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the quantity that will keep productive processes in motion. That procedure could be considered insurance against recessions, and the effect would be that the "aged” market might supplant the “foreign” market we might have difficulty holding in the future.

Recommendation: Increase the minimum monthly benefit to $70 and also provide that future benefits be adjusted to conform to any increases in the cost of living.

MEDICAL SERVICES FOR THE AGED

Every aged person should be entitled to medical services even though they may not be covered in the social security system. Otherwise, we will have the same inequities and injustices and hardships that have existed because of the lack of universal coverage. If all our old people received $70 per month in benefits, they would be able to pay for their own medical needs, except in certain severe and chronic illnesses when additional aid would be needed.

Recommendation: The provisions for medical aid under H.R. 12580 are satisfactory and adequate to prevent hardship cases. It is inconceivable that any State would not participate in this program.

LIMITATION OF TAX RATE

The maximum social security tax rate should be considered 3 percent, as that would appear to be the point of diminishing returns, considering all-around effects. Any shortage in the fund to pay adequate benefits should come from the general tax funds of the Treasury because the additional benefits paid will generate additional income and excise taxes to the extent of at least 25 percent.

Recommendation : Do not increase social security tax above 3 percent.

DETROIT, MICH., June 30, 1960. HARRY F. BYRD, Chairman, Senate Finance Committee, Şenate Office Building, Washington, D.C.:

Would like to appear before committee to testify in support of legislation to provide health benefits to aged through contributory social security system. If personal appearance would delay completion of committee work, would you. record in the committee record that I favor adding health benefits to the QASDI system.

LEONARD S. ROSENFELD, General Director, Metropolitan Hospital and Clinic.

U.S. SENATE,

June 28, 1960. Hon. HARRY F. BYRD, Chairman, Senate Finance Committee, Senate Office Building, Washington, D.C.

DEAR SENATOR BYRD: The purpose of this letter is to express my special interest in a small bill which I have cosponsored with Senator Eastland, S. 2903, which would deem teachers in the State of Mississippi to be employees of the State for purposes of title II of the Social Security Act.

This legislation is necessary to implement an agreement which has been worked out between the State of Mississippi and the Social Security Administration to include these deserving State employees under title II of the act.

I have been advised that this bill has the full approval and support of the Department of Health, Education, and Welfare and the Bureau of the Budget.

hope that your committee will favorably report S. 2903 or include it as an amendment to a committee bill.

Your consideration of this request is deeply appreciated, and if you need additional information, please let me know. Sincerely yours,

JOHN STENNIS. [S. 2903, 86th Cong., 2d sess. ] A BILL To deem teachers in the State of Mississippi to be employees of such State for

purposes of title II of the Social Security Act Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That for purposes of the agreeemnt undersection 218 of the Social Security Act entered into by the State of Mississippi with the Secretary of Health, Education, and Welfare, services of teachers in such State performed on and after March 1, 1951, and prior to October 1, 1959, shall be deemed to have been performed by such teachers as employees of the State. The term “teacher" as used in the preceding sentence means

(a) Any licensed teacher, librarian, registrar, supervisor, principal, or superintendent, who is principally engaged in any one or any combination of, the above-mentioned educational and/or administrative capacity in the public, elementary, and high schools of this State; and

(b) County superintendent of education, county school supervisor, principal of any county or municipal public school and the employees in their offices; and

(c) Any licensed teacher engaged in any educational capacity in any day or night school conducted under the supervision of the State department of education as a part of the adult education program provided for under the laws of Mississippi or under the laws of the United States of America.

STATEMENT BY CHARLES I. SCHOTTLAND, DEAN, FLORENCE HELLER SCHOOL FOR

ADVANCED STUDIES IN SOCIAL WELFARE, BRANDEIS UNIVERSITY Mr. Chairman and members of the committee, I welcome the opportunity afforded to me by this committee to file a statement of my views on the subject of medical care for the aged.

