Now, therefore, when you talk about what "they" did 5 years or 10 years ago, that was "they." "They" would be a different Secretary of Health, Education, and Welfare. I am a certain kind of Secretary of Health, Education, and Welfare. Mr. CURTIS. I am not trying to personalize this, Mr. Secretary. I am trying to relate it to ideas. And when I speak of "they," I am talking of the people who advanced the theories and the arguments behind these other approaches. And they, the same people, are the ones who are advancing the arguments and theories behind the approach of the King bill. And you have agreed with them to this extent. As a Congressman I have to be concerned, in seeing that we are dealing with basic law, as to what it might lead to, because some things are just ad hoc, just the issue itself. Others, we know-we put them in, and we expect them to grow and expand, as we did the social security system itself. So it becomes important to examine the theory of this. And I do not think the AMA and other people are amiss in saying and arguing that the theory behind this is not to limit it here, but this is only a beginning. Then I seek to examine with you what logic we can use that would hold it to this position; or whether the logic is to expand it. Let me go on to one other area. As I visualize this, if we limit this to people over 65, I would wonder how we could forbid this program to the disabled on social security, who almost by definition would be more in need of medical care than the aged. And let me add another group-because there are others, too— the widows and the orphans, the dependents on social security. What logic would there be for us not to extend it to them? And the pertinency is: Maybe that is logical; we cannot afford it now. But the theory of adopting this, at this time, would be that we will extend it to these other groups. Secretary RIBICOFF. The pertinency, sir, is my contention on the first page, that this is the most conservative approach. And the reason that it is the most conservative is that it is limited by taxes, because in this program those who will be the beneficiaries will make a contribution of a tax, and they know their dollars are going to pay for this program. Under public as: istance or Kerr-Mills the amount that people will pay for their medical care is lost in the general revenues, and you cannot identify it. Under this bill every man and woman knows that there will be taken out of his paycheck one-quarter of 1 percent of his pay. The things that you advocate, Congressman Curtis, cost a lot of money. And you have the hard reality of raising money. Under this bill there is a direct relationship between the taxes you pay and the benefits you get. Those who believe in conservative financing of the cost of government realize that if you identify the benefits with the cost, you have a direct relationship. Under the social security program there is a direct relationship between the cost and the benefits. Mr. CURTIS. Mr. Secretary, let me make this observation. After we got it worked around to the point that I think it was a good program, I supported the provisions for disability in social security. And we definitely put an age limit of 50 on it with the full intention of seeing how it would work. And without trying to kid anybody that if it proved to be workable, we would then be in to remove the age of 50. And at the time we debated it, we were not trying to say that this was just a bill limited to people over 50. There was no logic that could distinguish between a disabled person over 50 and a person disabled under 50; because disability was the criterion. And so I raised the proper question: Yes, we have a problem of health care for the aged, but we also have a problem of health care for disabled people. And we have a problem of health care for widows and orphans. And I think this committee has to view this step here from the standpoint of where it would lead to. It is for these reasons: When you start compulsory programs, including all people over 65, knowing these matters that I have presented, I think people can very properly warn all our citizens to think this over carefully, becaause this can lead to and would become socialized medicine. I believe that it would. I believe also that many of the people that support it fully want it to. And I respect those people, because I think their interest is the same as mine, which is to get the best health care for our people. I just happen to disagree with them fundamentally that that is the way you get better health care. And that is why I was so anxious for this committee to start dealing in some of the information that we should get and get away from the epithets and the language that is being used-on both sides, in my judgment; and I have probably been guilty of some of it myself-but confine ourselves to looking at this thing to see where the problem is. One very important thing about your bill is that I think it is a great limitation over what programs are now being offered in our society through the private sector. The people who are going to go on social security, if this plan were adopted, would start paying in, say, at the age of 20, or at the age of 30. But they get no health insurance at all until they reach 65. There are policies in the private sector now where you can take health insurance, and you start paying for it now, and you get coverage now, and it also is fully paid up at the time you are 65. Some of your labor-management contracts--and I am happy to see that the labor leaders have helped in this area. want to give credit to management, too. They have prepaid health insurance for their retirees. Secretary RIBICOFF. Not very many. I Mr. CURTIS. No. It is very recent. This whole thing is a recent problem, really. And of course the social movements to meet the problem have been equally recent. But there has been a tremendous increase in this area, recent as it is. Secretary RIBICOFF. Let me give you an example. And do not forget: Someone pays for that, too. Here is an excerpt from Fortune magazine, July 1960. It states that Fortune surveyed the worker retirement plans of the 25 largest industrial corporations in the United States. Together, these companies employed 2,800,000 