We definitely are not in favor of this measure and its provisions. In your study of H.R. 4222, please consider what it would mean to the dentists throughout the Nation. It is the conviction of the Jackson District Dental Society that the passage of this bill would be the first step toward the Government being the sole purchaser of health for the individual. We urge that you cast a nega

tive vote on H.R. 4222.

Please include this letter in the record of hearings before the House Ways and Means Committee.

Very truly yours,

BLAINE B. JOHNSON, D.D.S.,
Secretary-Treasurer.

The CHAIRMAN. Mr. Hayes, many of us on the committee know who you are, but for purposes of this record, will you please identify yourself?

STATEMENT OF A. J. HAYES, INTERNATIONAL PRESIDENT, INTERNATIONAL ASSOCIATION OF MACHINISTS, ACCOMPANIED BY DR. WILLIAM SAWYER, MEDICAL CONSULTANT

Mr. HAYES. Yes, sir. My name is A. J. Hayes. I am the International President of the International Association of Machinists, a labor organization representing approximately 900,000 workers in the United States and Canada.

The CHAIRMAN. Mr. Hayes, you have with you Dr. William Sawyer?

Mr. HAYES. Yes. Immediately to my right is Dr. William Sawyer, who is the full-time medical consultant to the International Association of Machinists.

The CHAIRMAN. We are pleased to have you gentlemen with us this morning and, Mr. Hayes, you are recognized.

Mr. HAYES. Mr. Chairman and gentlemen of the committee, in the capacity in which I serve at the present time, I have been associated with some groups and organizations engaged in the research and the study of medical economics. These have included President Truman's Commission on the Health Needs of the Nation and the Foundation of Employee Health, Medical Care, and Welfare, which is a jointly sponsored organization sponsored by the Machinists Union and a multiple-plant corporation, U.S. Industries, Inc. These and other associations and experiences have taught me that far too many retired people who need medical care do not receive it and for the worst possible reason. They do not receive it in this very rich country of ours because they cannot afford it.

In my opinion, an opinion which I hope to justify with facts and figures, the problem with which this committee is dealing, the problem of providing a system of adequate medical care for the aged, is one that seriously affects the welfare of the working people of our country. It concerns not only the aged and the retired, but also their children and their children's children, for when aged parents or grandparents cannot finance care for the inevitable infirmities that come with their later years, the burden falls heavily on their children, and when this happens family funds that should properly be used for the nourishment and education, clothing, and housing, and medical care of the young must too often be drained away to provide medical care for the old.

This problem has been with us as a country for many years. I remember testifying on certain phases of it before a committee of

the House back in 1954. It was a problem then, it is a problem now, and it will continue to be a problem 5 years from now, or 10 years from now, or just as long as Congress does not act to solve it. So I want to talk about medical care for the aged in terms of the facts that impel me to believe that the only sensible and humane solution is to establish, finance, and provide such care within the framework of the Social Security Act.

Specifically, I am here to speak in favor of H.R. 4222, the Health Insurance Benefits Act of 1961, introduced by Congressman King of California. I believe this legislation to be at long last a step in the right direction. The facts that support H.R. 4222 are well known to all who have studied this issue. However, I want to list them in logical sequence so that there can be no mistake as to the inescapable conclusion to which these facts lead.

First, the Nation's population is growing older. In 1920 only 4.7 percent of the American people were 65 years of age or over. By 1940 this figure had risen to 6.9 percent, and by 1960 it rose to 9.2 percent. According to the Bureau of the Census more than 1612 million Americans have now reached and surpassed the age of 65, the age that is customary for retirement from active employment. Each year this segment of the population increased by another onethird of a million, and this means that each year the problem of how the elderly will pay for medical care concerns more and more people, and more families and over a longer period of time.

Secondly, it is a commonly known and easily observable fact that as people grow older their need for medical care grows greater. It is really not necessary to prove this obvious fact with statistical data, and yet, in this case statistics seem to serve to dramatize the issue, for they show that even with limited incomes men and women over 65 years of age spend more than twice as much per person per year for medical care than those under 65 years.

The Health Information Foundation has shown, for example, that in 1957-58 men and women over 65 years of age spent an average of $177 annually for medical care while those under 65 averaged only $86 per year, and, remember, this is what was actually spent, and I emphasize this. This was what was actually spent, and not what should have been spent. There is no statistical measurement which will show how many millions of our retired citizens do not seek or do not get the medical care they need, simply because they cannot afford it.

