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OAA programs

All 50 States and the 4 jurisdictions now have in effect OAA vendor payment medical programs.

Nine States, Guam and Puerto Rico have initiated OAA vendor payment medical programs since enactment of Kerr-Mills. These States are Alabama, Alaska, Arizona, Delaware, Georgia, Kentucky, Mississippi, South Dakota, and Texas.

Twenty-nine States, the District of Columbia and the Virgin Islands have utilized Kerr-Mills to increase coverage and benefits under OAA medical programs they already were operating. They are Arkansas, California, Connecticut, Florida, Hawaii, Idaho, Indiana, Iowa, Louisiana, Maine, Maryland, Michigan, Missouri, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, and Wisconsin.

Twelve States have made no changes in their medical programs for persons on old-age assistance rolls following enactment of the Kerr-Mills law, many of them having had sufficiently broad programs that changes were not considered necessary. In addition, 11 of these States have enacted MAA programs.

In view of this record of implementation, no fairminded person could say that the Kerr-Mills program has been a failure. This is a record of great progress. Number helped

Thousands of needy and near-needy older persons across the Nation are receiving medical, hospital, and nursing home care every day under Kerr-Mills programs.

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With the oldest MAA programs in effect only 2 years, 1 out of 50 aged persons in the United States had received MAA help by September 1962. And the number of aged helped by MAA has increased steadily. According to figures of the Department of Health, Education, and Welfare, 172,736 older persons received MAA benefits costing $34.7 million, an average of $201 an individual, in March 1964. This represented increases of some 70,000 MAA beneficiaries and $11.5 million in benefit costs in comparison with May 1962.32

31

In the first 2 years of the program, almost 350,000 cases had been approved for MAA. Later cumulative totals have not been released, but monthly caseloads have increased consistently; by March 1964, they were over 11⁄2 times the load in September 1962. By September 1962, roughly $323 million had been spent to aid MAA recipients; from October 1962 to March 1964, the next 18 months, about $497 million was spent."

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From these figures, there appears every indication that twice as many of the aged will be helped during MAA's second 2 years and that, by the end of September, over 1 million of the Nation's aged will have received help through MAA since its inception.

In March 1964, nearly 2.2 million aged persons, one out of every eight, were eligible for medical care benefits provided through State old-age assistance programs (Kerr-Mills OAA).4 Almost $38 million a month is being spent to purchase medical services for those OAA recipients in need of such care."

Benefits provided

During the fiscal year ended June 30, 1962, according to the Department of Health, Education, and Welfare, $350.7 million in OAA funds and $194.8 million in MAA funds-over half a billion dollars-were spent in vendor payments for health care.36

30 Table: "Medical assistance for the aged-Number of cases approved and number transferred from other programs, from inception of MAA program through September 1962, by State." Supplied by Division of Medical Care Standards, Bureau of Family Services, Welfare Administration, Health, Education, and Welfare, per Feb. 28, 1963, letter from Thomas B. McKneely, M.D.. Chief, to Mr. James H. Fleming.

31 Welfare in Review, June 1964, Health, Education, and Welfare, Welfare Administration.

32 Social Security Bulletin, August 1963.

33 AMA computation from monthly totals of expenditures in Social Security Bulletins, 1963-64, and from Welfare in Review, June 1964. Data for first 2 years, table, footnote 30.

34 Welfare in Review, June 1964, Health, Education, and Welfare; Welfare Administration.

35 Welfare in Review, June 1964, Health, Education, and Welfare; Welfare Administration.

36 "Public Assistance: Vendor Payments for Medical Care by Type of Service, Fiscal Year Ended June 30, 1962." Bureau of Family Services, Division of Program Statistics and Analysis, Jan. 31, 1963.

About $210 million went for inpatient hospital care, $207 million for nursing home care, $49 million for physicians' services, $47 million for prescribed drugs, $6.3 million for dental care, $17 million for other services, and some $4 million was not identified as to type of service.37

The predominant services in both programs were hospital and nursing home care 34 percent and 33 percent, respectively, of OAA funds, and 48 percent and 47 percent of MAA funds. Physicians' services and prescribed drugs accounted for approximately equal expenditures, about 12.5 percent each of OAA funds, about 2 percent of MAA funds. Dental care accounted for about 2 percent of OAA expenditures, 0.1 percent of MAA expeditures.

American Medical Association's goal for MAA

Although much progress has been made in implementation of Kerr-Mills MAA, the job is not finished. As far as the American Medical Association is concerned, the ultimate goal is that all States have programs to provide comprehensive medical and hospital services to all aged persons who need financial help.