workers. All of the companies have some kind of group medical insurance programs for active employees. But 14 of them, with 1,800,000 workers, lo not contribute at all toward premium payments for retired workers' health insurance. There are some very stringent limitations on virtually all the industry plans studied by Fortune. Plans to which companies have contributed heavily have on the whole high eligibility requirements: 20 years of employment at Swift; 15 at Jersey Standard, and Standard of California. In most plans, including those paid for by the retired worker himself, benefits are substantially lower for retired than for active workers. Ordinarily, major medical policies available to active employees cannot be extended into retirement even at an individual premium rate. A clause automatically canceling a dependent wife's benefit when a retired worker dies is almost universal. In some plans medical expenses incurred by the retired worker are deducted from the face value of his company-sponsored life insurance. In addition to these limitations, most of the programs were set up to provide medical insurance only for future retired workers. For this reason, few retired workers are actually receiving the medical benefits. Now, when it comes to private insurance companies, I think they are doing a good job. Mr. CURTIS. All right. Let us stop at that point, there. Has the Department of Health, Education, and Welfare gathered any statistics on this? Or are you relying on Fortune magazine? Secretary RIBICOFF. The reason I used Fortune is that every once in a while when I encounter a conservative argument, I find it is good to use a conservative answer instead of HEW's answer. Mr. CURTIS. It makes no impression on me, Mr. Secretary. I will confine my question to whether-this is a yes or no-the Department has done some research in this area. That is a "yes" or "no" question. Mr. CURTIS. How much improvement has there been since July 1960, when this article was written? A year has passed, and this I think you will agree is a dynamic area. I am just curious as to how much advancement there has been in the year. Secretary RIBICOFF. We have a memorandum here, provisions for continuing hospital insurance for retired workers under collectively bargained employee benefit plans. It is the latest that we have. And I will be pleased to put it in the record at this time, and send it up to you. It is a few pages. I could read it, if you want. Mr. CURTIS. No. First, I am trying to find out what work you people have done in this area. What is the date of that, Mr. Secretary? Secretary RIBICOFF. This is July 18. It is dated July 18, 1961. It is from Ida Č. Merriam, Director, Division of Program Research. This was transmitted to me by Mr. Cohen. I am submitting his summary comments as well. Mr. CURTIS. I would like to see it. (The above-mentioned material follows:) To: The Secretary. From: Wilbur J. Cohen, Assistant Secretary. JULY 18, 1961. Subject: Provisions for continuing hospital insurance for retired workers under collectively bargained employee benefit plans. Attached is a memorandum which summarizes available data on the prevalence of provisions under collectively bargained plans for the continuation of hospital insurance coverage of a worker after retirement as a member the existing group. No similar data are currently available for plans not under collective bargaining. It should be noted that the data cited-taken from the Bureau of Labor Statistics continuing study of 300 health and insurance plans under collective bargaining-refer to less than 15 percent of the workers having hospitalization insurance through their place of employment (and to less than 10 percent of all wage and salary workers in the country). Moreover, the study excludes plans of fewer than 1,000 employees, and it is probable that continuation of protection was less frequent among these small plans. The BLS study shows that provisions for continuing hospital care insurance after retirement have been steadily increasing under collectively bargained plans, but the growth has not been spectacular-at least up to 1959, averaging about 1 to 2 percentage points a year. In early 1959, about 42 percent of the surveyed employees were in firms that provided hospital protection both before and after retirement. Since 1959, major negotiations in the steel, aluminum, and meatpacking industries for extending hospital insurance after retirement have brought this coverage figure up to an estimated 53 percent of the surveyed workers. There is thus some indication that the delay in congressional action on a realistic medical aid plan for the elderly has resulted, and will continue to result, in increased pressure by the unions to include such benefits within the scope of the collective bargaining agreement—at least for the largest firms. The attached memorandum also points out the limitations of extending hospital care protection to retired workers through employee-benefit plans. First, even when such benefits are incorporated in the plan, they may refer only to future pensioners, not to workers who have already retired. A 1960 BLS study shows that 69 percent of the plans that continued hospital benefits after retirement, covering 87 percent of the employees in such plans, provided hospital benefits to both prior and future pensioners; the remaining plans covered future pensioners only. Second, in most instances workers must in effect qualify as pensioners in order to continue receiving hospital expense protection. Because of these requirements-usually 5 to 15 years of service or of participation in a hospital expense plan the practice of continuing coverage after retirement is generally confined to workers who remain with a single employer for a considerable period before retirement. Third, because of the relatively high costs involved in providing elderly persons with hospital care protection, many plans that extend such protection reduce benefit provisions after retirement in a variety of ways-such as placing monetary or time limits on benefits. According to the 1959 BLS study, 41 percent of the plans with hospital benefits for retired workers, covering 27 percent of the employees, curtailed benefits in some fashion after