In 1956, after a very vigorous controversy, Congress extended compulsory contributions to cover the risk of permanent total disability insurance. The American Medical Association, the insurance companies, the U.S. Chamber of Commerce, and the National Association of Manufacturers all opposed it. But Congress eventually enacted it over their opposition and President Eisenhower approved the bill. The realistic necessity for insuring individuals, families, and societies against the economic and social hazards resulting from disability overcame the understandable reluctance to require individuals and employers to contribute.

Today, in the United States, we have nationwide compulsory contributions for five risks: Workmen's compensation, old age, life insurance, disability insurance, and unemployment. We also have compulsory employee contributions in one State, California, for a sixth risk-hospital insurance. The issue now is: Shall we expand this sixth-compulsory contributions for hospitalization of aged persons? There is a matter of principle which must be decided, as well as a pragmatic decision as to whether the present trends will be tolerated by the growing number of retired persons living on reduced incomes.

SOME PROBLEMS FACING HOSPITALS

The number of aged persons is increasing over a thousand each and every day. Both the number and proportion of the aged in the population is increasing. Medical costs have been rising, particularly hospital costs, and there is every indication they will continue to increase. Last year all medical costs in the United States averaged about $100 for every man, woman, and child in the Nation. Hospital room rates have increased 71.2 percent from 1948 to 1956, while all medical care costs increased 31.7 percent. Private expenditures for hospital services have increased from 1 percent of per capita disposable income in 1948 to 1.16 percent in 1952, 1.33 percent in 1954, and 1.43 percent in 1956-a 44 percent increase from 1948.

In 1955, public and private expenditures for hospital care in all general and special, short- and long-term hospitals was $4.3 billion, of which 26.6 percent came from tax sources. If mental and tuberculosis hospitals are included, the total expenditures reached $6 billion, and the portion coming from tax sources was 43.8 percent. From these figures, it can be seen that the issue is not whether tax funds shall be used to finance hospital care but in what manner and to what extent.

Another significant factor is that in recent years Blue Cross nonprofit plans have been declining, in comparison to commercial insurance carriers, in the proportion of the premium income earned for hospitalization services. In 1949, the Blue Cross nonprofit plans received 51 percent of all premium income earned for voluntary hospital insurance protection while the commercial carriers received 29 percent. In 1956, the nonprofit plans received only 44 percent while the commercial carriers received 50 percent. The remaining 6 percent was received by other community- or consumer-sponsored plans.

Unless some new factor intervenes, it appears that Blue Cross may continue to decline in terms of the share of the total voluntary hospital insurance coverage it handles.

One of the major problems facing hospitals, the Blue Cross plans, and communities is the fact that, as hospital costs rise, the premiums for hospital insurance must rise. This engenders, in many cases, violent public arguments, criticism of Blue Cross financial policies and accounting procedures, and appeals for the denial of permission for rate increases.

Coupled with this problem is the conflict between Blue Cross and private insurance plans in the method of determining premium charges. Blue Cross commonly uses the "community rating" method which fixes at an average rate the cost for all participants in the plan. Private commercial insurance carriers use the "experience rating" method by which lower rates are charged groups with more favorable experience, and those groups with higher cost experience are left to Blue Cross or are uninsured. The result is a tendency for the private insurance carriers to handle the lower cost groups and for Blue Cross to handle the higher cost groups. Inevitably, one of the issues which may result from this is the possible governmental regulation of both Blue Cross and private insurance in order that unfair competition will not develop. As voluntary insurance continues to grow, it becomes more and more "affected with a public interest" and, as in the case of public utilities, may face close governmental regulation.

One further important point should be brought out. Over the years the organized labor movement has insisted on realistic, long-term financing of the social

security program and has always supported the increased contribution rates necessary for the improvements they have advocated. With both hospital costs and hospital insurance premiums rising, the question arises whether social insurance financing of part of the cost of hospital care is better protection in the long run to hospitals and the consumers of hospital care, than the alternatives of Government regulation or Government subsidy for maintenance, haphazard financing with deficits, and continued controversy as to premium increases.