In 1960, the American Medical Association recommended detailed standards for MAA. Basically, these standards call for all near-needy aged persons receiving all medical services they require, regardless of ability to pay. These recommendations stated:

"Medical assistance for the aged [should] not be limited to the group within some fixed income-and-resources level, but should be based on the individual applicant's medical needs and his ability to pay for care without compromising those resources essential to his retaining self-supporting status after completion of treatment.

"In medical assistance for the aged, any type of treatment or facility medically necessary to the individual's care [should] be included in the possible range of assistance, but that aid [should] be provided in meeting only the costs of those services which are beyond the individual's means rather than all treatment costs for each case" 3

Kerr-Mills flexibility

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The flexibility of Kerr-Mills permits individual States to improve their programs as experience shows changes to be desirable. A vast national program under social security would lack this flexibility.

AMA policy

With the purpose of adding to the flexibility and the effectiveness of the MAA program, the AMA Board of Trustees 18 months ago adopted a policy calling for the following changes in the Kerr-Mills law itself: 40

1. Remove the requirement that both medical old age assistance (OAA) and medical assistance for the aged (MAA) programs be administered by the same agency;

2. Provide flexibility in the administration of the income limitations proposed under State law so that a person who experiences a major illness may qualify for benefits if the expense of that illness, in effect, reduces his money income below the maximum provided;

3. Include a provision in the law requiring State administering agencies to seek expert advice from physicians or medical advisory committees; and 4. Make "free choice" of hospital and doctor mandatory under State programs.

Improvements in early MAA programs

A survey made by this association a year ago indicated that, of the first 25 States implementing Kerr-Mills MAA, 17 had already instituted improvements. Fifteen had liberalized eligibility requirements and 16 had increased the benefits available. During the past 12 months, additional improvements have taken place. Some States have improved their programs more than once. In only one State, West Virginia, has there been any cutback.

Kentucky is a good example of a State that started with a modest Kerr-Mills MAA program and has improved it on the basis of experience. Prior to MAA, hospitalization was entirely a local responsibility in Kentucky and the State

37 Ibid.

Ibid.

Supplemental Report of the Council on Medical Service on Public Assistance Medical Care," adopted by the house of delegates, Nov. 30, 1960.

Board of Trustees, American Medical Association, adopted Feb. 2, 1963.

government was entering a new field. Kentucky's initial MAA program provided for only 3 days of hospitalization. It was increased to 6 days after a few months and then later to 10 days, with a "reauthorization" provision for still further hospitalization.

Nursing home care up to 120 days was added in Kentucky on January 1, 1963. On April 1, 1963, other benefits were improved and eligibility requirements were liberalized. The drug list expanded. Physicians' home and office visits were broadened from therapeutic only to include diagnostic, preventive, and rehabilitative services. The annual ceiling on dental payments was removed. The annual income ceilings for eligibility were raised from $1,200 to $1,600 for a single person and from $1,800 to $2,400 for a married couple.

Since initiating an MAA program, Tennessee has raised its income ceiling for eligibility, has increased hospitalization from 10 to 20 days, has added up to 90 days of nursing home care and expanded the list of authorized drugs. New Hamp shire has increased physician's visits (home or office) from 6 to 18 a year, added hospital visits by physicians, increased hospitalization from 7 to 12 days with a provision for extension, and added drugs.

In a July 8, 1963, editorial, "Oregon's Kerr-Mills Experiment," the (Portland) Oregon Journal commented on improvements in that State's MAA program after 2 years of experience:

[From the Oregon Journal]

"OREGON'S KERR-MILLS EXPERIMENT

"Oregon's 2-year experiment with the Kerr-Mills medicare law has produced two results: It has provided care for about 5,000 financial distressed elderly sick individuals, and it also proved that there had been a great overcalculation of the number of persons in Oregon unable to pay all or part of their medical care. When the legislators 2 years ago voted to go in partnership with the Federal Government in the Kerr-Mills law, it was estimated 55,000 might qualify.

"The middle grounders in the bitter debate over what type of Federal medicare program should be enacted have grounds for satisfaction-5,000 Oregon men and women in straitened circumstances have been substantially helped. Those who scoffed that any need existed have been proved wrong. Those who demanded an all-or-nothing approach have been largely silenced.

"Based on the successful Kerr-Mills experiment, a new giant step has just been taken at Salem. Governor Hatfield's experienced committee, which drew up the 1961 regulations, proposed that the 1963 legislators liberalize the rules, since there are obviously fewer to share the benefits than forecast. This was done by the legislature and now the State welfare commission has announced the larger and longer payments. Also, property qualifications have been siguificantly lowered. More persons will be benefited. But the spigot has been opened in a fiscally sound manner.

