keying retirement to age 65? Do not the facts indicate that, by and large, the retirement age now averages 68 years of age?

There is evidence that the sharp rise in the use of health services by aged persons is more closely associated with retirement than the age 65. If employers could be persuaded to lengthen the work years, that might in itself help materially in reducing the problem of health needs of the aged.

The second basic question is what can be done to develop a whole new basis of acceptance of the retired aged person. What can we do, in a society which measures the worth of every individual in relation to his ability to produce, to foster acceptance of retirement and the years of nonproduction as also being worthwhile?

We appreciate this opportunity to express our views before this subcommittee on a matter which we feel is of primary importance. We are confident that the work of this subcommittee will contribute greatly toward a better understanding of the problem and toward development of solutions.

STATEMENT OF THE AMERICAN HOSPITAL ASSOCIATION WITH RESPECT TO MEETING THE HOSPITAL NEEDS OF THE RETIRED AGED ADOPTED BY HOUSE OF DELEGATES, AUGUST 20, 1958

The house of delegates establishes the following policy of the American Hospital Association with respect to meeting the hospital needs of the retired aged, in lieu of all previous actions taken by the American Hospital Association:

1. The American Hospital Association is convinced that retired aged persons face a pressing problem in financing their hospital care.

2. It believes that Federal legislation will be necessary to solve the problem satisfactorily. It has, however, serious misgivings with respect to the use of compulsory health insurance for financing hospital care even for the retired aged. 3. It believes that all possible solutions must be vigorously explored, including methods by which the dangers inherent in the social security approach can be avoided.

4. It believes that every realistic effort should be made to meet the hospital needs of the retired aged promptly through mechanisms utilizing existing systems of voluntary prepayment. It is conceivable, however, that the use of social security to provide the mechanism to assist in the solution of problems of financing these needs may be necessary ultimately.

5. It believes that any legislation developed to provide for Government participation to meet the hospital needs of the retired aged should be so devised as to strengthen the voluntary prepayment systems, and should conform to the following principles:

(a) Legislation designed to provide for the hospital needs of the retired aged should provide essential hospital services and should exclude custodial care provided for nonmedical reasons.

(b) Government participation should be restricted to persons over 65 who are not regularly and substantially employed. The voluntary prepayment system provides a satisfactory mechanism for the coverage of other persons, regardless of age.

(c) Any program in which the Federal Government participates to meet the hospital needs of the nonindigent aged should emphasize individual responsibility and make the application of a means test unnecessary for obtaining benefits.

(d) Such a program should be based on the service benefit principle and should provide benefits sufficiently comprehensive to remove the major economic barriers to hospital care for the retired aged.

(e) Such a program should make benefits available through nonprofit prepayment plans.

(f) Hospitals should be paid fully for the cost of care rendered.

(g) Such a program should not provide services in facilities operated by the Federal Government.

(h) Such a program should provide reasonable criteria to determine the eligibility of hospitals to participate, but the Federal Government should be precluded from interfering in the administration and operation of hospitals providing the services.

D. THE RELATIVE RESPONSIBILITIES OF VOLUNTARY GROUPS, LOCAL THE STATE AND FEDERAL GOVERNMENT IN MEETING THESE SPECIFIC YOU HAVE OUTLINED THEM

It is difficult, if not impossible, to disassociate the health needs sons from their other needs. We believe the problem is such th satisfactorily solved except by the participation of all concerne quire the attention and energy of the individual and his family, munity, all of the various voluntary agencies, and of governmen and Federal. There are numerous activities which can be une local community level which can have an important effect upo need of aged persons for care in hospitals and other institutions.

We believe the voluntary agencies and organizations in can and must do even more than they are doing at present t health needs of aged persons. Voluntary health insurance o increasing the numbers of aged persons to whom they offer į tain of them are also increasing the scope of the protection o procedures used by organizations providing voluntary health which frustrate the aged persons' attempts to obtain health be eliminated as far as possible. There is also evidence of participation of employers in the cost of health insurance believe all such efforts should be encouraged and assisted.

Hospitals must increase their efforts to make available persons as ambulatory patients and their efforts to provid so that it may be less costly than acute general hospital care.

Efforts by hospitals and by others to provide nursing home sential. Great effort must be made to increase the level care rendered so that aged persons entering facilities calle may be assured basic health services. The States have r to improve the standards for nursing homes and to strengt ment. A differentiation should be made between purely cus and health care facilities.

Increased participation on the part of Government is nece lems of aged persons are to be dealt with satisfactorily. W health field, we would not suggest at all that Government tax We believe Government should participate and that particip vised so as to encourage rather than stifle voluntary efforts the facility needs of aged persons for acute hospital care, care, for care in chronic disease facilities, and for necess be provided for without the participation of the Federal stantial increase in Federal funds is needed through grant the provision of long-term, low-interest loans.

We have concluded that the Federal Government will with State Governments in financing the costs of education nel needed for the future. The situation is such that we an increase in the number of schools of nursing needed un such education is borne by the whole community rath patients. In large measure, the increased health perse necessary for the care of aged persons. This situation a; of health personnel as well as to nurses. It is essential that there be increased public funds to Indigent aged persons in most States.

We have concluded that it is not likely that the prot health care needs of the aged population as a whole can without the participation of the Federal Government. variety of approaches by which the Federal Government ticipation but we have not as yet found any satisfactory a involved. Though there has been a great deal of discus social security for the direct purchase of care, thought s other possible uses of the social security mechanism and a by which the Federal Government might participate in needs of retired aged persons without resort to the use mechanisin.

Mr. Chairman, as I consider the overall problem of there are two fundamental issues to be considered. T very difficult question as to the basic validity of earm when an individual is said to become "aged." As I he