Mr. KING. I have just one question, Mr. Joanis. I have noticed just recently the recommendation that under the provisions of H.R. 4222 if the payment should be made in cash that would soften the bill a bit or make it more acceptable or more compatible with free enterprise. When would this decision be arrived at?

Mr. JOANIS. I don't know that a decision has been arrived at, sir. I don't think the position, as I would understand it, is that the dollars made available under this bill be paid in cash. The thought is, as we have expressed in our testimony, that if those 65 and over do not have sufficient wherewithal to provide for themselves, even with admittedly careful budgeting, then the dollars should be made available to them and let them decide whether this is where they are going to spend their dollars or in some other area. I don't know that anyone, at least no one to my knowledge, has made the suggestion that the specific dollars provided for here be paid to the individual and he turn around and pay them to the nurse. I did not understand that to be the case.

Mr. KING. It has been mentioned.

Mr. JOANIS. This I had not heard.

Mr. KING. I think a doctor or two yesterday indicated it would be a much better proposal. But do you, Mr. Joanis, know any other groups, other than strictly private ones, who pay in cash, say Blue Cross, Blue Shield?

Mr. JOANIS. Blue Cross and Blue Shield have two methods of providing coverage. I don't happen to be an expert in that field. Blue Cross and Blue Shield have two methods of paying benefits, one to the service, where the person actually received the service. They necessarily have another way of paying through cash and identifying, where the situation does not comply with the regulations for this, for giving the service, they then have to have the cash benefit. In the insurance industry, as you know, we pay a cash benefit.

Mr. HUBBARD. Of course, one thing might be noted, Mr. King, and that is the real critical fact. The individual who purchases this insurance, whether it be Blue Cross or other protection, or the employer if it happens to be an employer plan, he has the option to take the resources which are available to him and convert it into health service. But the option, the initial option, rests with him. This is the freedom of choice that he has available.

Mr. KING. You gentlemen are aware that such a practice was adhered to 2 years ago in many States in respect to allowances and they soon got around to the vendor payment method.

Mr. JOANIS. When they start becoming concerned about how the individual takes care of himself that is where the shift starts to take place. We still feel that the basic principle is such that the individual should be given the right of making this choice. We cannot legislate away from a person his doing the right thing with his money, I don't think. But this bill would do it. Conceivably you could have housing and clothing and a number of other things. We are even getting concerned I gather on recreation in some areas.

Mr. KING. On occasion when I visited some rest homes and hospitals set up for aged persons I think it would strike one quite graphically that this system in ever so many cases would not be suitable or recommended.

Mr. JOANIS. Yes, I think there is going to always be this hard core of individuals that we are going to have to take care of and we should take care of them in that group rather than to spread this kind of coverage and this kind of system to everyone because we have that small group of persons that will need that kind of care. We don't doubt that at all, and never have.

Mr. KING. Thank you, gentlemen.

Mr. JOANIS. Thank you, Mr. Chairman.

Mr. KING. Mr. Lourie, will you identify yourself for the record?

STATEMENT OF NORMAN V. LOURIE, PRESIDENT OF THE NATIONAL ASSOCIATION OF SOCIAL WORKERS

Mr. LOURIE. My name is Norman Lourie and I am president of the National Association of Social Workers. I am accompanied by Mr. Rudolph Danstedt, who is our Washington representative. I am employed as deputy secretary of public welfare in the State of Pennsylvania. I do not represent that department today, but I would like to point out that, as members of this committee probably know, the Governor of Pennsylvania, David Lawrence, is 1 of 30 Governors who has endorsed the contributory association insurance approach to health care for the aged. As a matter of fact, he is going to be before you on Monday to discuss this particular bill. I would appreciate the inclusion of my full statement in the record but I would like to comment on and read some portions of it.

Mr. KING. Without objection, it will be included in its entirety in the record.