By way of identification, I was Commissioner of Social Security from July 1954, having been appointed to that position by President Eisenhower, to December 1958, when I resigned to become dean of the Florence Heller Graduate School for Advanced Studies in Social Welfare at Brandeis University. Prior to that time, I was director of the California Department of Social Welfare to which position I was appointed by the then Governor, Earl Warren.

Since 1927, when I entered the social welfare field, I have frequently been engaged in programs involving medical care for the aged, and it is out of this experience and study that I have come to some of the conclusions which I am setting forth today.

My statement today will be brief because I think both the problem and the solution can be briefly stated.

THE PROBLEM

The problem is an easily stated one although one of gigantic proportions. The aged in the United States are increasing rapidly. Today we have 16.0 million persons over 65. Tomorrow at this time there will be 1,200 more such persons since that is approximately the daily net increase. But it is not only a question of large numbers of persons over 65. Because of the improvements in medical care and in our standards of living, more persons are living to a ripe old age. Of all persons 65 and over, more than one-third have passed their 75th birthday. One in seven is in the eighties, and most of them are women; the women exceeding the men by nearly 120 to 100. There are, I understand, more than 5,000 persons in the United States over 100 years of age and some of them are actually working and paying their social security taxes.

With old age have come the usual diseases of age and senility-diseases which are long in duration and chronic illnesses which frequently required expensive care in hospitals.

INCOME OF THE AGED

Any casual analysis of the income position of the aged in the United States reveals the very simple truth that by and large the aged in this country cannot afford to pay for expensive medical care. Sixteen percent of the aged receive old-age assistance which means that they meet very strict standards of need. Another million aged persons are receiving pensions because of the death or retirement of a Government employee or railroad worker and almost a million are receiving veterans' pensions because of previous military service. In 1956 and 1957, three-fifths of all people 65 and over had less than $1,000 in money income. The situation today remains substantially the same. Only one-fifth had more than $2,000. Of old couples with a husband age 65 and over, almost half had cash incomes of less than $2,000 in 1956. Half of the aged persons living alone or with nonrelatives had incomes of less than $900. Even this small income is not reasonably certain since much of what goes into these averages comes from employment and other sources which decrease as age increases. Almost half (45 percent) of the total income of the aged comes from income maintenance programs, primarily social security and other public programs.

The problem is simply stated. When the aged have expensive hospitalization or nursing home care frequently amounting to as much as $20 to $30 a day or more, they simply are unable to meet this unusual and expensive medical care bill. While I was Commissioner of Social Security, the Social Security Administration conducted a survey of the OASI beneficiaries in 1957. This revealed that among the aged couples 52 percent had medical bills of more than $200 a year; of the single persons, one-third had medical bills of more than $200. Relate these figures of medical expenditure to the limited income of the aged and the problem is clear the aged in the United States do not have sufficient income to meet the mounting costs of hospitalization or other long-term care.

THE SOLUTION

What is the solution to the problem? In the United States we have developed one of the highest standards of medical care in the world. Our physicians, our dentists, and other members of the healing arts professions have combined to give us a system of medicine equal to any. We have learned much about the prevention, diagnosis, and treatment of disease, and I think that the medical professions and allied medical groups can take just pride in what they have accomplished, and the contributions they have made to our American society. But the prevention, diagnosis, and treatment of disease is one thing, and the economic arrangement under which persons are able to purchase medical care is another. The former is the province of the physician and the allied medical professions. The latter is the problem of all of us.

Medical care today in the United States is just like any other commodity. It is available to those who have the purchase price. If they do not have the purchase price, some may obtain such commodity by going on relief.

Now there are only a few alternative methods of obtaining the funds necessary to purchase medical care. Let me explore with you these several methods.

(1) The individual.The traditional method of paying for medical care is that of payment through the individual's resources. For many aged, this can result in an excellent medical care program. But as already indicated in the few figures I have presented on the income status of the aged, very few can afford extensive hospitalization or nursing home care. For the average aged person, an occasional doctor's bill or dentist's bill or an occasional pair of glasses or drugs may be met from his income or other resources. But for the vast majority the payment of hospital bills or extensive nursing home care is out of the question. We, therefore, must become reconciled to the fact that payment of medical bills by the individual will not take care of the rank and file of aged people.