And this brings me to the third fact that I want to stress, namely, that the vast majority of Americans over 65 years of age cannot afford the medical care that they need simply because they have reached the time in their life when their incomes are severely reduced. Of the 15.3 million individuals over 65 years of age and over who were not in institutions in 1959, 55 percent had annual incomes of less than $1,000. Another 23 percent received from $1,000 to $2,000 per year, another 9 percent from $2,000 to $3,000. In other words, only 13 percent of all people 65 years of age and over in this country had incomes of more than $3,000 per year.

The significance of this figure is underscored by the findings of the Bureau of Labor Statistics which show that a retired couple needs an annual income ranging from $2,390 in Houston, Tex., to $3,112 in

Chicago to maintain a modest, but adequate standard of living if they do not need unusual medical care.

When we compare the actual incomes of the aged with these Bureau of Labor Statistics' budgets it becomes convincingly clear that a large majority of our retired population simply cannot afford to pay for medical care with the incomes they have. Of course, some may say, very true, but what about their savings? Why shouldn't they use their savings to take care of their medical care costs at this stage in their life, and this, in essence, is what the American Medical Association says.

It takes the position that the elderly should be required to take what we call a means test in order to be eligible to receive medical care under legislative programs already in existence. In answer to that contention, let me state very clearly that I do not believe that it is morally right for a country as wealthy and industrially advanced as ours to require our own citizens who have directly contributed so much to the Nation's wealth during an entire lifetime of labor to take a means test to be entitled to medical care in their old age. As a matter of fact, too many of these people are already too close to the bare edge of subsistence.

And this brings me to the fourth fact that I want to restate for the record; namely, that most elderly and retired citizens have little or no savings. This was demonstrated by a Federal Reserve Board survey of consumer finances made in 1959, and this survey showed that of 8 million families in which the head was 65 years of age or over, 29 percent had no liquid assets, 17 percent had up to $500 in reserve, and 21 percent had from $500 to $2,000. In other words, 67 percent of these families, or a total of 5,630,000 had savings of $2,000 or less.

Now, surely, anyone who has had any experience with prolonged illness or who has spent even a few days in the hospital knows how fast $500 or $1,000 can be absorbed by medical or hospital bills, and any of the 5,630,000 families could be quickly wiped out financially by an illness of even moderate severity or duration, but it is not right that we should require this of our own people.

It is not proper that we require any retired American to sacrifice his home, his car, his savings, and his pride because he needs medical care, not when we know how to spread the risk through a sound system of social insurance which will be of benefit to all and which will cause none to suffer. Of course, I realize that some may say, yes, insurance is the answer, but why social security? Why not private insurance?

Well, again, my answer is indicated by what I consider to be the facts, and the fifth and final point that I want to add to this résumé of relevant facts is that private insurance has never met the problem and because of built-in limitations it perhaps never will.

Testimony by Congressman Dingell of Michigan last year before the Senate Subcommittee on the Problems of Aged and Aging shows that only 40 percent of all people over 65 years of age have any form of health insurance at all. Statements before the same committee by the former Secretary of Health, Education, and Welfare, Arthur Flemming, admit that some of this coverage is inadequate, and from the experience of our own members, we know that some of it is downright deceptive.

Many of the health insurance policies can be canceled at the option of the insurance company, and this option is too often exercised about the time the first illness occurs. When I discussed this type of situation with the president of one of the major health insurance companies some years ago, he told me point blank that private health insurance is intended for healthy people. As we have seen, the elderly are the least healthy group in our population. In fact, until this problem became a political issue individual health and accident policies which could not be canceled by the companies were practically unavailable to people over 65 years of age. Even today, though, such policies have been made available to some of the aged. The McNamara committee has found that of people who have been insured before the age of 65, but who did not have any insurance after reaching age 65, 39 percent could not afford it; 20 percent had been covered by group policies that could not be converted at retirement; and 13 percent had been canceled by the insurance company.

