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gained wide public acceptance. One such development, unforeseen a relatively few years ago, has been a variety of coverages for persons already past age 65 and who were uninsured. That this effort on behalf of private insurers has been effective is evidenced by the fact that between 1952 and 1962 the number of persons age 65 and over with some form of health insurance protection trebled and the proportion of that population group with health insurance doubled. During the April 1964 hearings of the subcommittee, both Government and industry spokesmen testified in detail with respect to this progress. It is difficult to understand how the subcommittee majority report could totally omit any mention of this dramatic growth. One cannot escape the conclusion that the majority report, by presenting a grossly incomplete picture, purposely intends an unbalanced view which is tantamount to an attack on an economically necessary and highly respected institution.

Beyond this, however, we are disturbed by the use of language which accuses us of playing a "numbers game," of using "inflated coverage figures," of attempting "to create an illusion," of having "concocted" figures, and with an attempt to "substitute fancy for fact," and other such intemperate phases. This is obviously to lead the reader to erroneously conclude that we spend our time fabricating the truth. We protest the use of such language and question its place in a Senate committee report. It is not at all in keeping with the facts presented at the hearing.

The subcommittee has before it data, reports, letters, and exhibits (some, but not all, of which, are included in the appendix of the report), which show clearly that such accusations are without foundation in fact. While in some instances the subcommittee majority may have labored under some misunderstanding or misimpression, our representatives were always available to furnish any additional information needed. Furthermore, the public hearings held by the subcommittee presented full opportunity to clarify any such misunderstandings. Yet, the transcript of those hearings shows no evidence that a full attempt was made to clarify any doubts in the subcommittee's mind with respect to the subject matter at which these charges are directed. Since the data in question are gathered in accordance with accepted scientific methodology having to do with statistical collections, and are gathered in good faith with no other objective than to obtain the facts of a situation in a given period of time. it is difficult for us to conclude other than that the clear intent of the subcommittee majority was to criticize private health insurance regardless of the facts.

"Didn't you testify before the Ways and Means Committee that 'more than 2 million aged were covered under individual insurance company mass enrollment plans' when in fact less than 750,000 different older people are so insured?" (Source: McNamara report. pp. 7-8.)

We did not so testify. The foregoing quote is a distortion of a portion of the statement made by this association before the Ways and Means Committee on November 22, 1963. In that testimony we described the various approaches used by the insurance business to extend coverage to the aged. One such approach is individual company mass enrollment programs. For such programs we said: "Individual company mass enrollment programs, first introduced about 5 years ago and affording coverage irrespective of condition of health, which have already enrolled over 2 million senior citizens."

As is evident from the material shown on pages 110 through 123 of the Senate subcommittee report the questionnaire used by the association in obtaining the number of aged persons covered as of the end of 1962 did not attempt to determine a separate total, for mass enrollment alone, or for any of the principal methods used to extend coverage to the older population. Our intent was to determine the total number covered. The misunderstanding which resulted in the unwarranted challenge in the subcommittee report which completely misconstrued the impact and meaning of the numbers cited in the distorted quotation from our testimony may well be due to a lack of understanding of insurance terminology. In its use of the term "enrolled," this association was illustrating the potential inherent in mass enrollment programs, and referred to the number of persons that had been enrolled over a period of time; i.e., since the programs were "first introduced about 5 years ago."

The difference between the number of persons enrolled under the mass enrollment approach and the number covered at any given time will of course be significant in view of the high average age of this insured population with resultant substantial terminations due to mortality alone. In fact, the Senate subcommittee

report points out that one of the companies engaged in the mass enrollment program lost about 80,000 such policies during 1963.

You should clearly understand that the question is not only a distortion of what we have said but it is also totally irrelevant to the point about which it was first raised; namely, the extent to which the aged are covered under all types of health insurance. The 2 million figure, the number of enrollees to that date under mass enrollment programs, did not enter into the association's estimate that 10.3 million or 60 percent of the aged were covered under health insurance through all types of programs and approaches available to them at the end of 1962. A review of the material contained on pages 104 to 123 of the Senate subcommittee report makes this clear.

The release of the subcommittee report in July prompted us to write immediately to the chairman of the House Ways and Means Committee to be certain that he and his committee had no misunderstanding about the import of the 2 million enrollee figure. A footnote pertaining to this point is contained in our testimony of August 13, 1964, before your committee as footnote 11.

