that has been actually under a private concern. And we have very But I am sure I can do justice to you and

careful records on it. myself.

The CHAIRMAN. We will certainly give very careful consideration to your statement, Dr. Panunzio.

(Dr. Panunzio's statement follows:)

STATEMENT OF DR. CONSTANTINE PANUNZIO, CHAIRMAN, Board of DIRECTORS, THE NATIONAL COMMITTEE ON THE EMERITI, INC., LOS ANGELES, CALIF. Honored members of the Ways and Means Committee, my name is Constantine Panunzio. I am professor emeritus of sociology at the University of California, Los Angeles, where I have been since 1931. I have also taught at other institutions. Since forced to retire, in 1952, in the very prime of mature life, I have devoted myself (1) to the welfare of retired college and university professors (the "Los Battalion," as Time called us); (2) to do what we can to help improve retirement systems; and (3) thereby to enhance the power of higher education to recruit and retain more of the best talent the Nation can produce. I function through the National Committee on the Emeriti, Inc., which I organized and of which I am the chairman (perhaps more correctly the "choreman" or factotum). The board includes highly distinguished and responsible persons. With your permission, Mr. Chairman, I shall append their roster, though I have not had an opportunity to discuss with them the remarks I am about to make.

The statement I am now making is not theory, opinion, a body of general findings, or advocacy of any kind. It is rather the case history of a group of aged people who, deeply in need of medical care, undertook to carry a group health plan, through one of the larger insurance companies.

This case history is particularly significant, because it recounts the actual experience of a group of people directly involved. As you are aware, most discussions or conventions seem deliberately to avoid calling upon the people who have actually experienced a situation to tell their story. And with your pardon, gentlemen, may I point out that, as far as I know, I am the only ancient of days (I am almost 77) who has taken part in these hearings during the entire period. In order that I may not be misunderstood in what I shall say further on, may I also state that we do not condemn, but commend commercial companies for doing what they can to carry health insurance for the aged. However, we question (1) their ability adequately to do so, (2) whether they are aware of the straitened economic circumstances in which the aged are, and (3) therefore whether by their intensive promotional activities they do not breed fear rather than aid the aged.

Take our case, for instance. There are about 12.000 of us retired college and university persons in this country and about 15,000 widows of deceased colleagues. If any group should have been sufficiently provided for in their sunset years, surely we should have been. We trained the leadership of the entire Nation, from the kindergarten teacher to the top echelons of industry and commerce, the professions, and those who serve in church and state. But, as Andrew Carnegie pointed out at the turn of the century, we have been all along in American history "the poorest paid and yet one of the highest of all professions, and therefore (again in Mr. Carnegie's words) we have been and are in a "deep and constant [economic] anxiety." As a result, believe it or not, though we have given an average of 34 years of service to the country, we, at an average age of 76 years, are receiving a median of $166 a month as retirement stipends, half of which, of course, we ourselves paid in. Widows average about $50 a month.

With such an income, you may well imagine how difficult the lot of most of us is. We have records of some who have scarcely enough to buy a decent amount of food; of cases in which two or more persons are forced to pool their meager resources, and even then are reduced to one meal a day. We have records of even persons of distinction being reduced to penury and want. In the course of our investigations we came upon a woman colleague who fairly shrieked at us: "What is there to tell? Does it have to be spelled out to you what it means to live on $85 a month in these days?"

Later we found her in an inconceivably miserable "nursing home," in a cubicle of a room, with three other living skeletons of women, on iron-framed beds once

white, barely holding on the thread of life. In a few days she died, and through the mercy of a neighboring church she was buried in a pauper's grave.

We have so many dying among us that we sometimes feel as if we were a nationwide poor man's mortuary.

Pray tell me, honored members of the Ways and Means Committee, how can one expect such people to buy health care from a commercial insurance company? Nor are we an exception. If the findings of the U.S. Senate Special Committee on the Aging are even relatively correct, there are probably at least some 7 million persons in the United States who simply do not have the wherewithal to purchase even the lowest minimum of health protection. What can the insurance industry possibly do for these people? What should the Nation do? A few years back when the boll weevil was infesting the land, the country rose up in arms and spent untold millions on coming to the help of the sick plants and trees. And now we argue endlessly, until we are red in the face, and have to buffet all kinds of fierce opposition, to come to the rescue of millions of human beings, many of whom are in urgent need of medical care.

Here are two cases that tell their own story: A woman writes on May 27, 1961, from somewhere in the wilds of Arizona:

"I have been forced to camp out in national parks the last 5 years. I have a 4-ton truck with a house on it, and a 1954 trailer to store my possessions and to serve as my home * * * I am 58 years old. My health, which has always been good, has broken down under the rigors of camp life-putting up tents and so on. And I was forced to sell my house to take care of medical bills and now I find myself in a precarious situation indeed."