(The statement referred to follows:)

STATEMENT OF NORMAN V. LOURIE, PRESIDENT OF THE NATIONAL ASSOCIATION OF SOCIAL WORKERS, ON H.R. 4222, RELATING TO THE PROVISIONS OF HEALTH BENEFITS TO THE AGED

Mr. Chairman and members of the committee, I am Norman V. Lourie, president of the National Association of Social Workers. While I am employed as deputy secretary by the Pennsylvania Department of Public Welfare, I do not represent that department or the State of Pennsylvania here today. However, as members of this committee undoubtedly know, the Governor of Pennsylvania, the Honorable David E. Lawrence, is 1 of the more than 30 Governors who have endorsed the contributory social insurance approach to health care for the aged.

I would appreciate the inclusion of my full statement in the record. I would then like to comment upon it.

The National Association of Social Workers is a professional membership organization, which I represent, composed of 30,000 members who are employed in governmental and voluntary social welfare-issue organizations.

Our association and its predecessors have been on the record for many years in support of comprehensive health care to all individuals through contributory social insurance. Over the decade and a half since the first Wagner and WagnerMurray-Dingell bills, we have supported the social insurance approach to health care. Subsequently, we have endorsed more limited measures providing hospitalization insurance for persons covered by OASDI and last year the more comprehensive Forand bill.

Today we support H.R. 4222, introduced by Mr. King for the Kennedy administration. We urge a program of comprehensive medical care, on the premise that society has an obligation to help restore a sick person to health. When the means are available to avoid ill health and consequent denial of satisfying living and a good life, a civilized society has the duty to assure that such means shall be provided. There is now general acceptance that society has an obliga

tion to provide food, shelter, and clothing to the individuals who cannot because of age, disability, or other limiting circumstances secure these for themselves. We would hold with the President's Commission on Health Needs of the Nation that access to the means for the attainment and preservation of health is a basic human right, and that we should be and are ready to implement this right. In an absolute sense, good health is a condition to be desired over almost any other condition of life. With the phenomenal progress that medicine has made, health today is a purchasable commodity.

We have recognized, of course, over the years that the attainment of the ultimate objective of comprehensive medical care for everybody-an objective that has been realized in substantial degree in the other industrial countries of the world-is dependent upon public appreciation of the possibility and desirability of a wider scope and higher quality of medical care than is available today, and a willingness to pay for such care through some organized system. The past decade or so has brought remarkable developments in private insurance, in health cooperatives, in management-union-sponsored programs, and in Governmentfinanced health care. These programs have made a distinctive and significant contribution to the financing as well as development of health care services to people still in the labor force and their dependents.

All of us, I am sure, take pride in the pragmatism that marks much of our American approach to our social problems. We accept and appreciate the mosaic of health care that has been developed in the United States through programs of health care for veterans, the medicare program for dependents of men in the Armed Forces, the recently instituted program of health services for Federal employees, the hospital cost and physicians' fees coverage in Blue Cross and Blue Shield, the variety of plans offered by private insurance companies, the medical care programs for recipients of public assistance, including assistance to the medically indigent aged, union-management programs developed out of collective bargaining, cooperative health organizations, and others. These developments are certainly in the directions of our association's policy statement on health which reads:

"A comprehensive national health program, which will assure full health care to all individuals by applying the principles of group payment and tax support or the principles of compulsory national health insurance to a total range of health insurance measures, is endorsed."

As I indicated earlier, we have made progress in providing health services to the employed, the veterans, and other special groups, even though we are still far short of a comprehensive program of medical care.

As far as persons outside the labor force because of age or disability it is only in the last 2 years because-in part-of the stimulation of health proposals by the former Congressman Forand that we have seriously begun to plan for the health care needs of this group. The enactment of the Kerr-Mills medical assistance for the aged seems to me to have conceded that time was too short to wait for a promised expansion of private insurance to the aged and that a public program was needed to finance the cost of medical care for older people. In 1959 the administration argued that the extension of voluntary health insurance programs to the older population was such that in just a few years the coverage would move from 40 to 70 percent-no clear indications were given, however, as to the adequacy of such private programs. However, in 1960, the administration, under pressure of the possibility of a social security approach to health benefits for the aged, dropped its optimistic predictions of the year before and recommended a program somewhat paralleling this approach in eligibility and coverage, but with the limiting exception that it was to be financed out of the general revenue-Federal and State. Thus a bipartisan agreement was reached that Government had an obligation to finance health services for the aged.