Although the insurance industry has been moved by the controversy over health care for the aged to design special policies for older people, it is obvious that private insurance by its very nature, will always be inadequate to meet the health care needs of people over 65 years of age, and this is true because, as we have seen, the aged are a high-risk group so far as illness and accidents are concerned. In the insurance business a high risk must necessarily carry a high premium. And yet, as we have also seen, most of the aged on their reduced incomes cannot even afford the normal premiums. No amount of finagling or working out of special policies by the insurance industry can overcome these economic realities, and the result is that existing private insurance plans, even those that the industry has tried to tailor to meet the needs of the elderly, are clearly inadequate.

The answer, in our judgment, is a program of insurance that spreads the cost of high-risk, old-age health insurance over the entire working life of the insured, and that is what H.R. 4222 will do.

Gentlemen, let me sumarize these basic facts. Our population is. aging, the aging have a higher incidence of illness than the rest of the population; the aging have low incomes and few savings, and private insurance is indequate to meet the great social problems involved.

These facts and the statistics that support them have been placed on the record many times. No matter how you arrange them or add them up, they still come out to the same answer. It is an answer that has been accepted by practically every other civilized and industrialized nation in the world. Not only have such relatively advanced nations as England, France, West Germany, Switzerland, some of the Scandinavian countries, and Italy brought medical care within the reach of workers through sound principles of social insurance, but even countries whose wealth and resources are far below ours, countries such as Bolivia, Brazil, Burma, Chile, Greece, India, Japan, Portugal, and Venezuela, to name but some, have gone much further than we have to remove the financial risks of sickness and accidents through such principles.

We are, in fact, the only major industrial nation in the world that does not do so. In that H.R. 4222 would provide hospital and related services to one significant and growing sector of our population, it would, let me repeat, be a step in that right direction.

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Before concluding, I want to assure the committee that despite the propaganda smokescreen that is being laid down by the AMA and the insurance lobby, it is our judgment that the American people are with Congress on this issue. Even though the doctors are not affected actually by H.R. 4222, the AMA seems to oppose it on the ground that it is a first step toward what they call socialized medicine. Of course, as someone has said, as I read in the newspapers, the AMA seems to define socialized medicine as a dangerous trend toward health.

However, I think that H.R. 4222 is more a step toward good sense than toward socialism. It is only good sense to let American workers pay now for medical care they will need later. It is only good sense to make it possible for them to stop worrying about how they are going to carry the backbreaking costs of hospitalization for their parents and their grandparents, and because it does make such good sense this issue was very much in the minds of more than 1,200 delegates that attended our recent convention in St. Louis, Mo., and that convention unanimously approved a resolution supporting the principle of health care of the aged under social security. So testifying this morning, I am, of course, carrying out the desires of our membership as formally expressed in that convention resolution.

However, on this issue I know that I am expressing more than the sense of a formal resolution. I am expressing a heartfelt desire of an overwhelming majority of the members of the Machinists Union and of the American labor movement to see the humane principle of medical care for the aged under social security established in our country.

That concludes the statement I want to make to the committee this morning. However, as your chairman has already stated, I would like at this time to have Dr. Sawyer, who is a full-time medical consultant for our organization, supplement my statement, with the permission of the Chair.

Dr. Sawyer has a lifetime of experience in the practice of medicine. He is not only a competent and practical physician, but, equally important, Dr. Sawyer has a social conscience. After Dr. Sawyer's testimony, we shall be very glad to answer any questions.

The CHAIRMAN. Dr. Sawyer, you are recognized, sir.
Dr. SAWYER. I hope I can do it justice.

My name is William A. Sawyer, M.D., and I am a medical consultant to the International Association of Machinists. Since 1919, I have made my home in Rochester, N.Y. Before I entered my present association with the Machinists in 1953, I was medical director of the Eastman Kodak Co. I held that position for more than 30 years. One of my chief responsibilities at Kodak was to provide medical supervision for the employees sick benefit program. In this position, I became well acquainted with the medical care problems and the quality of medical care provided by the medical profession of the community who treated the 30,000 employees in the traditional fee-forservice method.

In my present position, I am conducting a health education program for the Machinists Union. I write an article each week in the Machinist paper on some phase of health and medical care of special interest and applicability to the members. The weekly Machinist paper goes to the homes of the entire 900,000 membership.

From the many letters received, I have gained new insights into first, what workers expect from their doctors; second, their difficul