Then when he moves down after a period of 36 hours, perhaps, or even less, to an area in which less intensive care is indicated he goes into what we call the intermediate department, and there the costs would probably be, in Lincoln, on the order of $16 or $17 a day. Finally he moves to the self-care area, at which the cost per day will be on the order of $9 or $10, substantially less, sir, than one would be. charged in a first-class hotel, only for the right to place his head on a pillow at night.

Senator CURTIS. That of course includes meals.

Mr. FAULKNER. Yes, sir.

Senator CURTIS. There is no such thing as tipping as in a hotel, as a general practice. In other words, it is your feeling that, in addition to the voluntary insurance making strides, from the standpoint of good hospital administrators likewise a great deal of progress is being made.

Mr. FAULKNER. That is correct.

Senator CURTIS. In a period where the resources of the retired people are on the increase?

Mr. FAULKNER. Yes, sir.

Senator CURTIS. If our present system operates as it does now, do you feel that a great many people, not only in the insurance field, but elsewhere, share your view that in the next very few years this voluntary system will make strides comparable to the last 5 or 6 years?

Mr. FAULKNER. If we can reason from the progress that has been made over the last quarter of a century, particularly over the last decade, sir, there is no question in my mind of the competence of the voluntary system to take care of the vast majority of all Americans insofar as the costs of their health care are concerned.

Senator CURTIS. That is all, Mr. Chairman.

Senator HARTKE. Mr. Chairman, I interrupted Senator Douglas. Senator DOUGLAS. Please go ahead. I have just two or three more questions. You go ahead now.

Senator HARTKE. Go ahead now.

Senator DOUGLAS. I have simply three statistical questions to ask. How many people over the age of 65 are now under group contracts?

Mr. FAULKNER. Group contracts of all kinds of insurance service plans as well as insurance companies is that the question?

Senator DOUGLAS. No, just of insurance companies.

Mr. FAULKNER. They are on the order of 72 million over age 65 who are insured for, under all kinds of arrangements. On the order of 3 million are insured by insurance companies.

Senator DOUGLAS. Under group contracts.

Mr. FAULKNER. And of that number, on the order of probably 1 million to 1,250,000 under group contracts.

Senator DOUGLAS. About 1 to 14 million.

Mr. FAULKNER. Yes, sir.

Senator DOUGLAS. Under group contracts, those now over the age of 65.

Mr. FAULKNER. Issued by insurance companies.

Senator DOUGLAS. And 134 million to 2 million under individual contracts.

Mr. FAULKNER. That is correct, sir.

Senator DOUGLAS. May I ask, how much does it cost for a person who retires to convert from a group policy to an individual policy?

Mr. FAULKNER. Well, the cost of conversion ordinarily is nil. The rate that he would pay under the individual policy would be according to the amount of benefit under the contract that he buys provides and as I have suggested to you, in my example out of my own company, the premium for the benefits I described would be on the order of about $13.

Senator DOUGLAS. Suppose you have identical benefits under the individual policies as provided under the group policy and under the group policy of course the cost is borne partially by the contributions. of the younger workers although their incidence of disease is not as great.

Now when the aged person departs from the protection of the group. policy, and has to get the protection of the individual policy, the premiums for that group are supposed to meet the costs for that group without being contributed to by the younger group. How much will the policy rate increase as he converts from a group to an individual policy? If you cannot give it in dollar terms, I suppose you could in percentage terms.

How much do you have to raise the rate in order to meet the specific costs of this upper age group as compared to the general average? Mr. FAULKNER. Here again, we are confronted with a difficult generalization, sir, but I can give you a figure. While it is true, as you have suggested that the incidence of disease among the aged is considerably more than among the younger, the incidence of maternity is. considerably less.

Senator DOUGLAS. I think that is indisputable. [Laughter.]

Mr. FAULKNER. In New York State the premium for the benefits: under the converted policy cannot exceed the premium for the benefits prior to conversion by more than 20 percent. So it would be in the range from 0 to 20 percent more.

Senator DOUGLAS. And not above 20 percent?

Mr. FAULKNER. That is the New York law.

Senator DOUGLAS. Yes, but what about the practices over the rest of the country?

Mr. FAULKNER. Here again we are confronted with the difficulty of attempting to generalize about something that is not succeptible to easy generalization.