And, on June 24, 1961, a colleague writes from the edge of the desert in California:

"A dental bill of about $150 is coming up this month and I don't know how to take care of it except by small monthly payments, to which the dentist is not ready to agree. Is there any possibility to give me some relief

In utter desperation we undertook to set up a group health plan, with a reputable company. But no sooner had we done so than the New York Times, on March 12, 1959, reported that the company had been brought up before the authorities, and charged, among other things, of returning only 34 cents on the premium dollar to the insured.

TERROR STRUCK OUR PEOPLE

And at about the same time we discovered that the company's agent was adding to our mailing names which did not belong to us and charging our small premium fund for circularizing them.

That was not all. The company and certain company-sponsored "associations" began circularizing our people and many others, with other and other plans: at first for payments of $6.50 a month; then came plans at $8, at $9, at $10; then with a combination at $13 per month. These solicitations pounded at the aged; setting very brief periods in which to enroll; not only confusing our people but, worst of all, producing a greater sense of insecurity; which in turn led some of our people, though in straitened circumstances, to subscribe to two or even more policies, in the same company, or in two or more companies. There were 16 such solicitations by our company alone and its sponsored "associations" in 3 years. Our files are filled with evidences of bewilderment and distress. One colleague comparing the various policies promoted by the same company cried out:

WHO GETS STUNG? YOU OR I-OR THE COMPANY?
1

Furthermore, subscribers seldom evaluate or can evaluate what they are buying. Policies state that so much per day will be paid while in the hospital; so much for physicians' services; so much for other expenses. But seldom can subscribers even remotely know how far the coverage will protect them. In fact the policies have so many unspecified elements, so many "ifs" and "ands," that they are difficult, even for the most intelligent, to understand.

Also, we have records of physicians who collect the amount permitted by the policy (paid of course from the premiums paid by the subscribers) and then send supplementary bills to the people. The result is that the aged not only carry month-by-month premiums, but at the end of an illness find themselves with considerable bills to pay. Again and again they report that their savings are completely wiped out.

One thing must be said in all fairness: The company with which we dealt paid the claims of our people very promptly. By that means, however, it only

promoted more and more recruits. And more to the point, we have no way of checking on the correctness of the charges made by hospitals or physicians against our premiums; or the extent to which the charges made were correctly paid; or what our overall loss ratio was. During the first year and a half, by our own accounting, we were running at between 46 and 65 percent loss ratio; when all of a sudden, in one month, the loss ratio jumped up to 81 percent. We tried to find out the reason; we requested a detailed statement; we received neither a satisfactory explanation nor an accounting.

Part of the difficulty, in all the plans we know anything about, is that all those involved, namely subscribers, hospitals, physicians, entertain the idea that the insurance company guarantees to pay the bills. (Even an eminent nationally known attorney with whom I talked about the matter had that notion.) That is entirely erroneous. In reality, the company pays and can only pay the claims from the total of the premiums it collects; and it can carry a plan only as its premium income equals the claims, plus the charges it makes for carrying the plan, for agents' fees, etc. In our case, the company, out of a total premium of $211,232 for the first 2 years, charged our premium fund $75,000 for overhead and operating costs when we ourselves were doing about 90 percent of all the necessary operations. In addition, the company charged $31,900 for claims reserves. With such charges, the plan would, of course, show a deficit, fictitious though it might be. Repeatedly and respectfully we requested a detailed accounting, without success.

Then, on December 29, 1960, we were served a four-line, peremptory notice that our premium would go up 50 percent, or from $8 to $12 per person, per month, 1 month hence, on February 1, 1961. We protested. In time, the company reduced the demand to 25 percent or to $10. But it notified us that it would continue to carry us only on condition that we turn over our plan, body and soul, to the company to operate. In fact, it made it known to us that that was the reason why it had given us the 50-percent rise in premium notice. Since that would deprive us of the power of check and balance and even take the ownership of our plan from us, we refused to release the plan. The "reason" given was that we were not keeping the books properly. But the company's own auditors had examined our records and found them entirely correct: the field investigator of the commissioner of insurance had also looked over our records and he, too, had pronounced them entirely in order. Still the company insisted on taking over our plan.

We asked the company to make a reasonable commitment that it would not increase the premium again in the near future; it refused. We requested it to to tell us what its retention rate was; it refused.

Meantime, our people kept protesting over the proposed $2 premium increase. Here are a few excerpts, picked at random, just as I was running for the plane (the dashes preceding the names of the States indicate names of towns or cities omitted):

Connecticut, April 10, 1961: "I hope you can really help us old folks ; not take what little we have."

Washington, April 8: "Unfortunately my means are very limited and not expendable; it is with regret that I feel unable to renew my subscription." Pennsylvania, April 10: "Increase in monthly rates was both unexpected and disquieting. Many emeriti *** must regard an increase of $48 per year as somewhat perturbing."

-, Florida, April 10: “I ask the company to return the $32 to us because we are not prepared to continue at the considerable increased rate to $10." California, April 11: "I do not feel I can keep up the insurance if it is increased to $10 a month."