Many problems are involved in the continued increase in hospital insurance coverage, irrespective of whether such coverage is private or public. Increased utilization and additional public and private funds for capital outlay and maintenance are common to increased insurance coverage whether induced by private or public action. Accounting problems on the costs of hospital care, and the organization and improvement of nursing and other services are common to both. There will continue to be many vexing financial, economic, organizational, and personnel problems, regardless of the agency insuring the cost. The Forand bill highlights the many issues involved in providing more and better hospital care to the American people.

BIBLIOGRAPHY

American Hospital Association, "Statement on Financing of the Hospital Needs of the Retired Aged." Approved by the board of trustees, Nov. 27, 1957.

American Public Welfare Association, "Federal Legislative Objectives, 1958," Chicago, Ill. Congressional Record, Aug. 30, 1957, statement by Aime J. Forand.

U.S. Social Security Administration, Division of Program Research, "Basic Cost Calculations Relating to Proposals To Provide Hospitalization and Other Medical Care Services to OASDI Beneficiaries," Washington, D.C., Jan. 20, 1958.

Division of Research and Statistics, "Health Costs of the Aged" (Rept. No. 20), Washington, D.C., May 1956.

[From the American Journal of Nursing, September 1958]

THE AMA POSITION ON HEALTH INSURANCE FOR THE AGED

(F. J. L. Blasingame 1)

Believing that readers are interested in all aspects of a current and controversial issue, the Journal is pleased to publish this article at the request of the American Medical Association; for further information about the Forand bill, readers are referred to the article, "The Forand Bill," which appeared on page 698 of the May issue of the Journal; the position on health insurance adopted by the ANA house of delegates at its recent convention is on page 984 of the July Journal.

This article is not "impartial," it takes a strong position-the American Medical Association position-against the Forand bill. It explains the reason for our stand and points the way to positive alternatives.

In 1949, when the Truman administration advocated national compulsory health insurance, we opposed it as ill-advised, politically motivated legislation, and conducted a tremendous campaign to promote voluntary health insurance. Today is reminiscent of that earlier period. Again, those who support a federally controlled and financed medical and hospital system are pressing for an amendment to the old-age, survivors, and disability insurance system (OASDI). This time, however, they have directed their main attack to one segment of OASDI beneficiaries-the retired group. In centering their attention on this group they have, admittedly, selected a relatively weak link in our overall health care program.

There is a problem. No controversy exists on that question. But it is the nature and extent of the problem, as well as the means of meeting it, that provide the disagreement. On the one side are ranged many union leaders, social welfare professionals, and others dedicated to the "welfare state" concept. This group supports the thesis that massive Government intervention based on compulsory taxation (social security taxes) is the only mechanism that can assure quality health care at a cost all the people can afford.

The group opposed to this concept-the American Medical Association, the American Hospitalization Association, American Dental Association, American Nursing Home Association, U.S. Chamber of Commerce, American Farm Bureau

1 Dr. Blasingame is general manager of the American Medical Association.

Federation, the Blue Cross-Blue Shield, and the private health insurance industry, among many others-places its faith in traditional voluntary enterprise and resists Government intervention of the Forand type. It points to the dynamic and flexible nature of voluntary mechanisms, with all their diversification, to resolve health problems. It seeks to eliminate remaining deficiencies by methods that preserve individual and community freedoms.

QUESTIONS AND ANSWERS

But why not answer the whole problem immediately with national compulsory health insurance? Isn't this approach equitable? Isn't this proposed health benefit a reasonable expansion of the present cash benefit system? These are fair questions, but there are good answers.

Federal old-age and survivors insurance was set up in 1935 to provide a floor of cash maintenance for eligible beneficiaries. Although subject to numerous amendments since its enacement, it has always preserved its basic character of a cash benefit program. The Forand bill, and other bills that introduce health benefits into the OASDI structure, introduce a new concept of service rather than cash benefits.

This proposal is dangerous. It is our conviction that the following developments would occur soon after the enactment of such legislation.

1. The physician-patient relationship as we have known it in this country would change profoundly. The confidentially and mutual respect that generally characterize the relationship between patients and their physicians could not continue under a nationalized program.

