Mr. Chairman, and distinguished members of the committee, I want to thank you for this opportunity to appear today on behalf of H.R. 4700, the bill introduced by Congressman Forand to provide insurance against the costs of hospitalization, nursing home care, and surgical services for those eligible for old-age and survivors benefits or who would be eligible if they applied. I have introduced a similar bill, H.R. 5000.

The committee, I am sure, is fully cognizant of the provisions of the bill, and I do not feel that any further detailed explanation is necessary at this time. Its purpose is to provide a sensible insurance program against certain specified expenses resulting from the ill health of those eligible for old-age and survivors insurance benefits.

It offers a feasible method for coming to grips with a clearly demonstrable need, the difficulties encountered by a great portion of our senior citizens to finance certain heavy medical costs. I fully realize that the provisions of the bill may not be the final answer, but I respectfully urge that the committee undertake a full review of the problem with the objective of developing a reasonable solution which will not impose exorbitant costs on our aged.

I would like to discuss briefly, what I believe are several pertinent questions in regard to this proposed legislation. Is it needed? Is it desired? Is it preferable to suggested alternatives? And, what is its projected cost?

The report by the Department of Health, Education, and Welfare in response to the committee's request is sprinkled with references to the lower incomes and more costly medical expenses of the aged. The third paragraph of the report declares:

There is general agreement that a problem does exist. The rising cost of medical care, and particularly of hospital care, over the past decade has been felt by persons of all ages. Older persons have larger than average medical needs. As a group they use about 21⁄2 times as much general hospital care as the average for persons under age 65, and they have special need for long-term institutional care. Their incomes are generally considerably lower than those of the rest of the population, and in many cases are either fixed or declining in amount. They have less opportunity than employed persons to spread the cost burden through health insurance.

A larger proportion of the aged than of other persons must turn to public assistance for payment of their medical bills or rely on "free" care from hospitals and physicians. Because both the number and proportion of older persons in the population are increasing, a satisfactory solution to the problem of paying for adequate medical care for the aged will become more, rather than less, important.

Incomewise, the aged are not in a strong position. Of the 9.3 million on old-age, survivors, and disability insurance, about one-fifth have no other income than the monthly benefits they receive. Of the couples, with the husband aged 65, or over, who have their own households, almost half had cash incomes of less than $2,000 in 1956 and only 15 percent reported incomes of $5,000 or more. Half of the aged persons living alone or with nonrelatives-not in institutions-had incomes of $900 or less in the same year. Nonmarried aged persons living with relatives had, on the average, even less than this figure, the HEW report indicates.

The report specifies that the median total income of retired couples drawing benefits under the OASDI, in 1957, was $2,190 or $183 a month.

What do these figures mean in respect to the need for expanding the social security program to provide insurance against the costs of certain medical expenses for the aged?

Let me refer to volume III of "Studies of the Aged and Aging,' prepared by the staff of the Senate Committee on Labor and Public Welfare, in November 1956. The report is entitled "Income and Income Maintenance."

The report points out that the Welfare and Health Council of New York City, in 1955, prepared a family budget standard for the city that corresponded to the level of the city worker's family budget. The total cost of goods and services for an elderly couple living alone in New York City, as of October 1954, was estimated at $2,317 if the head and his wife were both retired.

This figure was reduced to about $1,900 if the family included another member living with them.

Such costs might not be similar in all other areas of the United States, but, the report points out, they may not be greatly in excess of the average for the large cities, particularly when it is realized that almost two-thirds of the aged population live in urban communities.

These budget estimates were made in 1954 and, as we all know have increased considerably since then. If almost half of the retired couples owning their own homes in 1956 had cash incomes of less than $2,000 as I previously mentioned, it is clear that many aged couples in cities cannot maintain a level of living equivalent to that represented by the New York City budget standard.

The same conclusion applies to nonmarried aged persons living alone. The 1954 budget estimate for these citizens was about $1,600 and $1,500 for retired men and women, respectively. These figures are to be compared with the Health, Education, and Welfare report that half the aged persons living alone or with nonrelatives-not in institutions in 1957 had incomes of $900 or less.

How can the aged be expected to provide adequately for their medical expenses under such conditions?"

