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Nonmarried beneficiaries, who tend to be older, use more hospital and other institutional care than the married. One in seven of those interviewed in late 1957 spent some time in a hospital, nursing home or other institution during the previous 12 months. Median medical costs amounted to $600 for all such beneficiaries, to $500 counting only those who spent some time in a short-term general hospital.

The effect of hospitalization on the size of the total medical bill can be demonstrated more directly in another way. Among those couples with one or both the members hospitalized and able to report their total medical costs, the costs associated with such episodes averaged 64 percent of their total medical bills for the year--41 percent representing charges made by a general hospital, 4 percent charges of chronic care institutions, and 19 percent the fees for the surgeon and inhospital doctor's care. For nonmarried beneficiaries the costs associated with hospital and nursing home care made up 77 percent of total medical costs, an even greater portion than for beneficiary couples.

Means of Meeting Medical Bills

Persons who are hospitalized--and therefore have relatively large medical costs--naturally have more difficulty than others in meeting their total medical bills for the year.

According to the 1957 beneficiary survey, more than twofifths of the couples and roughly three-fifths of the nonmarried beneficiaries who spent some time in a general hospital did not meet the year's medical costs out of their own income, assets and health insurance. The longer the hospital stay, the larger the proportion that could not stretch their resources.

Medical debts were incurred--or increased--by 21 percent of the couples and 12 percent of the nonmarried beneficiaries with a hospital episode during the year. (For all the aged, whether or not hospitalized, the proportions were very much smaller--6 percent and 3 percent, respectively.) And this does not count the cases where a doctor, for example, may reduce his fees because he knows that the patient cannot pay. Moreover, a considerable number of the beneficiaries who had more unpaid medical bills at the end than at the beginning of the year got help from outside as well.

Fifteen percent of the couples and 29 percent of the nonmarried beneficiaries relied for at least part of their medical care on public assistance agencies, hospitals, or other public and private health and welfare agencies. Less than half as many of the nonhospitalized beneficiaries had to turn to welfare agencies.

The number receiving help from relatives in one form or another was at least as large. When beneficiaries were asked how they met their medical bills, 15 percent of the couples and 26 percent of the nonmarried with one or more hospital episodes reported that relatives helped pay for them. (Less than half as many of the other beneficiaries had to turn to relatives.) Some additional beneficiaries with hospital bills in effect received as much or more help with their medical costs from relatives who helped support them either sharing their home or by paying other regular living expenses.

The Role of Hospital Insurance

Were it not for health insurance--despite the limitations discussed below of many policies held by the aged--many more would have had to turn to relatives or welfare agencies, or both, to meet their pressing medical needs.

Data just becoming available from the National Health Survey reveal that for half the hospital stays of aged persons, health insurance paid no part of the bill. On the other hand, insurance paid some part of the hospital costs for three-fourths of the stays of younger persons.

Even when insurance is available, it is of course less effective for long than for short stays (table 8). Thus, three-fourths or more of the hospital bill was paid by insurance for three-fifths of the episodes lasting less than a month, but for less than half the episodes of a month or longer.

The actual proportion of hospital bills paid in some part by insurance is probably smaller than shown, because terminal illness cases are excluded, and those at the older ages, who are most likely to die, are least likely to have any insurance. It is not feasible, however, to try to quantify the effect of this exclusion on the findings as they relate to length of stay.

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Table 8.--Percentage distribution of short-stay hospital
discharges according to proportion of bill paid by
insurance, by length of stay, July 1958-June 1960
(Civilian noninstitutional population of the United States)

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During the past few years the private insurance industry has made an intensive and commendable effort to develop health insurance policies for older persons. Until quite recently persons aged 65 and over who were not still at work and members of an employed group, had limited opportunity to purchase health insurance. An increasing proportion of the persons now reaching age 65 are able to carry over into retirement health insurance coverage which they obtained in their younger years, although frequently with more limited protection or higher premiums or

both. Blue Cross, Blue Shield and many commercial insurance companies have developed special "Senior Citizen Certificates" or group policies that can be purchased by persons aged 65 and over in most circumstances, although coverage of pre-existing conditions may be limited.

There has now been enough experience with private health insurance for the aged to indicate that it can provide useful supplementary protection but also to demonstrate why private insurance alone cannot and should not be expected to meet the basic health care costs of the aged. The essential factors have already been discussed. The larger medical care needs of the aged as a group must result in higher average costs--in insurance terms, higher premiums. These costs are beyond the ability to pay of large numbers of older persons. The younger members of society must in one way or another pay part of these costs if older people are to have adequate medical care.

Private insurance has been able to effectuate some cost-sharing. The community-rated premiums of Blue Cross plans average hospital costs for all participants. Coverage of many persons past age 65 has been achieved, however, only by the development of special policies with their own (higher) premium rates. Perhaps three-fourths of all private health insurance coverage is written under employee benefit plans. In many such plans, the employer carries or shares in the cost. For those retired employees who are continued under a group plan with no change in premiums or benefits or with the employer paying a substantial part of the cost of their benefits, the aged person's health costs are shared by other age groups. But the number of pensioners in this situation is very small and such arrangements cannot be expected to apply to the great majority of retired persons, because of worker mobility, limited vesting, and the fact that in general it is only the larger firms that have such plans.

A compulsory social insurance program offers the only feasible basis for a broad spreading of the costs of health protection for the great majority of older persons.

Aged Persons Having Some Kind of Health Insurance

No more than half of all persons aged 65 and over have any kind of health insurance. The National Health Survey found that in the last half of 1959, 46 percent of those 65 and over, as compared with 67 percent in the population as a whole, had some form of health insurance. Other estimates confirm these general magnitudes.

8

U.S. Public Health Service Publication No. 584-B26, Health
Statistics: Interim Report on Health Insurance, United States,
July-December 1959, (December 1960).

Estimates prepared by the Health Insurance Council on total health insurance enrollment are somewhat higher than those derived from household surveys. For January 1960, the Health Insurance Council estimated that 73 percent of the total population (rather than 67 percent) were covered. The Council's estimates are built up from reports from individual companies' plans and may well make too little allowance for multiple policy holding. On the other hand, household interview surveys may miss some individuals. Special studies are now under way that will provide a better basis for estimating the extent of multiple policy holding. In any event, information for separate, age groups is available only from household interview surveys.

Perhaps as important as the numbers of aged persons with

health insurance are the characteristics of those having and those not having such protection. In general, health insurance is much more likely to be owned by aged persons still in the labor force, by those closest to age 65, by those with relatively higher incomes and by those in the best health. These factors are, of course, closely

related to one another.

Income and coverage. --According to the National Health Survey, when the total family income of the person 65 or over (including both his own income and that of all other family members) was under $2,000 only 33 percent of the aged had hospitalization insurance. When the family income was $4,000 or more, 59 percent had hospitalization insurance.

The survey of OASI beneficiaries in 1957 showed a similar relationship. The median income of QASI beneficiaries with no hospitalization insurance was 30 percent lower than that of those with insurance.

Age and coverage.--According to the National Health Survey, among persons aged 65 to 74, 53 percent had protection against hospital costs; among persons aged 75 or over, 32 percent had protection against hospital costs.

Work status and coverage.--Aged persons still in the labor force are more likely than those fully retired to have some health insurance because employment means higher income, the less expensive group coverage is more likely to be available to those employed, and part of the premium is frequently paid by the employer. Among the relatively few aged reporting themselves as usually working, nearly two out of three (64 percent) had some hospital insurance; but among those not usually working, less than half (42 percent) had hospital insurance in the latter part of 1959.

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