I would say to you that probably the increase in premium over the rate charged for the worker during his active years would be in the range of 0 to 3313 percent.

Senator DOUGLAS. Excuse me, Senator Hartke. You have been very gracious and I regret my taking the time.

Senator HARTKE. Let me ask you, you are acquainted with the fact that the Secretary of Health, Education, and Welfare in his testimony here yesterday stated, asserted quite strongly that private insurance companies cannot meet this need."

Mr. FAULKNER. I have been told that that was the Secretary's assertion. I reserve the right to differ strongly with the Secretary on that

score.

Senator HARTKE. I think this is a great American right to differ with people.

58387-60-18

Mr. FAULKNER. Thank you, sir.

Senator HARTKE. Do you know any other insurance company which approves of the social security approach which I disapprove of? Mr. FAULKNER. I know of only one, a company whose philosophy is, well, shall we say, somewhat at variance with the other companies in the business?

Senator HARTKE. That is nationwide, is that right?

Mr. FAULKNER. That is correct.

Senator HARTKE. And with the permission of the chairman I would like to insert this resolution into the hearings in this place under date of April 7 in which they do adopt the policy to support the use of social insurance principle to meet the health needs of older citizens and for further detail.

(The document referred to follows:)

RESOLUTION

ADOPTED BY NATIONSIDE

INSURANCE BOARD OF DIRECTORS, APRIL 7, 1960

Whereas the Nationwide Insurance Cos. are deeply committed to the principle of helping people to meet their social and economic needs; and the health needs of their older citizens are among the most urgent and pressing social problems remaining unsolved; and

Whereas most of the health costs of older people are not being met by insurance as evidenced by certain statistics which indicate that 86 percent of couples receiving social security benefits in 1957 had none of their medical care costs met by insurance; and

Whereas certain statistics indicate that most older people had neither the income nor the assets to meet such expenses as evidenced by the figures that nearly 4 out of 10 couples over 65 years of age had total income of less than $2,000 in 1958: Be it

Resolved, That it be the policy of the Nationwide Insurance Cos.

(a) To support the use of the social insurance principle to meet the health needs of older citizens;

(b) To support the application of this principle in appropriate legislation to provide basic health insurance to those eligible for old-age, survivors, and disability benefits as a feasible and desirable step in this direction; and

(c) To continue our efforts in our own insurance program, in conjunction with cooperative health plans, and as members of the private insurance industry to provide further health care through voluntary coverage in addition to that which may be furnished through government programs. Mr. FAULKNER. Senator, even in this insurance business it is permissible to have differences of viewpoint.

Senator HARTKE. That is good, too, sometimes.

Mr. FAULKNER. Indeed it is.

Senator HARTKE. In competition and for the price of premiums. Mr. FAULKNER. One of the great and virile characteristics of the health insurance business in this country is the keen free competition. that characterizes it. It has been an enormous force for progress and it has made possible situations in which the American people can pick and choose the kind of coverage that they need and want.

Senator HARTKE. I would like to comment briefly here on one of the statements. You say health care is still one of the greatest bargains enjoyed by Americans, is that right?

Mr. FAULKNER. The quality of the health care, yes, I subscribe to that.

Senator HARTKE. How about the quantity?

Mr. FAULKNER. The quantity is of such character, Senator, in my judgment, that anyone who needs health care and seeks it has it available to him irrespective of his ability to pay.

Senator HARTKE. Would it make any real difference to you, and I assume the truthfulness of your statement, if actual cases were brought to your attention and you could see and visit some of these people

Mr. FAULKNER. I would welcome the opportunity to be brought up to date, if you please, on that score.

Senator HARTKE. Let me say, sir, to you, I don't want to go into detail, if you would accompany me rather than elicit your information from black-and-white sheets, I would be happy to accompany you and show you the deplorable condition of the health of some of these people, which I personally have witnessed, and it is a sorry sight. Mr. FAULKNER. Senator

Senator HARTKE. They are not going to buy insurance policies from your insurance company or any others.

Mr. FAULKNER. Sir, on no less than three occasions over a period of that many years I have asked, in the position of a witness, I have made the statement that I have made to this committee, and to my knowledge there has never been brought forward the case of an aged person who needed and who sought health care and has been denied it because he could not pay for it.

