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It seems to me compulsory participation in a program of mutual self-protection is in the same category.
Senator GORE. Well, if a program for health care and hospitalization is to be condemned because of that, would not the social security program logically fall for the same reason?
Mr. CRUIKSHANK. Precisely, yes indeed it would, and this was, as you will recall, Senator, although I don't believe you were in the Senate at the time, but this was an issue that was fought out in the Congress just 25 years ago. The Clark amendment proposed that there would be an electing out procedure under the social security legislation, and it was determined that any effective system of protection would have to be compulsory, that is universal in coverage,
if it was to be effective at all.
Senator GORE. Well, you are right, I had not reached here by then but I assure you, I am thinking about it.
Senator ČURTIS. Were you thinking about the Clark amendment, is that your evidence? [Laughter.]
Mr. CRUIKSHANK. There are many important social effects that would flow from the enactment of a bill affecting health benefits under the OASDI. One, it would ease the financial burden of hospitals by providing payment for the care that now they must give to charity cases.
Second, it would greatly strengthen the private and voluntary health insurance programs such as Blue Cross because it would relieve them of the very highest risk and high-rated group which now they must carry
way. Blue Cross has been forced away from its community-rating provisions, which it had when it started, to an experience-rated standard, so that they have to apply rates according to the risk of the group covered. This means that when Blue Cross extends its coverage to any of the older group, because they are a high-risk group, they must up the rates to the point where it is almost prohibitive.
Senator CURTIS. Mr. Chairman, could I interrupt at that point?
Medical costs are high because it takes a lot of money to run a hospital, rare and expensive drugs, pay help, all of these things. Why is it that you contend that the Government can get that at less cost than private groups?
Mr. CRUIKSHANK. Senator, I don't maintain it can get it at less cost. I maintain that it can get it at lower fees.
Senator CURTIS. Now that is because the people who are producing pay it for those who receive it, is that right?
Mr. CRUIKSHANK. That is right, sir. At any given time.
Senator CURTIS. You have in here, “Unlike public assistance, the Federal program pays," and I assume you are talking about a proposed health program “pays benefits as a matter of right without a means test."
Mr. CRUIKSHANK. Yes.
Senator CURTIS. You do not propose to pay those hospitals less than the cost of operation, do you?
Mr. CRUIKSHANK. No, sir.
Mr. CRUIKSHANK. That would, out of the social security tax or some similar tax.
Senator CURTIS. And everybody in retirement regardless of income or property owned would get the benefits.
Mr. CRUIKSHANK. That is correct; yes, sir.
Senator CURTIS. Does that mean, for instance, that a young individual, paying his own medical bills and that for his family, buying a home, and perhaps paying some college expenses, will have a payroll deduction to pay the costs of medical care for people who happen to be over 65 even though they are individuals of great wealth and still able, soine of them, and desirous of producing ?
Mr. CRUIKSHANK. There might be some such instances, yes, just as with other insurance systems. A person paying in his premiums in Blue Cross, for example, at the time he is not making any claimsand he may not make any claims for 5 or 10 years—is paying the hospital expenses of somebody else who carries Blue Cross regardless of whether they are wealthy or in poverty.
Senator FREAR. But the great difference being voluntary and involuntary, isn't it?
Mr. CRUIKSHANK. No, I don't think that is the great difference, sir, because a large part of Blue Cross is group coverage which is selected by a vote of groups covered, and those who are in the minority are covered whether or not they voted for it.
That is it isn't an individual choice in Blue Cross in all cases. In some cases it is, and in other cases it is not, it is a group choice.
Senator FREAR. But under this proposal there is no choice by anyone?
Mr. CRUIKSHANK. There is no choice as to whether he pays the contribution or not, that is right.
Senator CURTIS. Mr. Cruikshank
Mr. CRUIKSHANK. If I may interrupt for just a moment, I am only pointing out this operates just like any other insurance. A person paying a current premium is paying a benefit for somebody else currently and thereby of course establishing his right to the benefit when the contingency against which he is insured arises.