I do not believe that health care problems of the aged and the handicapped are going to be significantly dealt with by taking a little bit of this and a little bit of that and creating a combination of governmental and voluntary programs. Certainly there seems to be no evidence that private insurance companies, for example, have marched ahead very rapidly over the last several years in increasing the proportion of older persons who are covered by a primary though limited form of medical care; namely, hospitalization. Today, according to an estimate of the Senate Special Committee on the Aging, not more than 46 percent of the aged have some type of hospital insurance, much of it highly restricted. While it is encouraging that some of the larger and well-established insurance companies are assuming leadership in developing health insurance

programs for the aged, their sales prospects do not seem promising in view of the fact that almost 60 percent of the aged have annual incomes under $1,000. Private or voluntary insurance has not yet been established on a prepayment basis to cover medical illness during old age. A few industrial plans permit retirees to continue in the system but not on a prepayment basis. Virtually all private and voluntary plans require payment during the period of coverage. This means that retirees who are already on reduced incomes must continue to pay an insurance premium.

Furthermore, most private and voluntary plans have lumped the aged into a single group, which is admittedly a high-risk group and which, therefore, pegs the insurance premium at a high level.

The high cost of health insurance plus the high-risk factor accounts for the finding by the National Opinion Research Center conducted for the Health Information Foundation, in 1957, that one-half of the aged persons without health insurance who wanted it either could not afford it, had been refused insurance, or had had it canceled.

Of those who had private insurance, the coverage is typically limited and the proportion of the bill paid by such insurance is less than that paid in the case of younger insured patients. According to the national health survey conducted from 1958 to 1960, the percentage of aged patients covered for less than one-half of their bills is more than twice the percentage for the total of the insured patients.

While it is encouraging that the Congress through the Kerr-Mills bills sought to deal with the problem of medical indigency of the aged through measures that permit relief of the somewhat stiffer conditions of eligibility required of recipients of old-age assistance, the programs are nevertheless relief programs with eligibility requirements that are the necessary concomitants to relief programs. As this committee knows, some progress has been made among the States in taking advantage of this medical assistance legislation; 18 States have adopted this legislation to date. In some areas, the new State programs have done little in extending service, but have done much in relieving State fiscal pressures and in aiding hospital financing. In my own State of Pennsylvania, we have just this week enacted legislation to implement the Kerr-Mills legislation.

However, this legislation still requires that the applicant meet a series of income tests, a necessary condition, of course, unless the policy decision has been reached that health care is a matter of right granted by the Government or secured as an inherent part of a social insurance approach. I would like to append as part of this statement a part of a recent memorandum prepared by our department of public welfare, outlining what is involved when a person applies for public assistance, and then comment briefly upon the implications of this process to the aged applicant for medical assistance.

In the first place, the individual has to come to the public welfare office, which to a great many of these individuals is a new and discomfiting experience, since the odds are that he has never had to apply for any form of public aid before. The applicant has to be prepared to provide a great deal of information about himself. Why is he applying? How has he managed up to now? What are his actual potential resources earnings, benefits as a veteran, OASDI, railroad retirement, workmen's compensation, or any other disability insurance or retirement program sponsored by employers pr unions? He has to provide information about his personal property, such as cash, stocks, bonds, mortgages, insurance, or any other personal effects of any unusual value. Information has to be provided about any real property owned by him and he must be prepared to provide a lien on his property, which, of course, cannot be exercised until after his death and that of his wife. This requirement alone is a particularly disturbing one to older people, a great many of whom have managed to pay off their mortgages on their property completely. Information will be required about the ability of his children to provide support, and an inquiry, of course, will be sent to these children to ascertain their income. This information will be compared against a relatives' income scale and other standards, and the decision will be indicated to the children as to the amount of support they are expected to furnish their parents. In some cases, a parent may be required to sue his children in order to establish eligibility. An affidavit must be taken indicating that the applicant has revealed all the facts concerning the income and resources available to all the persons for whom application is made. There are other details provided in the attached statement, but the impact of all this upon the individual who has up to the time of his illness or that of his wife been self-maintaining, is quite considerable. We can be sure that if the