(2) Voluntary organizations.-A second method of handling the problem would be through philanthropic medical and social welfare agencies. Private hospitals have provided yeoman service in giving medical care to the indigent of our country, but they have reached the point where they are no longer able to serve the increasing aged population. I hope that voluntary effort through hospitals, social welfare agencies and other such groups will continue, that the sources of funds for such voluntary effort will increase, and that they will continue to make their contribution as voluntary agencies to the solution of this difficult problem. But I think that the representatives of these voluntary agencies engaged in medical care would be the first to admit that they are in no position to make substantial increased contributions to the medical care costs of the 16 million aged in the United States.

(3) Public assistance.--A third method of taking care of the problem would be to provide a very extensive system of public relief or public assistance for persons who cannot pay the medical care bill. This year, almost a half billion dollars will be spent by Federal, State and local communities to care for the medically indigent through public assistance and other programs. Many persons receiving old age assistance are receiving old age assistance almost entirely because of their medical care needs. In other words, were it not for medical care bills, these aged would be self-supporting or living on their old age and survivor's insurance benefits. I wonder how many Americans feel that it is sound practice to force a person to go on public relief in order to receive medical care. It seems to me that this is unsound in theory and is not in accordance with American tradition. Furthermore, public assistance is a State program. In many States, persons without income will not qualify because of other assets such as real property. In some States, the aged do not qualify until they have been in residence for 5 years; and a variety of other restrictions makes it impractical to think of public assistance as an answer to the problem.

(4) Voluntary insurance.-Another approach to the problem would be through voluntary insurance. There is no question that voluntary insurance for the aged has made tremendous progress in the United States. The voluntary prepayment of hospital and medical costs has won wide acceptance and today, some 72 percent of the total population are covered by some form of hospitalization insurance. I believe that the insurance industry has made a yeoman effort to make a contribution to the solution of the problem of costs of medical care aomng the aged. In the past few years the percentage of aged with some form of medical insurance has risen rapidly. In the 1957 survey previously mentioned 43 percent had some insurance protection and today it is probably about 48 percent.

There is no question in my mind that voluntary insurance can make an even bigger contribution to this problem and that it will continue to do so. There is also no question in my mind that it cannot be the answer to the total problem of medical care for the aged. The reasons will be presented to this committee by others and it is not necessary to labor them here. The high cost of medical care for the aged; the fact that many aged will not be able to afford the premiums; the fact that many aged are such poor risks that the premiums would be very high; the numerous exclusions; the inability of many voluntary insurance programs to carry persons into their eighties and nineties—these and many other factors militate against any voluntary insurance program providing comprehensive medical care coverage for the aged. Furthermore, voluntary insurance cannot finance, without extremely higher premiums the many millions already aged and received medical care.

(5) Grants-in-aid to assist the medically needy.Now before this committee are a variety of proposals for grants-in-aid to the States to assist aged who may not qualify for old age assistance but whose income is insufficient to pay for medical care. Presumably the States would match Federal grants with State and/or local funds, establish eligibility standards more liberal than those applying to old age assistance, and set forth the type of medical care programs to be provided.

It is my considered opinion that such grant-in-aid proposals make little contribution to a solution of this vexing problem of medical care for the aged. Many States do not even have a medical program for old age assistance recipients, or if they do it is very meager and inadequate. If these States will not establish a program for their most needy, it is not likely that they will do so for those whose income is high enough to disqualify them for old age assistance. Furthermore, such proposals proceed in the wrong direction. Our efforts should be directed to helping people out of their distress; not in devising new programs to help them in distress on the basis of a means test. These proposals are nothing more than another relief program, setting forth a means test to apply to persons who do not need or desire relief. Should we foster a program which forces elderly people to undergo a means test because they cannot afford expensive medical care? I do not believe this can ever be a satisfactory solution. It is unnecessary, undignified, contrary to those values which we hold so dearly as Americans, and in the last analysis, it will not work. Even some of the proponents of such grant-in-aid, modified-means-test proposals concede that many States will not be interested in adopting it.