"1. You spend a great deal of time talking about the number of insurance policies held by the aged but say virtually nothing about the adequacy of those policies. "2. Are you aware that, according to the McNamara report, only one in four of our older people hold adequate hospital insurance under the definition established by the American Hospital Association?" (McNamara report, p. 17, ff.) It is not correct that my statement spent "a great deal of time talking about the number of insurance policies held by the aged." In an 18-page statement only two paragraphs (pp. 2 and 3) make such reference, and these paragraphs include reference to estimates other than our own. Furthermore, we do not talk about numbers of policies but rather numbers of persons insured.

It also is not correct that we have said "virtually nothing about the adequacy" of health insurance coverages. In my statement to the Senate Finance Committee, on pages 14 and 15, this subject is discussed and the nature of available health insurance coverages is mentioned. Because of the time limitation this discussion was necessarily brief. However, a more lengthy discussion and documentation of these areas was presented to the Subcommittee on Health of the Elderly of the Senate Special Committee on Aging by our association on April 28, 1964. (See pt. 2 of the proceedings of the hearings held by that subcommittee, pp. 92-94.)

From a review of the subcommittee hearings and report, I cannot conclude that in fact the American Hospital Association has undertaken to establish 75percent coverage as a general test of adequacy of insurance. While I have not at this time, been privileged to see the document of the American Hospital Association from which this conclusion of a standard of adequacy is drawn by the majority of the subcommittee, the record would imply to me that the 75-percent figure was not established as a standard of adequacy to judge individual or family programs. Rather it appears probable that it was developed as one of a group of minimum requirements to be imposed on any Blue Cross-type organization seeking service contracts with hospitals and the endorsement of the American Hospital Association. Furthermore. it is quite apparent to me from my review of the record that the report in attributing support to 75 percent as a general test of adequacy to an insurance spokesman has drawn an erroneous conclusion from his testimony. The insurance representative's testimony from which this conclusion must have been drawn relates only to a description of the goals of coverage that were adopted for the New York 65 plan program— quite a different matter from defining or establishing a general standard which would be appropriate for all individuals.

Sincerely yours,

H. LEWIS RIETZ.

Senator GORE. The committee will adjourn until 10 a.m. (By direction of the chairman, the following is made a part of the record:)

COUNCIL OF JEWISH FEDERATIONS & WELFARE FUNDS, INC.,

Hon. HARRY F. BYRD,

Chairman, Senate Finance Committee,

Senate Office Building, Washington, D.C.

New York, N.Y., August 10, 1964.

DEAR SENATOR BYRD: I am writing to you in connection with the hearings which the Senate Finance Committee is holding in reference to the Social Security Act.

As you know, we are one of a group of voluntary agencies in the social welfare field for whom Mrs. Elizabeth Wickenden, technical consultant to the National Social Welfare Assembly, has presented testimony favoring the addition to H.R. 11865 of health benefits to the aged under social insurance. In addition, we would like to submit this individual statement expressing our point of view which is consistent with Mrs. Wickenden's testimony.

The position of our council has been expressed by our highest governing body, our general assembly, in resolutions adopted on November 18, 1962, and November 10, 1963. The latter urged the Congress to "enact medical care for the aged through the mechanism of the old-age and survivors insurance program while making adequate provision for those persons not so covered."

Our council is an association of 218 central Jewish community organizations responsible for financing and planning all types of health and welfare services. Our federations reflect the experience of 74 general and specialized hospitals; 76 homes for the aged: 81 family service agencies, a large part of whose caseload are the aged; and 44 vocational service and group counseling agencies, a number of which provide rehabilitation and retraining assistance to the aged, and other agencies in a comprehensive network of services to this part of our population. Our conviction regarding the inadequacies of current provision for their health and hospital needs is based upon this very extensive experience throughout the country, and upon the special 4-year study on community health serv ices for the aged and chronically ill which we recently completed. This experience has led us to conclude:

The requirements of the aged for health and hospital services continue to grow. Private philanthropy cannot meet the deficits involved in providing services to patients unable to meet the full costs.

It has been demonstrated that the comprehensive health and welfare needs of the country require the pooling of funds from various sources: from individuals according to their capacity to pay, voluntary insurance, Blue Cross, governmental social insurance, public welfare assistance.

The social security system will provide medical benefits to spread the costs of premium payments over the earning years. It will do so most economically. It is the simplest to administer and can be most quickly effective. It respects the dignity of the individual and avoids a "means test" repugnant to American standards and principles.