Senator FREAR. Yes, sir, but again I say that individual has his choice of whether he wants to or he doesn't want to. Aren't
taking a right away from an individual in this instance?
Mr. CRUIKSHANK. No, sir, I don't think we are. I think that we are proposing just to extend the social security principle. You are not taking away anyone's right, I don't think to insure against a contingency of dependent old age and that is compulsory and he is required to do it.
Senator FREAR. I respect your views but maintain mine. [Laughter.]
Senator CURTIS. I would think we would all agree that diabetes is a very expensive continuing illness. According to your views a lady might be a diabetic patient, still working, perhaps supporting, some children, and it is a type of illness that requires cash to be paid out out week after week in order to live. You are suggesting a further deduction from her pay to pay medical benefits to people who happen to be over 65 regardless of their wealth or ability to pay for themselves.
your program amount to that? Mr. CRUIKSHANK. Yes, it amounts to that but if she is in any voluntary group she does exactly the same thing.
Anybody who works in a shop, for example, that has negotiated a health insurance plan with the employer covering health contingencies, is doing exactly the same thing, because, Senator, that very same lady that you described may find herself in a condition later on where she is no longer able to work and she would then be able to collect a benefit and have protection.
Senator CURTIS. She might find herself in that position for 50 years while she is carrying the load to care for this select few. Do you at the present time favor the Forand bill?
Mr. CRUIKSHANK. Yes, sir.
Senator CURTIS. You state here you suggest benefits for those already retired. Suppose those who are beyond the employable stage are not the beneficiaries of OASI. The Forand bill would not do anything for them, would it?
Mr. CRUIKSHANK. Not in itself but other proposals that we support would.
Senator CURTIS. In other words, all of these millions of people working would have a further deduction out of their pay envelope to pay part of our present aged some of whom, I don't know how many, don't need it at all, but the individual retired, and there are several million of them, who are not by chance OAI beneficiaries would be left out under the Forand bill, if we enacted it tomorrow, isn't that correct?
Mr. CRUIKSHANK. Well, they would be left out of those particular provisions, yes, sir, but they would be eligible for other types of protection. What we are proposing
Senator CURTIS. I have known you a long time, and I know how well you know this social security law, and I am utterly astounded at your lack of altruism in your proposal.
Senator DOUGLAS. Now, Mr. Chairman, may I interject by
Senator CURTIS. Should we act to tax those who can be taxed to take care of those who can't care for themselves? Do your proposals here abandon those ?
Mr. CRUIKSHANK. No, sir, it does not, because what we are really proposing is that a Forand-type amendment, if you wish to call it that, be added to the provisions of title VI. Let title VI operate, and take care of these people, who are not under the social security system, in the only way that they can be taken care of. The public assistance approach has always been our second line of defense.
Now I think there is one other point we need to get at, if I may, that while not everyone at any moment needs health care, I think it is generally accepted in this country that everyone at all times needs health insurance.
So that the person who is paying this contribution is not paying for something for nothing, he is not paying something for which he gets nothing. He gets the protection which the insurance affords him, and he has that all the time.
Senator CURTIS. I disagree with the loose manner which you use the word “insurance” but the committee is too busy for us to debate that. But if you are suggesting title VI plus the Forand bill, then these people I talked about, the individual below 65 who suffers from an illness all his years, or the individual whose income is low and is supporting a family and buying a home and doing all these other things, he has not one tax taken out of his payroll. He has two, one to support title VI and one to support the Forand bill.
Mr. CRUIKSHANK. Except that the cost of title VI would be greatly reduced by the extension of the social security principle, just as Dr. Larson pointed out, for example, in his testimony, that we had reduced public assistance from 22 percent down to 15 percent of the people. How did we do that, we did that because beginning in 1950, which was the base year that he presented, we greatly extended social insurance, and social insurance has absorbed a large part of the load which otherwise was public assistance.
Senator CURTIS. Well, that is part of it.
