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More of the Kentucky story

Obviously, the "Kentucky story" is more than our medical assistance to the aged program. Of the 3 million people living in Kentucky, the Health Insurance Institute has reported that as of December 31, 1961, over 1.8 million have purchased health care coverage either through a commercial insurance company or through Blue Cross-Blue Shield. We know that over 85,000 of our aged are covered by Blue Cross-Blue Shield alone, and it would be a realistic assumption to place the number of those over 65 who are covered by a commercial insurance policy at about the same figure. Of the 292,000 senior citizens in Kentucky, approximately 170,000 are protected by privately purchased voluntary health care coverage.

In addition to those presently covered by the voluntary prepayment system, private industries such as Southern Bell Telephone & Telegraph Co., Ford Motor Co., General Motors, United Mine Workers, Green River Steel, Newport Steel, and Armco Steel are now providing health care programs for their retired employees. Other volunteer groups, labor, management, medicine, teaching profession, local government, and the people themselves in Kentucky, have demonstrated beyond the slightest doubt that through our voluntary efforts we are caring for those unable to provide medical care for themselves.

During the 4 years of the Kerr-Mills' existence in Kentucky, we have had an opportunity to observe its growth, and we know it is providing an ever-increasing service to MAA recipients. Private insurance and voluntary efforts continue to grow and fill the needs of the people of our State.

We wish to express our appreciation for the privilege of presenting the association's comments on H.R. 11865 and request that these views be incorporated in the record of your hearings.

INDIANA STATE MEDICAL ASSOCIATION SUBMITTED BY DONALD E. WOOD, M.D.,

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DEAR SENATor and MEMBERS OF YOUR COMMITTEE: You currently have before you H.R. 11865 (Social Security Amendments for 1964) as adopted by the House, concerning the increasing of benefits under social security and the adding of physicians to those compelled to pay social security taxes.

You are currently holding hearings on this measure and we desire to make the following a matter of record as a statement from the Indiana State Medical Association.

We beg the indulgence of your committee to take action, removing physicians from this bill. Under the provisions, if retained, and physicians are compelled to pay the social security tax, you are, in effect, raising the cost of medical care to the people of the State of Indiana. Under the rates, as projected for physicians, you will be collecting approximately $14 million per year from Indiana doctors, which is, naturally, a cost of doing business which will be passed on to the consumer, as are all expenses of doing business.

Physicians, as a group, generally, do not retire from practice until totally disabled, and more often only upon death. Therefore, there is very little likelihood that many of the physicians, or their families, in our State would ever benefit from this program. Should you insist on retaining physicians under this bill, it might be a factor in encouraging about 10 percent of the physicians in Indiana to retire earlier, as has been the case in industry and commercial forms of business. If this would occur, we would be faced with a tremendous physician shortage, which, again, would reflect upon the care and the health of the people of our State. While we are aware that a percentage of physician members of our association are covered by social security for one reason or another, and others are interested in being covered; nevertheless the poll taken of our membership indicates 3-to-1 opposition to compulsory inclusion under social security. For example, in 1965, under the proposed rates, you would extract $307.80 per physician per year. In 1966 this would increase to $324 per physician per year, in 1968 it would increase to $367.20, and in 1971 to $388.80 per physician per year. The average age of physicians in our State being what it is, a physician of 30 years of age, making a $350-per-year investment in private insurance retirement programs, at age 74, the usual retiring age, if they do retire, would

have a cash value lump sum of $40,395 at 4 percent. If this money were invested in funds producing an 8-percent rate he would have a lump-sum benefit of $124,932, or he would have a monthly life annuity on a 4-percent rate of $388 per month, or a monthly life annuity on an 8-percent rate of $1,199 per month.

A man of 40, investing the same amount of money would accumulate $24,450$55,519-and monthly life benefits of $235 and $533, respectively. Even a man of 50 years of age, investing $350 per month in private programs would obtain monthly lifetime annuities at $131 and $224.

Most of the physicians have taken advantage of this type of program through private carriers and, therefore, we see no reason for this additional tax which would influence the cost of medical care being added as a burden to the physician and his patients.

We, therefore, urgently request that your committee remove physicians from this proposed legislation.