The social security system would enable the aged to pay for their medical care, choose their own physicians, and safeguard a high quality of medical care. Such quality is indispensible to any program to be developed.

With such provision, voluntary philanthropy can continue to concentrate on the fields of social welfare not coming within the responsibility of government. We therefore support enactment of legislation that would provide health benefits to the aged under the social security system.

Sincerely yours,

LOUIS STERN, President.

STATEMENT OF THE NATIONAL ASSOCIATION OF MANUFACTURERS ON AMENDMENTS TO PROVIDE HOSPITAL BENEFITS UNDER SOCIAL SECURITY (H.R. 11865), AUGUST 12, 1964

This marks the fourth occasion since 1958 on which the National Association of Manufacturers has registered its opposition, before a congressional committee, to the principle of social security-financed hospital benefits. The events which followed our first statement on the Forand bill, down to the most recent report of the board of trustees, have only intensified our skepticism. We believe now, as we did then, that once the principle of a national compulsory hospital care program has been established we shall witness an expansion that will alter beyond recognition both the practice of medicine and our self-supporting social security system.

We see a parallel in the evolution of disability benefits which at first was limited to a waiver of premiums for the permanently and totally disabled. Soon disabled people over 50 were drawing benefits on the theory that their misfortune was a form of forced retirement. Next it was claimed that age was irrelevant and benefits became payable regardless of age. Then benefits were extended to dependents of a disabled worker. Today, there is serious talk of a temporary disability benefit.

Have we any assurance that hospital care for the aged will not follow a similar pattern? What of those people retiring at age 62-can Congress afford to ignore them because of a 3-year age difference? And then there are the totally disabled, many of whom are already in hospitals, would they not be justified in demanding help to meet medical expenses? What of the medical needs of survivors-young children and mothers?

The basic issue here is much broader than the question of medical aid for the aged. It is simply a problem of dependency in all its aspects, with staggering cost implications if a social security solution is contemplated.

An analysis of the state of social security finances reveals a phenomenal growth in costs with the system straining to pay benefits already promised. The cost of OASI alone has quintupled in just 10 years with total disbursements of $14.5 billion in fiscal 1963; and the benefit rolls have been growing almost as fast with 17.2 million now drawing retirement and survivor checks. As a consequence, the system has failed to pay its way in 5 of the past 6 fiscal years. The OASI reserve has now dwindled to slightly more than 1 year's benefits.

These deficits have been incurred in a period of unmatched prosperity and in the face of predictions by the Board of Trustees that a surplus of funds would be generated. Whereas the Trustees in 1959 estimated an OASI fund of $50.3 billion by 1970, the report accompanying H.R. 11865 now puts the fund at $27.6 billion in 1970. This downward revision is no reflection on the ability of our social security actuaries. It simply demonstrates the futility of projecting costs in a program that permits the taxes required for added benefits to be spread into the future.

We believe there is some question as to the actuarial balance of the system, due not only to its political aspects but also the uncertainty of factors like employment, income, longevity and inflation. It would seem foolhardy under these circumstances to adopt a program of hospital benefits of unascertainable cost. We are aware of the administration's assurances before the Ways and Means Committee that the King-Anderson plan could be adequately financed by a 0.5-percent tax increase on a revised wage base of $5,200. But questioning revealed that the underlying assumption for this estimate-namely that wages and hospital costs will remain in the same future relationship as in the 1961 experience-is, in fact, contrary to past and present experience where wages are rising 3 percent per year and hospital costs 7 percent per year. If present experience prevails, and this is not beyond the reach of reason, it is estimated that a tax increase of 1 percent will be required instead of 0.5 percent of payroll.

The prospect of underfinanced hospital benefits is indeed alarming because it brings closer the possibility of Federal subsidies. How much more can be asked of the employer and employee with the maximum combined tax already scheduled for $444 by 1968, an increase of almost 400 percent since 1950? H.R. 11865 calls for a maximum employee tax of $259 by 1971-Is this not a sizable sum for a man earning $5,400 a year? In many cases the employee will be paying more in social security taxes than in income taxes. For example, a man earning $5,000 per year with a wife and three children—a typical situation-pays an income tax of approximately $185. Under present law his social security tax will exceed this amount ($198) by 1966. If this same man is earning $4,500 he will be paying a social security tax in 1965 almost double his present income tax ($84 versus $161).