retirement. Fourth, many plans require workers after retirement to bear a larger share of the costs. According to the 1959 BLS study, 3 out of 4 employees in plans where preretirement hospital benefits were jointly financed had to pay the entire cost after retirement. JULY 18, 1961. U.S. Government memorandum. To: Mr. Wilbur J. Cohen, Assistant Secretary. From: Ida C. Merriam, Director, Division of Program Research, SSA-OC. Subject: Available data on provisions for continuing hospital insurance for retired workers under collectively bargained employee benefit plans. Only limited data are available on the prevalence of provisions under employeebenefit plans for the continuation of hospital insurance coverage of a worker after retirement as a member of the existing group. The Bureau of Labor Statistics has collected continuing data for several years on the prevalence of such provisions under selected collectively bargained plans,' but collectively bargained plans, in toto, are estimated to represent less than two-fifths of all workers in the Nation having hospitalization insurance through their place of employment. Moreover, the plans studied by the BLS-numbering some 300, of which 293 has hospital insurance in 1959--cover only about 40 percent of the estimated number of workers under all collectively bargained plans, even 1 Bureau of Labor Statistics, "Health and Insurance Plan Under Collective Bargaining: Hospital Benefits. Early 1959" (Bulletin No. 1274), 1960, and "Analysis of Health and Insurance Plans Under Collective Bargaining, Late 1955 (Bulletin No. 1221), 1957. though including some of the largest plans in the country. Thus the following summary data on the situation regarding hospital insurance for retired workers under collectively bargained plans refer to less than 5 million employees or about 14 percent of the 38 million workers estimated to have hospitalization insurance at the beginning of 1960. (There were an estimated 58 million full-time and part-time wage salary workers in public and private employment in 1959.) According to the BLS study, the proportion of employees in those of the 300 collectively bargained plans that continue hospital protection after retirement rose from 36 percent in 1955 to 42 percent in 1959. The proportion of workers in plans that provided protection for employees' dependents both before and after retirement increased from 40 to 44 percent. These figures indicate an average gain of 1 to 2 percentage points a year-a steady but not spectacular growth. Since 1959 there have been further gains. Major negotiations in the steel, aluminum, and meatpacking industries in late 1959 and early 1960 have newly provided for such continuation of coverage after retirement. It is estimated that if the BLS survey figures are adjusted to take account of these additional settlements, provisions for extending hospitalization benefit protection to workers after retirement would be found in 44 percent of the plans covering 53 percent of the workers." It should be noted that not all the plans that extend hospital benefits to workers upon retirement also extend coverage to employees who had already retired when the plan was initiated or expanded. A later BLS study shows that in January 1960, 69 percent of the plans that continued hospital benefits after retirement, covering 87 percent of the employees, provided hospital benefits to both prior and future pensioners; the remaining plans covered future pensioners only. The coverage of prior pensioners was more frequently provided by large plans than by small plans. Another important consideration is the fact that workers in most instances must in effect qualify as pensioners in order to continue receiving hospital expense protection. In some plans, the requirements are not spelled out, except to state that the protection will begin upon retirement. But in many cases the requirements are explicit, calling for a specified number of years of service (5, 10, or 15), of years of coverage (usually 5) in the group hospital plan as an active employee, or both. In effect, then, the practice of continuing coverage after retirement is confined to workers who remain with a single employer for a considerable period before retirement. Because of the higher costs involved in providing elderly persons with hospital care protection, plans that extend such protection are often concerned about keeping costs down. Some plans, for example, may reduce one or more of the benefit provisions for each disability after retirement, i.e., the amount of the daily room and board, extra service allowance, and/or duration. Frequently, the same benefit schedule is provided, but a lifetime limit ($1,000 to $2,500) is placed on the total amount of hospital benefits provided or on total payments for all hospital, surgical, and medical benefits combined during the retirement period. A few plans may specify that a set of benefits for retired workers and their dependents will be payable only once during the worker's retirement period. Once these benefits are exhausted, coverage ceases. Still other plans may discontinue benefits during the retirement period after a specified timeusually a year or less. There are also a few plans that engage in the practice of charging the benefits paid under hospital insurance against group life insurance which such insurance is continued after retirement. According to the 1959 BLS study, 41 percent of the plans with hospital benefits for retired workers, coverage 27 percent of the employees, curtailed benefits in some fashion after retirement. The concern with costs is also reflected in the method of financing hospital benefits after retirement. In the 1959 BLS study, four-fifths of the employees under plans that extended hospital benefits to retired workers and whose preretirement benefits were jointly financed would have their method of financing The 300 selected plans range in coverage from 1.000 to one-half million workers each. Virtually every major manufacturing and nonmanufacturing industry was represented in the sample studied. 3 AFL-CIO, "Collective Bargaining Report," May-June 1960, p. 31. 4 Donald M. Landay, "Extension of Health Benefits to Prior Pensioners," Monthly Labor Review, August 1960, pp. 841-843. |