SOUTH CAROLINA MEDICAL ASSOCIATION

Statement to: The Committee on Finance, U.S. Senate, Washington, D.C.
In behalf of: The South Carolina Medical Association, by Dr. Frank C. Owens,
Columbia, S.C., president.

Subject: H.R. 11865, Social Security Amendments for 1964.

The purpose of this statement is (1) to describe the means now available for payment of the medical and hospital care of citizens of South Carolina over age 65, and (2) to emphasize the adequate provisions already made by Government through the Kerr-Mills Act for the care of the aged in South Carolina.

The South Carolina Medical Association is an eleemosynary corporation chartered in the year 1904. Among the purposes stated in its charter and for which it is maintained are: extending medical knowledge and advancing medical science; elevating the standards of medical education, and securing the enactment and enforement of just medical laws; promoting friendly intercourse among physicians; protecting them against imposition; and enlightening and directing public opinion in regard to the great problems of medical care, so that the profession may be more useful to the public in the prevention and cure of disease, and in prolonging and adding comfort to life.

Its membership has approximately doubled in the past 15 years as the number of physicians entering practice has kept pace proportionately with the increase in population of the State.

Since 1944, the association has been engaged in a positive program designed to relate its activities and the services of its members to the needs of the entire population. The initial task undertaken by the association, after the institution of is 10-point program in 1944, was the passage of enabling legislation for the organization of a nonprofit hospital service plan. Previous to that time, the hospital association of the State had made considerable effort along this line, but not until the South Carolina Medical Association began its positive effort in that direction was it possible to secure passage of a statewide law. The act was passed in 1945 and became operative in 1946. It is entirely accurate to say that without the efforts of the doctors of South Carolina through their association, such legislation would not have been enacted at that time, if at all. The South Carolina Hospital Service (Blue Cross) Plan was organized shortly afterward and has operated successfully since. The scope of its coverage and extent of its services to the citizens of the State have been expanded regularly, and continue to increase.

In April 1948, again through the efforts of the medical association, additional enabling legislation was adopted by the general assembly of the State to provide for the organization of a nonprofit medical service plan. Pursuant to that act, South Carolina's Blue Shield (the South Carolina Medical Care) Plan was formed and operates through the cooperation and participation of the members of the association.

The foregoing facts will demonstrate the association's early interest in the provision of medical care for all the people of the State at prices which they could afford to pay, whatever the income bracket. It will be noted that they antedated by several years the first determined effort in Congress toward compulsory health insurance legislation.

In 1948, the association sponsored and secured passage of an act appropriating State funds for financing eight scholarships at the Medical College of South Carolina, for students of medicine, who, in return for such scholarships, would

agree to practice an equivalent number of years in a rural community designated by the State department of health upon the basis of need for doctors.

Beginning in 1946 and during the ensuing years, this association combined the weight of its influence with that of the trustees and other officials of the Medical College of South Carolina for a broad expansion program at that institution. The then president of the association appeared before a joint meeting of the Senate and House of Representatives of South Carolina to assist in what proved to be a successful effort to obtain appropriation of more than a million dollars by the State toward the cost of such expansion. As a result of the latter, the total number of young doctors graduated each year from the medical college was increased from 40 to 80.

The Kerr-Mills law was passed by Congress in the fall of 1960. At the next session of the General Assembly of South Carolina, in the spring of 1961, officials of the South Carolina Medical Association, in cooperation with the director of the department of public welfare of the State, sponsored legislation to implement the act in South Carolina, the president and other officers appearing at hearings before the committee on ways and means of the State house of representatives in behalf of the bill. It was enacted into law and became effective July 1, 1961. At the suggestion of association officials, and with the full endorsement and cooperation of its members, any provision for payment of professional fees from Kerr-Mills funds was omitted. Therefore, despite the authority therefor granted by the act of Congress, no money from the Federal Government or the State government under the Kerr-Mills law is used in the payment of professional fees for physicians in South Carolina.

By reason of all the foregoing, we respectfully submit that this association and its members are qualified to speak and are entitled to be heard on the subject of the means of providing hospital, nursing home, or medical care for the citizens of the State.