Senator CURTIS. Some of them die without ever getting the benefit, yet they purchased the necessities of life in an economy that was carrying the load of social security, and I do not feel this sort of an approach is meeting what the American public has in mind.
We are not thinking about the extreme destitute because we are committed to paying for those cases and we want to. They are thinking about what need is there beyond it, not in terms of taxing everybody, including those that it will be an extreme hardship upon, to give a benefit to people who do not want it. Together goes with it the defeat and suppression of private endeavors and voluntary endeavors and the surrender of the right of choice for many people. In reference to these people who are beneficiaries of OASI, when did the first ones qualify for benefits?
Mr. CRUIKSHANK. I believe 1940.
Suppose an individual, qualified for OASI benefits in 1940, and we will assume that he has not made or paid any social security taxes since then, how many raises has he received in benefits since 1940 ?
Mr. CRUIKSHANK. I don't know exactly how many but his average payment in 1940 was $22.60 and his average payment now is around $55.
Senator CURTIS. The difference between 22 and 55, did he ever pay any tax for it?
Mr. CRUIKSHANK. No, sir.
Senator CURTIS. Why are you denying the people outside the system in your Forand proposal which you propose, the benefits of this when you take the person who by happenstance retired in 1940, probably paid less than 1 month's benefits out of his payroll, in all probability paid less than 3 months' benefits if you count his employers' payments which are not credited to him. You have increased him on an average, more than doubled it, and now you are going to give him this. The individual who has been outside you now come here and say "He will still be outside of the medical benefits."
Mr. CRUIKSHANK. No, sir; they will be outside this particular method of paying for the benefits. But what you say, sir, is true of the whole social security system.
You can disagree with that whole social security system if you wish.
Senator Curtis. No, no. All I have begged you people to change, to make it social, to make it humane, to make it fair.
Mr. CRUIKSHÁNK. We have tried to do that, sir, we have supported the extension.
Senator CURTIS. You have resisted it every time.
Mr. CRUIKSHANK. We have supported—the extension of coverage has meant payments out of relationship to an immediate payment of contributions which comes out of the pool which is created largely by taxes on industrial payrolls. Despite that we have argued for it, for the extension of coverage.
Senator CURTIS. That is true of everybody's benefits.
Senator CURTIS. Yes, the social security operates today because you are taxing the people who are working to take care of the people who are not, isn't that true?
Mr. CRUIKSHANK. That is true, but it is also true that every life insurance company today is paying its benefits out of its current premiums.
It operates exactly the same way.
Senator CURTIS. It is far, far different, and as I say, the time of this committee is too valuable to debate whether or not it is insurance. That is all, Mr. Chairman.
Senator DOUGLAS. Mr. Chairman, I would like to ask Mr. Cruikshank if it is not true that the vast majority of younger workers who pay in contributions have parents and grandparents over the age of 65 who are in need of hospitalization, nursing, and medical attention, and who, if these expenses were not met by some form would have to be borne in the main by these younger workers?
Mr. CRUIKSHANK. That is exactly true, and the question really is, when we challenge this program on the ground that it would mean that current workers are paying the bills of people who are over 65, who is paying them now? They are paying them now. It isn't the people that are beyond 65 who are in the hospital or needing medical care who are currently paying for these costs. To a very large extent they are paid by the younger children and often at very great family sacrifice. The choice often comes as to whether you properly take care of mother and father or whether you properly educate your children and this is a hard, cruel choice that is forced on many American families, and one which the social insurance mechanism would relieve them of.
I would like to point out that one of the real advantages of this approach is that it would strengthen the voluntary plans and enable them to grow. We have a witness to that, Dr. Basil C. McLean, who is the recently retired head of the national Blue Cross Association. He said and I quote, “Legislation along the lines of the Forand bill offers a means settling an area of difficulty and relieving the voluntary prepayment mechanism to concentrate on better programs within its areas of demonstrated competence."
Commercial insurance companies would still have an ample field of activity since they would be used to supplement a Government program just as life insurance and annuities have been purchased to supplement monthly cash benefits of social security.