The advent of general revenue support and the demise of the self-supporting principle will destroy the last stronghold of cost control and a way will be cleared for ultimate nationalization of all retirement security programs. This threat is implicit in the hospital care proposal.

And what of the alternative: Heavier tax levies on the employee? Today's new entrant and his employer are scheduled to pay $1.69 for every $1 he can expect to receive in benefits. The producer may not be receptive to paying hospital benefits for an estimated 17.5 million oldsters who will not have borne 1 cent of the added costs. The total value of the free gift has been put as high as $25 billion; young workers are already carrying a similar burden of some $300 billion attributable to past liberalizations. And bad as this burden is, will it not become doubly onerous as these young taxpayers begin to realize that many of the recipients are not in any sense needy? The inequity to the young is blithely ignored by those who are continually demanding a better deal for the aged many of whom are already drawing total benefits far in excess of their tax contributions.

Perhaps few young people today are aware of this situation since social security has been portrayed as a system where you "earn" or "pay for" your benefits. Sooner or later, however, the real nature of the bargain will begin to dawn. At that time Congres may become the target of irresistible pressures to either repudiate or subsidize the system.

Proponents of compulsory health care for the aged continue to base their arguments on widespread need and despite clear evidence that the facts have changed. Over the years, a remarkable pattern can be seen. In 1940, the era of the Wagner-Murray-Dingell bills, only about 10 percent of the total civilian population had some form of voluntary health insurance. But this figure had grown to 28 percent in 1945, to 38 in 1947, and today it is estimated that as of June 1, 1964, 78 percent of the population is covered by voluntary health insurance. The growth of coverage for people over 65 has also been spectacular; old people are joining voluntary coverage plans at a rate four times better than all age groups; the 60 percent now covered by private plans is an increase from 48 percent in 1959 and more than double the total a decade ago. Some experts predict that within 3 years 75 percent of our aged will be covered with a possible 90 percent coverage realized before the end of the decade. And, as coverage grows, so will benefits and services provided for the premium dollar.

In light of these facts one would assume that cries about "unfulfilled needs" would be diminishing whereas just the reverse is true.

In conclusion, we believe that any proposal to establish hospital or medical service benefits under social security strikes at the principle of paying only cash benefits related, in some measure, to the amount of contributions made by an employee and his employer. The concept of service benefits leads inevitably to flat-rate benefits and Government subsidies. Finally, it sacrifices the right of the benefiiciary to spend his benefit check as he believes best.

STATEMENT OF T. DONALD PERKINS, SAN DIEGO, CALIF., IN BEHALF OF THE NATIONAL ASSOCIATION OF RETAIL DRUGGISTS

Mr. Chairman, and members of the Senate Finance Committee; my name is T. Donald Perkins and, for 40 years, I have practiced pharmacy in San Diego, Calif., where I own and operate a community drugstore.

I appear here as president of the National Association of Retail Druggists. The NARD, as you know, is a small business organization having a nationwide membership of more than 36,000 independent drugstore owners. The NARD speaks for its membership of family druggists on all legislative matters affecting their professional and competitive interests.

Accompanying me is Philip F. Jehle, Washington representative and associate general counsel of the NARD.

Mr. Chairman and gentlemen, I wish to state at the outset that the National Association of Retail Druggists shares with all responsible citizens the conviction that good health care should be readily available to all Americans regardless of age. The NARD further believes no American citizen, again without reference to age, should be deprived of adequate health care for financial reasons. But it must also be clearly stated that the NARD likewise believes that those financially able to provide for their own health care needs should do so irresponsible of age.

Financially secure persons should not be looking to Washington for material assistance they do not need. This policy, I am sure, is sound whether the aid being sought involves food, clothing, shelter, or health care. Our American tradition is to help those unable to help themselves—and only those. I might add that in the past only those unable to help themselves would either seek or accept aid from others, including the Federal Government.

In the light of these generally accepted economic and social principles, the NARD in convention assembled has formally examined and rejected, for many years in the past, legislative proposals of the nature and purpose of the Federal health care amendment, which Senator Abraham Ribicoff has offered in respect to H.R. 11865, the social security benefits bill now before this committee. For your consideration, I would like to offer in summary form, the main grounds for the NARD membership's opposition to the Ribicoff medicare amendment and its predecessor bills:

1. Medicare benefits would not be limited to those elderly persons in actual financial need. In fact, under the proposed legislation, almost all persons over 65, whether or not eligible for social security benefits, would be eligible for

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