Now, as to the specific benefits available to persons over 65 under Kerr-Mills: A. Institutional medical care

1. Hospitalization.—(a) Coverage.—General hospital care is provided an individual who (1) has been certified by the county welfware department as meeting the need and other eligibility requirements, and (2) has been certified by a physician as acutely ill, injured, or has a sight-endangering condition, with hospitalization being essential for treatment. Conditions diagnosed as either tuberculosis or psychosis are excluded, except for a period of 42 days of hospitalization for such conditions. Provisions for out-of-State hospitalization are included, provided the recipient is a resident. Hospitalization will be provided for a recipient for as much as 40 days in any 1 fiscal year.

2. Nursing care.-Nursing care in a public medical or private institution licensed by the South Carolina Board of Health is provided under the program. Where possible, an effort is made to limit such care to a period of 3 months, but this is extended in unusual cases involving long-term treatment.

B. Noninstitutional medical care

In addition to the foregoing, the program in South Carolina provides for the following:

1. Outpatient hospital or clinic medical care service.-(a) Emergency room service. This service will include drugs administered in the emergency room, oxygen, small casts, sutures, dressings, and so forth, administered to emergency cases seen and treated in the emergency room, but not admitted to the hospital. (b) Organized clinic service. This service will include drugs administered in the clinic, oxygen, dressings, cast removal, and so forth, routinely used in the treatment of patients in an organized clinic.

(c) Special diagnostic and therapeutic services.-In addition to payments for emergency room and clinic services when requested through those departments or on the basis of a direct request from a private physician, the following services will be provided:

(1) Laboratory procedures: This service will include all examinations of urine, blood, sputum, stool and tissue specimens, both gross and microscopic, and metabolism tests.

(2) X-ray and radioisotope procedures: This service relates to diagnostic procedures.

(3) Intravenous solutions: This service relates to the administration of intravenous solutions, regardless of the size of the dose.

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(4) Minor surgery: This service includes biopsies, excisions of pigmented nevi, and so forth.

The foregoing services are available to single persons having an annual income not exceeding $1,400, or to a man and wife whose combined annual income does not exceed $2,400. Ownership of a homestead does not disqualify a recipient otherwise eligible. The cash loan or surrender value of an applicant's life insurance on the first $1,000 face value, if single, or $2,000 in case of a man and wife, are exempt from consideration of eligibility or from the requirement that it be applied to payment for care received under the program. Likewise, exempt are the first $500 of savings of an individual, if single, or the first $800 savings of a man and wife living together, and also the value of such personal property items as automobiles, household furnishings, and farm equipment.

According to the records of the department of public welfare, as of February 1961 there were in South Carolina approximately 150,600 people over the age of 65. Of these, there were 34,000 on the public welfare rolls (OAA). Fiftyfour percent of the total, or 81,324, received an annual income of less than $1,000, some of whom may have been covered by OASDI. Generally speaking, it is the latter group, therefore, with which the Kerr-Mills program is concerned, although, obviously, considerably more than this number will be included under the higher annual income of $1,400.

Now, let us look briefly at the extent of the service which has been rendered under the program. During the fiscal year ending June 30, 1963, the last full year of operation for which figures are now available, the program paid for hospitalization of 5,670 patients, representing 66,578 patient days. The total amount paid to hospitals for these cases was $1,330,546.37. Nursing home care was provided for 489 patients, representing 12,580 patient days, for which a total of $50,138.33 was paid to nursing homes. In addition, payment was made for service to a total of 3,407 outpatient cases.

Of the total expenditure of $1,409,293.20 for medical assistance during the year July 1962-July 1963, the State of South Carolina paid 20 percent or $281,854.64, and the Federal Government 80 percent or $1,127,438.56.

According to the director of the department of public welfare, the extent and cost of services under the program are increasing steadily. There are now 12,000 on the eligible list for Kerr-Mills benefits, and there are many more who are eligible but have not established eligibility.

The foregoing information demonstrates:

(1) The recognition by South Carolina citizens of their responsibility in the field of medical, nursing, and hospital care for the aged.

(2) Their willingness to cooperate with the Federal Government in providing the needed assistance.

(3) The fact that the benefits are available to the group for whom they are intended—those of modest income, able to provide for their ordinary needs, but unable to bear the burden of serious illness and the cost of institutional care.