The Health, Education, and Welfare report points out that

the aged spend at least twice as many days per capita in general hospitals as the population as a whole, that acute conditions occur less frequently among the aged and chronic conditions more frequently than among younger persons. It estimates that a rough measurement of the equivalent current annual cost of medical care per person in the noninstitutional population would be $81, but for those aged 65 or over it would be $125.

However, hospital bills, drugs, and medicines make up considerably larger proportions of the medical care for the aged than for the population as a whole.

As far as costs are concerned, the Health, Education, and Welfare Department reports that some 30 percent of those drawing OASDI benefits in 1957 had medical costs of $300 or more. Of those who were hospitalized in general hospitals, only 10 percent had costs below $300. For the average couple with one or more members hospitalized, the median cost was about $700. Only about 14 percent of the couples reporting had any of their expenses covered by insurance.

With median medical expenses for married couples receiving OASDI benefits running to a little less than $200 annually, and median

income of such couples slightly under $2,200, medical expenses on the average for these aged people amounted to almost 10 percent of annual income. When we consider that the Health, Education, and Welfare Department reports that more than four-fifths of the aged incurring medical costs assumed responsibility themselves for all their medical costs incurred during the year, the drain on the assets of the aged is readily apparent.

This, Mr. Chairman, is why I believe that enactment of H.R. 4700 is necessary. Whereas some 40 percent of the aged are reported to have some form of health insurance of varying benefits, the adoption of H.R. 4700 would enable some 70 percent of our aged population to receive specified protection against the heaviest of medical expenses; that is, hospitalization and nursing home care.

Is such a bill desired by the public, Mr. Chairman?

Several weeks ago I sent out to the voters in my district a questionnaire. Among the questions was one asking each voter if he or she favored amending the Social Security Act to provide hospital, nursing home, and surgical services to our senior citizens. The results of the poll are not fully tabulated yet, but thus far they indicate that 66 percent are in favor of amending the act in this fashion.

This is a resounding percentage. I am sure that favorable percentages have been returned to similar questionnaires sent out by other Members.

I have also received numerous letters urging adoption of the bill. It is a subject that in various forms has been before Congress for more than 10 years, and sponsors of proposals in the field, as we know, have included among others such eminent Members of Congress as the late Senator Taft and the chairman of the Senate Labor and Public Welfare Committee, Senator Hill.

Is this bill preferable to suggested alternatives? Chapter VI of the report by the Health, Education, and Welfare Department offers highly interesting reading on alternative proposals. I will not take the time of the committee to describe them in detail, but they include stimulation of voluntary insurance, subsidies to private insurance carriers, and Federal grant-in-aid programs.

It is enlightening to read some of the comments in the chapter as to these proposals. For instance, on permitting private carriers to pool experience, such a program would not

meet the problem of the financial barriers to purchase of insurance by the aged. On a Federal program to reinsure carriers against abnormal losses it

would not improve the ability of low income persons to purchase health insur

ance.

On a plan for the Government to operate a checkoff system similar to a payroll deduction on a voluntary basis for persons receiving OASDI benefits—

since participation would be voluntary and the entire cost would be borne by the beneficiary group, there is no reason for thinking that the premiums could be much lower than those now charged by group plans covering the aged.

On having the Government subsidize the cost of health insurance bought by OASDI beneficiaries through a matching payment for amounts deducted from the monthly benefit:

Unless the subsidy represented a substantial portion of the premium it is probable that not many more beneficiaries would participate in the plan than in a voluntary checkoff without subsidy.

On subsidies to private insurance carriers:

The difficulties of providing hospitalization and health insurance coverage for the aged stem primarily from the fact that they require above-average amounts of care and in general have below-average incomes. Any large expansion of protection for the aged thus seems unlikely without some way of covering the costs by spreading them over other segments of the population and throughout the lifetime of the individual. Voluntary insurance has succeeded in doing this to a limited extent through community-rated premiums and inclusion of the retired aged in employment groups.

There is a question, however, of how far voluntary effort and private industry can go to assure adequate protection to all or the great majority of the aged. And again, in respect to cost and premium norms of subsidized private insurance:

When such requirements are recognized and spelled out in detail it becomes apparent that the degree of regulation of voluntary health insurance that would be involved would probably be unacceptable and that such a program would be complicated and costly to administer.