individual had another alternative, he would have grasped it quickly. Again, I am not implying in this review of the conditions that must be met to satisfy a means test that the process is in any sense harshly administered or unnecessarily involved in redtape. The law says that we have to take into account the individual's resources and we are following the law, while trying, nevertheless, to make the process as constructively helpful as possible to the individual.

In order to obtain some further firsthand background on the impact financially and emotionally of health problems and the cost of health care on the aged people, our association conducted a brief inquiry among some of our chapters in various parts of the country. These observations testify to the urgent necessity for placing equal priority on the provision of health care as a matter of right secured by an insurance benefit to aged people along with payments for food, shelter, and clothing.

Typical is an illustration which demonstrates how rapidly resources melt away and the sense of defeat that comes with the necessity to seek public aid:

An elderly couple had to move out of a desirable residential area into a slum area because of a prolonged illness which used up their savings. It was necessary to mortgage their home, which they finally lost because the social security benefits were inadequate to meet the payments. In their retiring years, this couple who have lived in this particular section of a residential area for practically all of their married life were compelled to undergo the tragic experience of losing all they had accumulated because of the costs of sickness.

I would like to also present a couple of observations that highlight the problem of the aged more generally. A social worker connected with a housing project reported on a survey of services needed among 1,100 residents in that project who are 60 years of age and over; 749 of these individuals needed medical care, while of this group, 693 could not afford such medical care without some form of subsidy.

A director of the social service department of a large metropolitan hospital, who has an opportunity to observe both the breadth and depth of the problem, makes this observation:

"In an effort to remain independent, many of these people have attempted to provide for medical needs by purchasing hospital insurance from Blue Cross and other private insurance plans. All of these plans are tremendously expensive in relation to the limited incomes of such persons and they are woefully inadequate in coverage to pay for the extensive and expensive care which many of these people require. We find that many of these patients are unable to pay for outpatient care and medications, as well as extended hospitalization. If they require nursing home care, they are forced to apply for public assistance with all of its humiliations, including the encumbrance of their homes which constitutes a blow to their self-esteem out of all proportion to the money value of the property."

I know I could multiply these situations substantially, but it seems to be hardly necessary to do so since I know this committee is fully familiar with the general background of need as set forth in various reports and documents laid before you, including, of course, the very excellent report on "Hospitalization Insurance of OASDI Beneficiaries” prepared by the Department of Health, Education, and Welfare at the request of this committee and submitted in April 1959.

Let me note, however, that a number of national social welfare organizations with extensive experience in serving the aged and closely familiar with their needs have endorsed the social security approach to health benefits for the aged. These include:

American Public Welfare Association.

Council of Jewish Federations and Welfare Funds, Inc.
Public Issues Committee, Family Service Association.

National Federation of Settlements and Neighborhood Centers.
YWCA National Board.

prepared by our

There is appended a pamphlet entitled "We Support * * association which lists a wide group of organizations and individuals who support the social security approach to health benefits for the aged. We would appreciate having this included as part of the record.

There is every good reason to believe that the problem of providing health care for the aged is going to get worse unless some basic solution is provided. Somers and Somers in their recent book sponsored by Brookings Institution, "Doctors, Physicians, & Health Insurance," indicate how in just a few years that there has been a "revolution of rising expectations" in regard