It is obvious, we submit, that such a program is vastly preferable to one which, through a substantial increase in social security taxes for everyone, would undertake to provide limited hospital and nursing home care for millions who would prefer to buy their own private insurance coverage from Blue Cross-Blue Shield or other commercial companies, or whose financial circumstances are such that they do not need to provide insurance coverage at all.

FRANK C. OWENS, President.

STATEMENT OF THE MISSOURI STATE MEDICAL ASSOCIATION SUBMITTED BY LEONARD T. FURLOW, M.D., PRESIDENT

Re H.R. 11865

The following statement concerning H.R. 11865 is being filed on behalf of approximately 4,000 Missouri physicians who are members of the Missouri State Medical Association.

We hereby record our opposition to the King-Anderson bill being substituted for or added to the House-passed legislation, as well as to the so-called option plan whereby recipients of social security would have the choice of increased cash benefits of a hospitalization program.

Our reasons for opposing the King-Anderson approach to health care for persons aged 65 and over have been stated before. First, this method would pro

vide benefits regardless of ability to pay. It would not, as does the Kerr-Mills program, operate on the sound basis of providing aid only to those in need.

Second, because all persons aged 65 and over would be eligible for benefits, the cost would not only be prohibitive, but would force working people of today to pay these higher costs in order that assistance be provided to very man and woman over a certain age limit, whether such assistance is needed or not.

Third, such a compulsory plan for the aged under the social security system would, of necessity, place unwarranted control and direction of our Nation's health care in the Federal Government and would, thereby, disrupt the traditional doctor-patient relationship and free choice of physician which has built and maintained a system of health care second to none in the world.

Finally, from our experience and knowledge of the needs of Missouri's elderly, we are convinced that these needs can be taken care of at the State and local levels. The last session of the Missouri General Assembly authorized increased and expanded payments under the Kerr-Mills program. Along with local assistance programs and the steadily growing coverage of persons 65 and over by private health insurance plans, it is apparent that whatever problem there is in providing medical care for the aged in Missouri is being taken care of without a costly Federal program.

We oppose the addition of King-Anderson to H.R. 11865 for the same reasons, with an added emphasis on the cost factor. As Health, Education, and Welfare Department Secretary Celebrezze stated to your committee, the social security wage base would have to be raised from the $5,400 level of the House bill to $6,600 in order to finance a King-Anderson program.

Moreover, placing King-Anderson on top of H.R. 11865 would probably result in a combined social security payroll tax on employers and employees of at least 10 percent. Certainly, it would be impossible to have both the cash increase provided in the Mills bill and King-Anderson without a major increase in either the wage base, the tax rate, or both. It seems clears to us that advocates of social-security-financed health care are determined to enact such a program, regardless of the financial burden it would put on our working men and women, or the danger it would pose to the continuing stability of the social security system itself.

Similarly, we oppose the inclusion of a Federal program as an option to increased cash payments. This would not only lead to confusion and higher costs, but would be a first step toward a completely compulsory King-Anderson program. As an "option," this scheme has the same inherent drawbacks it has always had.

We would, therefore, urge each member of the committee to oppose any amendment in support of King-Anderson, or a similar program, as an addition, substitution, or option to increased cash payments.

We would also ask that you act favorably toward an amendment which would eliminate that part of H.R. 11865 which brings private physicians under social security coverage. Physicians do not generally retire at any certain age; in fact, a majority of doctors in the United States continue to practice after they have reached the 65-year mark. Thus, although the average physician would be required to pay into social security at a maximum rate, many of them would never receive retirement benefits. We believe that a majority of physicians in Missouri and throughout the Nation oppose inclusion, and hope that your committee and the Senate will take these views into account.

Thank you for your consideration and attention.

STATEMENT OF THE NEBRASKA STATE MEDICAL ASSOCIATION SUBMITTED BY THE R. E. GARLINGHOUSE, M.D., PRESIDENT

In opposition to the type of legislation as proposed in the medical-hospital care amendments to H.R. 11865; and compulsory inclusion of physicians under social security

Mr. Chairman and members of the committee, the health care horizon for senior citizens in Nebraska is unclouded, because Nebraskans have shouldered the responsibilities of providing adequate health services to any of their fellow citizens in need.

Working hand in hand with the department of public welfare and the Governor's Commission on Aging, the Nebraska State Medical Association has investigated every phase of health care problems which confronts senior citizens

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