The various modifications proposed to these five methods likewise will not solve the problem-public subsidy to voluntary insurance plans, grants to hospitals for various services—these and many other proposals are stop-gap measures which do not offer satisfactory solutions.

(6) Social insurance. It seems to me that the solution to this problem is clear. We have developed in the United States a method of insuring against widespread social risks. We have insured against industrial accident through workmen's compensation; we have insured against old age through old age, survivor's and disability insurance; we have insured against total and permanent disability through this system, and we have insured against the contingency of death of the wage earner. We have also insured against the contingency of unemployment through unemployment insurance. In four States in the Union, we have insured against temporary disability or sickness. All of these have been done through the mechanism of social insurance.

The social security program has become thoroughly accepted by the rank and file of the people of this country as it has by the rank and file of the people of practically every western industrialized country in the world. It is a sound method of insuring against certain risks and it is in the tradition of American values in that it provides for saving during a person's working and productive years so that when the contingency insured against arises, the person will be able to take care of his problems.

A number of proposals in bills before this Congress embody medical care programs based upon this principle of social insurance. The use of the social insurance mechanism provides an opportunity through a relatively small payroll tax (a tax which I believe the American people are willing to pay) to finance the program contemplated.

I am not impressed with many of the arguments against the proposals to finance medical care for the aged through social insurance. The charge of socialized medicine is not a valid one. The use of the social insurance principle to provide economic arrangements under which medical care bills will be paid has nothing to do with socialized medicine. There is no proposal here for the establishment of Government hospitals or doctors employed by the Government to treat patients. There is nothing here to disturb the traditional patient-physician relationship. When workmen's compensation was irst introduced into the United States, the same arguments were used against it as are now used against these present proposals. It was said at that time that it would destroy the physician-patient relationship and introduce socialized medicine into this country. Certainly, this has not occurred because of workmen's compensation. What has occurred is that workmen's compensation has made it possible for the injured workmen to obtain medical care and for the employer to be safeguarded from suits for injuries on the job. In the four States that provide benefits for temporary disability-namely, New York, Rhode Island, New Jersey, and California—such program has not constituted any threat to the traditional American system of medical practice.

As a matter of fact, the use of the social insurance mechanism would not prevent the Secretary of Health, Education, and Welfare from developing arrangements with existing organizations such as Blue Cross or with existing hospitals to pay for the cost of medical care to such hospitals in exactly the same way that Blue Cross now reimburses such hospitals.

CONCLUSION

In my experience I have run across numerous tragedies among the aged because of the high cost of medical care. I have seen persons who saved for their old age, who owned their homes and had substantial assets, reduced to destitution because of prolonged illness; I have seen persons go on relief who had always been self-supporting until they reached their seventies and eighties and medical costs forced them to seek public assistance. I do not believe that a society such as ours, conscious of its medical needs, cannot afford good medical care without such hardship and humiliation. In the distant past, men frequently resigned themselves to such a situation. But today our people have made the discovery that there is a way to insure against various social risks ; namely, through the device of social insurance a device that is now keeping millions of Americans from the hardships and poverty which otherwise would have come because of unemployment, old age, death of the wage earner, disability or industrial accidents. The problems of medical care for the aged are national problems in which all citizens have an interest. The Congress has it in its power to make a contribution to the solution of the financial aspects of these problems through financing a program in the same manner now used to finance cash benefits to the unemployed, aged, widows, surviving children, and disabled. The machinery of social insurance has proved successful and has been administered soundly, efficiently, and economically in connection with oldage, survivor's, and disability insurance. In other democratic and free countries, the extension of this principle to medical care has been found successful. It does not involve any fundamental change in the physician-patient relationship. It would be the beginning of a solution to this very vexing problem, and I respectfully express the hope that the members of this committee, after due deliberation and the weighing of all of the testimony and evidence, will give to this approach to the solution of the medical care problems of the aged, the same favorable consideration which they have given to other social insurance programs which have been approved by this Finance Committee of the Senate of the United States.

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