"Meantime, Congress seems to be getting nowhere with the King-Anderson bill. the so-called administration measure. How wise it was for Oregon to experiment, along with many other States, with the moderate Kerr-Mills law. It is obvious that, when the final Federal medicare statute is written, there will be much solid evidence obtained from experiments in Oregon and sister States on which to base proper legislation. Billions, too, will be saved in taxes and expenditures.

"After all, medicare is not a political question as some would have it. Medicare is a medical, a social, a moral problem which should be decided by nonpartisan lawmakers, based on the need and on the financial resources of the country. It must be remembered, too, that the first impact of costs will be on the backs of young and presently employed persons. The recipients will be the elderly, who never contributed to the fund. By progressive stages, fair alike to the young and paying group and to the old and nonpaying group, transition can be made to any type Federal medicare program that is wanted and can be financed."

Lack of administration leadership in MAA implementation

The progress in implementation of Kerr-Mill also must be viewed in the light of the absence of vigorous leadership by the administration which has been noted by various State officials and several members of Congress. Early in 1963, the Department of Health, Education, and Welfare published a 16-page report on its programs for older persons in 1962. The report brushed off the Kerr-Mills program with one short paragraph, prompting an editorial in the Washington Evening Star which said:

[From the Evening Star, Jan. 9, 1963]

"S-S-S-SH!

"If participation in the Kerr-Mills program of old age medical assistance had dropped last year, or even stood still, we can't help wondering what the Department of Health, Education, and Welfare would have had to say about that in its roundup progress report on Government help for the aged.

"As it turned out, the 16-page HEW report devoted a single brief paragraph to Kerr-Mills, concentrating almost entirely on the point that average payments declined under the program. It avoided entirely the facts that the actual number of Kerr-Mills benficiaries during the year ending last June more than doubled, from 46,247 to 101,634, and that monthly payments around the country in that period increased from $9,311,027 to $17,415,814.

"Why? Well, according to Miss Ruth Lauder, a spokesman for the HEW staff, the omission of any reference to gains in the program 'was not deliberate.' For one thing, she said, the report concentrated on 'newer' and 'more dramatic' programs-including, presumably, the President's bill for medical care for the aged through social security, which the report called the 'most important legislative proposal of 1962.' And anyways, Miss Lauder added, the Kerr-Mills program is really 'an income maintenance program,' which doesn't have anything to do with the health of old people, 'except indirectly.'

"This must be a surprise to those Members of Congress who passed the KerrMills program, who think it has not been given a fair shake, and who believe it is at least a partial answer to the administration bill. One who is not surprised, however, is Representative Byrnes of Wisconsin, the ranking Republican member of the House Ways and Means Committee. Mr. Byrnes says the HEW has deliberately kept the program in a vocuum, that it 'has not only been dragging its feet on encouraging State participation in Kerr-Mills but has actually put stumbling blocks in the way of its success.'

"Whether that statement is accurate or not it is certainly true that the public at large has only the fuzziest idea about the Kerr-Mills program and how it is working. And from this viewpoint alone, the congressional investigation of the matter which Mr. Byrnes has advocated is clearly merited."

Kerr-Mills implementation undoubtedly would have been given greater impetus if HEW had taken positive leadership. Because this leadership has been lacking. it has fallen to the lot of AMA's constituent State societies to work with their legislatures for improvements experience has shown to be desirable. Transfer to MAA

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We have spoken already of the remarkable progress in implementing KerrMills, of the 265,000 new MAA cases aided in its first 2 years, and of OAA medical expenditures of $36 million a month." This should be evidence enough that Kerr-Mills is bringing new help to the aging.

But, even as these developments were being recorded, some opponents of Kerr-Mills who should know better have claimed that little new aid is being given, that the States in implementing Kerr-Mills have merely shifted part of the cost of old programs to the Federal Treasury.

The facts refute such claims. In September 1960, the month before Kerr-Mills took effect, according to figures of the Department of Health, Education, and Welfare, the States made vendor payments through their old-age assistance programs of $254 million; " in May 1963, old-age assistance vendor payments were up $12 million-to $37 million-and medical assistance for the aged payments totaled nearly $29 million." That is, vendor payments for medical care to the needy and medically indigent aged had increased, in 32 months, by $41 million per month.