Senator HARTKE. Well, you should go to Evansville, Ind., where they play it on the front page of the Evansville newspapers.

Mr. FAULKNER. In California, as my colleague reminds me, the Los Angeles County Medical Society periodically inserts a display advertisement in the newspaper requesting people, who are in need of health care and who are unable to pay for it, to call the number and a doctor will be sent, and there is no response.

Senator HARTKE. All right. Let me say to you for information that that might be misinterpreted, I don't think this is applying particularly to Evansville, I just mentioned that because that is where my home city is, but I think this is true in every other city and here again I respect your right to disagree with me.

You have made one other statement I want to get to just quite hurriedly, in which you comment upon the strides which insurance companies made for the protection of the whole American people including aged for which I congratulate you for the good work you have done, and I would imagine then that you would dispute the contention of the Senate subcommittee on the problems of the aging in which they point out that in 1958 about 3 million families headed by individuals over 65 received less than $2,500 in income, and this makes about 6 million men and women with incomes of this amount or less, and that we have to add to this about 2 million unrelated aged individuals who received less than $1,500, a figures which is considered quite low in terms of adequacy.

In other words, there are about 8 million aged citizens living in what at today's prices would almost have to be called poverty and that, in fact, if you go into the absolute figures and the overall position, the Federal Reserve Board consumers finance survey for early 1959, among spending units with aged heads who have incomes of less than $3,000, 56 percent have liquid assets of less than $500, among those units with incomes of $3,000 to $5,000 only 30 percent had liquid assets of less than $500, and also that in the 10 years since 1949, there

has been no more progress in the proportion of aged heads of spending units with no liquid assets at all.

In 1949 there were 32 percent; in 1959, 29 percent. An absolute figure is there was actually a retrogression because in 1949 there were 3.9 million, almost 4 million spending units with aged heads who had no liquid assets, but by 1959, 10 years later, there were at least 4.6 million an increase almost of 700,000 people of spending units with no liquid assets at all.

An additional 3 million have no liquid assets of more than $500. In other words, there are about 7.6 million or 7,600,000 people, who have liquid assets of less than $500, in other words, there are more than 7.6 million aged spending units with between zero, not $500, but between zero and $500 and these do not take into account the fact that there has been an increase in medical costs and other costs of living since 1948, in the last 10 years.

In substance what you are contending is that these figures leave a false impression or are in fact false.

Mr. FAULKNER. May I have the privilege to comment, sir?

Senator HARTKE. Oh, yes, that is what I asked for.

Mr. FAULKNER. I am reminded of the remark attributed to the late great Lord Beaconfield, Disraeli who is purported to have said "There are liars, damn liars, and statisticians."

The comment that the learned gentleman from Indiana has offered, I think substantiates the principal contention that I attempted to make in my testimony, and that is that here is so much confusion, there is so much lack of sound and adequate information about this problem, that it would be deplorable for the Congress to take precipitate action in this area at this time.

Senator DOUGLAS. In what ways are the figures that the Senator from Indiana quoted false?

Mr. FAULKNER. Senator, I certainly didn't mean to imply that, and I hope you did not interpret that I suggested that the statistics quoted by Senator Hartke were false. I simply suggest to you that they are conclusive of nothing. I suggest to you, sir, that an isolated statistic does not prove the case. I suggest to you that there are statistics available that would lead to the contrary point of view.

Senator HARTKE. Let me point out to you, sir, that these are not my statistics, nor the committee on the aged, problems of the aged, these are the statistics of the Federal Reserve Board Consumer Finance Survey, a fairly reputable outfit in this world today, I think, sir. Mr. FAULKNER. Yes, indeed, sir.

Senator HARTKE. And I hope we don't ascribe to them that they are liars, damn liars.

Mr. FAULKNER. Or statisticians.

Senator HARTKE. Or statisticians in the terms in which you described it.

Mr. FAULKNER. We don't ascribe anything to anybody. We simply suggest to you that it is a futile endeavor to attempt to arrive at a total picture of varying needs on the basis of unrelated statistics.

Senator DOUGLAS. I would suggest that these are related. I don't see how you can sweep these figures under the rug, if they are true. Now if they are not true, why, of course, we should know about them, excuse me, Senator Hartke.