On a program of Federal grants to States for medical care for the indigent

thus, expenditures for hospital care for the aged under a program of medical assistance assuring uniform nationwide protection might be of the order of magnitude as the costs of providing hospital insurance for aged OASDI beneficiaries roughly $750 million in 1960 for persons aged 65 and over.

And, I need not remind the committee that this money, of course, would be paid from the Federal Treasury out of appropriations rather than being raised through nationwide taxation on employers and employees in an insurance program divorced from budgetary considerations.

What would be the cost of the program? According to the Health, Education, and Welfare Department report, if the program were restricted to eligible aged persons, hospital service benefits would cost $826.3 million in 1960. To this would be added $14 million for limited skilled nursing home benefits for the aged and disabled. Surgical benefits were not estimated by the Health, Education, and Welfare report, but the Health Insurance Association of America has given the figure of $197 million.

Totaled together, these sums amount to $1.0373 billion.

If all OASDI beneficiary groups were included in the hospital service benefits, an additional $69.1 million would result for a total of $1.1054 billion.

These are the estimates of experts. Others have ranged as high as $1.370 billion. In general, I believe that it would be safe to say that the total cost would run in the neighborhood of slightly over $1 billion in 1960. It may be trite to refer to such oft-quoted figures as national spending of $6,074 million in 1957 for cigarettes or $9,140 million for liquor, but few people could reasonably argue that $1 billion for the heath of our senior citizens would not be a far more salutary expenditure.

Mr. Chairman, I believe that the bill should be carefully considered by the committee. I believe that it proposes a reasonable method for meeting an obvious need in this country; that it is supported by a great many Americans; that it offers a proposal superior to suggested

alternatives; and that its cost, spread over an insurance program, can be satisfactorily absorbed by the American economy.

It certainly is not socialized medicine. The Health, Education, and Welfare report, to my knowledge, never resorts to such terminology. Like the other great welfare programs which our Nation has undertaken, such as national distribution of Salk polio vaccine, it offers a pragmatic solution to an existing problem.

I thank the committee for its courtesy and I respectfully urge that it recommend legislation in this vital area.

Thank you, sir.

The CHAIRMAN. Mr. Halpern, we appreciate your bringing your discussion of this matter to the attention of the committee this morning. Are there any questions of Mr. Halpern?

Mr. FORAND. Mr. Chairman, I don't have a question, but I do want to commend Mr. Halpern for his presentation. I know of his sincerity in this program and the hard work he has been putting into it, and for that I say thank you.

Mr. HALPERN. Thank you very much.

The CHAIRMAN. Mr. Byrnes.

Mr. BYRNES. You said that Senator Taft supported this proposi tion. I would say that I have a great admiration for the Senator and I wonder if the gentleman can tell me where or when the Senator supported a proposition such as this?

Mr. HALPERN. Yes. It is my belief that from 1946 to 1949 Senator Taft was a sponsor of legislation in the field of medical assistance. It may not have been this bill. I didn't say it was specifically this bill.

Mr. BYRNES. No.

Mr. HALPERN. Or even the exact objectives of this bill, but he did sponsor a grant program to States for assistance for those unable to meet medical or dental care.

Mr. BYRNES. Under the old-age assistance program?

Mr. HALPERN. Yes.

Mr. BYRNES. Not the old-age and survivors insurance system? Mr. HALPERN. No.

Mr. BYRNES. What we are talking about here is the old-age and survivors insurance system.

Mr. HALPERN. I think there is a kindred relationship as to the philosophy behind it.

Mr. BYRNES. I would differ with the gentleman, and I think most members of the committee would, as to the objectives. One is based on need, the insurance system is not based on need.

That is all, Mr. Chairman.

Mr. FORAND. Mr. Chairman, I think we ought to make it clear that the assistance program is part of the social security system.

Mr. BYRNES. Is it not part of the old-age and survivors insurance system?

Mr. FORAND. You are breaking it down into chapters.
Mr. BYRNES. That is right.

The CHAIRMAN. Mr. Halpern, I was somewhat myself interested in your observation of Senator Taft's support during his lifetime of anything such as this connected with OASDI because it has been my thought that he had not supported further expansion of OASDI