2. The limited Forand approach to retired and other beneficiaries of OASDI would inevitably be expanded to all persons under the OASDI system. 3. The cost would be far higher than anticipated.

4. Abuse of a politically inspired nature would be certain.

5. Overutilization of hospital and medical facilities is a built-in feature of such programs.

6. The rapidly progressing voluntary health insurance industry-including the Blue Cross-Blue Shield and the private insurers-would be destroyed, since voluntary purchase of health insurance would gradually be replaced by national compulsory health insurance.

7. The Federal Government would promulgate standards of health care and levels of compensation. In time, physicians, hospitals, nurses, and ancillary professional groups would be subject to extensive Federal regulatory controls. What, then, is the alternative? We believe that the combined efforts of individuals, families, communities, voluntary organizations, and-within boundsFederal, State, and local governmental agencies can provide for the health needs of the aged.

The American Medical Association has had a committee on aging for over 2 years, which has devoted its full time to this problem. Over 35 State medical associations have now established similar committees. The American Hospital Association, likewise, has been conducting research, meeting with the insurance industry, and studying practices with the objective of containing rising costs.

The health insurance companies only 2 years ago formed the Health Insurance Association of America in order to step up their important contribution to the financing of medical care. They are now engaged in intensive studies designed to create new types of coverage tailored to meet the needs of the aged ill. Preretirement financing of health insurance policies with paid-up status at 65 years of age; use of life insurance after 65 to pay for health care; the application of deductibles and coinsurance to permit coverage of costly illnesses at a low premium rate; and many other approaches will soon help spread health insurance, to an ever-increasing degree, among the aged.

The nursing home operators are earnestly seeking to improve their standards and provide a quality service that will bridge the present gap between inexpensive but inadequate home care and adequate but overexpensive hospital care. Innumerable other instances could be cited of enterprising activity to analyze and meet the problem.

In an effort to provide better coordination and stronger, swifter action in this area, a Joint Council to Improve the Health Care of the Aged was founded recently. Charter members are the American Medical Association, American Hospital Association, American Dental Association, and the American Nursing Home Assoication.

The joint council will

(1) Identify and analyze the health needs of the aging.

(2) Appraise available health resources for the aging.

(3) Develop programs to foster the best possible health care for the aging regardless of their economic status.

In addition, the joint council will

(1) Obtain the facts through a coordinated program of research.

(2) Encourage the expansion and improvement of health care facilities for the aging. (Under this item the joint council members have endorsed loan programs by the Federal Government for hospitals and nursing homes, and encouraged greater use of Hill-Burton funds for chronic disease units.) (3) Expand the development of community health services for the aging. (Visiting nurse services, homemaker programs, and other projects will be pushed.)

(4) Cooperate with the Joint Commission on Mental Illness and Health. (5) Intensify education, research, and action programs.

(6) Promote the expansion of investigations into the characteristics of health problems of the aging.

(7) Increase the availability of improved voluntary health insurance coverage for older people. (Much remains to be done, but the history of this dynamic movement provides no fodder for the pessimism of its detractors.)

(8) Urge State and local governments to provide realistic financial support for medical, dental, hospital, and nursing home care of aging public assistance recipients.

Forand-type legislation would not only stifle these energetic, imaginative programs which show great promise and which should be given the opportunity to develop fully, but would propel us irreversibly toward a federally controlled health care program. Voluntary enterprise by individual groups, as we know it in this country, is almost unique among the nations of the world. Working together, I am confident that we can conquer this health problem of the aging just as we have mastered so many others.

[From the American Journal of Nursing, November 1958]

THE AHA POSITION ON HOSPITAL NEEDS OF THE AGED

(Ray Amberg 1)

In September, the Journal published the position of the American Medical Association on health insurance for the aged, and is now pleased to publish the policies of the American Hospital Association on the same general subject; the position on health insurance for the disabled, retired, and aged, adopted by the American Nurses' Association at its 1958 convention, is on page 984 of the July Journal.