Virginia, April 11: “I am paid up in full at the $8 figure, $10 per month seems like a large premium and I don't have the extra money anyway. I entered the hospital Saturday the 8th. Please send the claim form."

Pennsylvania, April 15: "I am enclosing check to cover the rise in premium. Then, depending on what develops, I will continue or withdraw." Minnesota, May: "Cannot pay more premium."

(No State indicated), May 1: "I cannot continue the insurance, as it will take all the income I have."

-, Florida, May 13: "My university ought to be ashamed of what it contributed to my annuity. It amounts to $110 per month. Pitiable in these days. I cannot afford the raise."

New York, May 13: "The sudden increase of $2 a month is very disturbing to a pensioner. I enclose check under protest."

Virginia, May 18: "My only problem is to get the money to pay the premium. I am all OK for 1961, but wonder about next year. I am on $132 per month U.S. civil service pension, and see little chance it will increase, while the cost of board and room go up. Do you expect the Senate Committee on the Aged and Aging to bring relief?"

Michigan (no date): "There seems to be no alternative, but $10 is much too high."

North Carolina, May 17: "The dollar will not stretch. If I can possibly manage to squeeze out from a bare living the extra $2 I shall not feel like calling upon someone else to contribute. After I am unable to make current expenses, I shall discontinue the contract."

Gentlemen of the Ways and Means Committee, do these people seem to you affluent? Or able to carry even the minimum of commercial health coverage? Who can come to the rescue of these people? What can the insurance industry do for them? Would it be willing at least to cut down its profits to a bare minimum? Does that industry make itself vulnerable when it cites the American Association of Retired Persons as an example of what a private concern can do? Has a competent committee of the industry examined the origin, the management, the profits, the promotional practices of that "association?" And does the industry approve?

The insurance industry has made a weighty representation before you, contending that the Federal Government need not intervene and that they, the insurance companies, are able to protect the aged with commercial policies. But is the insurance industry as a whole really convinced that it actually can meet those needs, at a cost the people involved can bear? If so, how does it explain that it has done so little thus far toward meeting those needs? Also, how does it account for the fact that most of the oldtime and conservative companies refuse to have anything to do with old-age health protection? We have approached 16 of those companies during the last 3 years and all of them have courteously but firmly turned us down. (And, from information which reached us, all our inquiries seem to have landed in the offices of one company.)

It is also dubious whether the medical profession, whose income has gone up enormously during the last decade or two, (physicians' real income went up about 80 percent from 1940 through 1954 alone) even remotely realizes that the income of most aged people is frozen at preinflation levels; and that small as that income was and is, it is worth but one-half in purchasing power of what it was a decade or two ago.

And as to physicians doing considerable work gratis, the records we have for about 1,250 persons, over a period of 3 years, contain not a single mention or other evidence whatsoever about rendering services without fees. On the contrary, again and again we find what seem to us very high fees charged. This may be in part perhaps because physicians generally do not realize that the aged themselves are paying the bills, through the premiums they pay, and not the insurance companies.

The above overall picture, honored Ways and Means Committee, sketchy though necessarily it is, is not one that a nation of the stature of our country can be proud of. A substantial body of data can easily be produced in support of the judgment that a veritable disaster is overtaking a considerable body of aged people throughout our society. One has only, to scan a small book entitled, "It's Cheaper To Die," by William Meichelfelder, or the April 11, 1961, number of Look magazine, to get substantial documentation of the situation as it prevails the country over. The findings of the U.S. Senate Special Committee on the Aging, already referred to, and a number of authoritative books, add greatly to the documentation.

It would seem that a careful examination of available evidence would convince any unbiased person that only the Federal Government can do what must be done to rescue those of our aged people who now exist and suffer under profound misery and distress; and that the rescue should be carried on as a matter of human and citizenship right, through dignified national means, and not by any method which would subject the aged people to the further disgrace of public charity.

THE NATIONAL COMMITTEE ON THE EMERITI, INC.-THE AMERICAN ASSOCIATION ON EMERITI, LOS ANGELES, CALIF.

BOARD OF DIRECTORS

Wade E. Church, former attorney gen- Edwin G. Nourse, former Chairman, eral, State of Arizona

Doctor, I notice you are president of the Student American Medical Association. If you will otherwise identify yourself by giving us your full name and address, you will be recognized.

STATEMENT OF WILLIAM B. WEGLICKI, JR., PRESIDENT, STUDENT AMERICAN MEDICAL ASSOCIATION

Mr. WEGLICKI. Mr. Chairman and members of the committee, I am William B. Weglicki, Jr., of Baltimore, Md. I am appearing here today as president of the Student American Medical Association. The Student American Medical Association is an autonomous organization with more than 17,000 active medical student members, and over 30,000 affiliate intern and resident members. In order to briefly acquaint you with the purpose of the SAMA, it seems fitting to quote from the constitution of our organization, which states:

The objects of this association shall be to advance the profession of medicine; to contribute to the welfare and education of medical students, interns, and