In March 1964, old-age assistance vendor payments were $37.8 million and medical assistance for the aged payments totaled $34.7 million. In the 31⁄2 years since Kerr-Mills began, medical vendor payments for the aged went from $25

41 Table, "Medical Assistance for the Aged: Number of Cases Approved and Number Transferred From Other Programs, From Inception of MAA Program Through September 1962, by State," supplied by Division of Medical Care Standards, Bureau of Family Services, Welfare Administration, HEW, per Feb. 28, 1963, letter from Thomas B. McKneely, M.D., Chief, to Mr. James H. Fleming.

42 "Social Security Bulletin," August 1963.
43 "Social Security Bulletin," December 1960.
44 "Social Security Bulletin," September 1963.

million per month to $72.5 million per month-an increase of almost 200 percent."

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In light of such figures, it is difficult to see how an Assistant Secretary of HEW could tell a House subcommittee that most of the States with Kerr-Mills programs "have been involved in no net increase in payments to either hospitals or to the individuals, for medical care." 46

In June 1961, a staff report of the Special Committee on Aging of the Senate, "State Action To Implement Medical Programs for the Aged," made the statement that, while reports from the six States and two territories with MAA programs at the time were "somewhat inconclusive and tentative," they did show "one definite pattern: a heavy transfer of cases from OAA to MAA." The tabulation which accompanied this statement showed, for six States, Puerto Rico, and the Virgin Islands, only three with any transfers, including Washington State, which had transferred five OAA recipients. In Michigan, one-third of the approved applications were transfers, and only Massachusetts, at this early stage, had an MAA load comprising more than half OAA transfers." Transfer pattern not established

We feel it is pertinent to question the validity of a staff report that can find a definite pattern of heavy transfer in two jurisdictions out of eight. However, more important is the question: Has there actually been such a pattern in later MAA developments?

Although some States had a strong financial incentive in that they would get more Federal matching funds if they put nursing home patients on MAA less than one-fourth of MAA patients have been transfers. In the first 2 years of MAA, according to HEW figures, 265,424 new cases were taken care of and 81,423 were transferred from other programs, primarily OAA. Twelve States transferred no OAA recipients, 5 transferred less than 100, 4 transferred between 100 and 508, and 7 transferred 1,000 or more."

This record of transfers hardly constitutes a "pattern." A large majority of MAA cases are new ones. Indications are that the percentage of transfer cases will decrease as the State MAA programs continue because in the States where transferring was the heaviest it was an administrative action at the start of their programs.

For example, during the first month of the MAA program in New York, there were 16,438 transfers. The number dropped to 2,651 the second month, 1,049 the third month, and 593 the fourth month.*9

One possible indication of the validity of this criticism is the lack of any cumulative figures on transfers later than September 1962. It is our belief that such figures, if released, would show today a far smaller proportion of total MAA recipients are transferred from other programs.

Largest States-Largest allotments

Another criticism of the Kerr-Mills MAA program has been that three, four, or five States have been getting too large a share of the Federal aid under it. HEW Assistant Secretary Wilbur J. Cohen has charged that four StatesCalifornia, Massachusetts, Michigan, and New York-"receive about 88 percent of the money spent" under MAA programs.

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Our first comment on this statement is that this is an outdated percentage. becoming more outdated monthly. But it is not surprising that a few large States have been getting a large part of Federal MAA matching funds.

From the start of the program until June 1961-9 months-Massachusetts. Michigan, and New York were by far the largest States involved. The three States had comprehensive medical programs in effect for the needy aged. They

45 "Welfare in Review," June 1964.

46 HEW Assistant Secretary Wilbur J. Cohen, at House Appropriations Subcommittee hearings, Feb. 18, 1963. 47 Staff report to the Special Committee on Aging, U.S. Senate, 87th Cong., 1st sess.. "State Action To Implement Medical Programs for the Aged," June 8, 1961, p. 45. 48 Table, "Medical Assistance for the Aged: Number of Cases Approved and Number Transferred From Other Programs, From Inception of MAA Program Through September 1962, by State." Supplied by Division of Medical Care Standards, Bureau of Family Services, Welfare Administration, HEW, per Feb. 28, 1963, letter from Thomas B. MeKneely, M.D., Chief, to Mr. James H. Fleming.

49 Table 3, "Medical Assistance for the Aged: Applications, Cases Opened and Closed, Persons Aided, and Costs, by Month, New York State, April-December 1961," from Re search Brief No. 1, 1963, title, "Medical Assistance for the Aged in New York State, April 1961 to December 1962." Bureau of Research and Statistics, New York State Department of Social Welfare, Mar. 9, 1963.

50 House Appropriations Subcommittee hearing, Feb. 18, 1963.

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