I am delighted to have an opportunity to bring to the nursing profession, through the Journal, a statement of the position of the American Hospital Association concerning the health needs of the aged.

First, let me say that the association properly restricts its attention to the hospital needs of the aged and further qualifies this by addressing itself to the hospital needs of the retired aged, on the basis that those who are substantially employed can meet their hospital needs through present mechanisms regardless of their age.

The present policy of the association was adopted by its house of delegates at the annual meeting in Chicago on August 20, 1958. This statement, printed on the opposite page, supersedes all previous policy.

However, some background seems to be in order. The health needs of the aged have recently received a great amount of attention in the Congress and in the popular and professional press. The interest of the American Hospital Association antedates this flurry of headlines.

The association was instrumental in organizing the independent Commission on Financing of Hospital Care. This commission was composed of members

1 Mr. Amberg is president of the American Hospital Association and director of the University of Minnesota hospitals.

of the public and of the various disciplines including nursing, concerned with the problem. It issued its report in 1954 and spotlighted the special hospital problems of the aged.

The association promptly appointed a committee to study the findings of the commission and to recommend policy. As a result of the work of this committee, a policy statement was approved by the association's house of delegates in September 1955, supporting Federal and State matching grants to underwrite, from general tax funds, a portion of the premium for voluntary health insurance for the aged.

As Tol Terrell, then president of the American Hospital Association, reported to the membership in December 1957, "little support for the association's position was forthcoming and no action was taken" along the lines proposed. Recognizing that inaction would not solve this growing problem, the board of directors appointed another committee to see if a new and more acceptable approach could be formulated. This committee consulted all sorts of groups and got a wide range of expert opinion. While the committee was at work, Representative Aime J. Forand introduced his well-known bill on the health needs of the aged. The committee took his proposal as part of its field of study.

Last November, the board of trustees of the association adopted a statement on financing of the hospital needs of the retired aged. This statement reiterated the position of the association that "retired aged persons face a serious problem in financing their hospital care." It recognized the necessity for Federal legislation to solve the problem satisfactorily. It expressed its preference for a voluntary rather than a governmental system and said that the Forand bill was "not a suitable solution to the problem of financing the hospital needs of the retired aged.”

Between approval of that statement and submission of a new policy statement to the house of delegates, the association was far from inactive. It arranged a meeting between leaders of the insurance industry and the Blue Cross plans to explore methods by which the voluntary prepayment system could come up with an answer which would make Government assumption of this problem unnecessary.

The association also joined with the American Dental Association, the American Medical Association, and the American Nursing Home Association in the formation of the Joint Council To Improve the Health Care of the Aged. In a special report, the membership of the association was informed that

* * * despite reports to the contrary, this council was not formed for the negative purpose of defeating the Forand bill, nor any other currently proposed Federal legislation. The council has a positive program to obtain the facts about the health problems of the aged through a coordinated program of research, the encouragement of the expansion and improvement of health care facilities for the aging, expansion of the development of community health services for the aging, cooperation with the Joint Commission on Mental Illness and Health, intensification of education, research and action programs, promotion of the expansion and investigation into the characteristics of these health problems, and to increase the availability and to improve the voluntary health service coverage for older people, and to urge State and local government to provide realistic financial support for medical, dental, hospital, and nursing home care of aging public assistance recipients. In addition, the association has participated in two national conferences concerned with the health problems of the aged; has testified before the House Ways and Means Committee studying suggested social security changes; and has offered its assistance in any way to those grappling with this big task.

On August 20, after lengthy debate and certain changes in the statement as submitted to it, the house of delegates of the American Hospital Association adopted a policy statement. The association's activities in this area will now be governed by this policy statement which appears below.

THE AHA POLICY ON THE HOSPITAL NEEDS OF THE RETIRED AGED

The house of delegates establishes the following policy of the American Hospital Association with respect to meeting the hospital needs of the retired aged, in lieu of all previous action taken by the American Hospital Association: 1. The American Hospital Association is convinced that retired aged persons face a pressing problem in financing their hospital care.

2. It believes that Federal legislation will be necessary to solve the problem satisfactorily. It has, however, serious misgivings with respect to the use of