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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, ma 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 whicb 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 care fully 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
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
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.
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 satis-, factory 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 enforce ment. 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 person.. nel 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 approach 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