Michigan's adults are 65 and up. That our percentage is almost half of this, I feel shows a real effort to make care available to all. Blue Cross began by enrolling industry-this meant the worker and his family. Our membership among older people was, therefore, very small in the beginning. It is growing and it is entirely foreseeable that we will soon have our full share of the 65-and-over population group.

Any present Blue Cross member may continue membership as long as he wishes. In fact, over two-thirds of the adults now enrolled may continue after 65 with the same benefits and rates as may be enjoyed by the active groups from which they came. As more retiree groups come in, this percentage will increase. All others may convert to direct pay upon leaving an active Blue Cross-Blue Shield group. No one is denied.

Thus, you can see that the Blue Cross movement is not ignoring the aged. Quite the contrary is true. We feel that they deserve membership on an equal basis with all others and most assuredly they need equal treatment and that is what they receive. The enrollment restrictions we have are an attempt to guard against direct abuse and individual selection against us, by those who know they need the benefits immediately and they are not primarily aimed at any one group-such as the aged.

The average age of our membership is rising faster than is the average age of the general population. What does this trend mean to Blue Cross in terms of income and expenses? There can be no doubt but that it means greater utilization-a greater number of hospital days per member. But, what is the extent of this problem? Let us examine our experience with retiree groups.

Most of our retiree groups have had only 2 or 3 years of experience. This is not a long-enough period of time to show the picture accurately. Therefore, my remarks are not intended to show precise calculations, but rather to point out in general terms what may face us.

So far, our expense for the hospital care of retiree groups has been about 161 percent of our expense for their parent groups. By parent groups I mean the active employees, together with their families, working for those same 159 employers which have formed retiree groups. This figure of 161 percent is derived from a study of the experience of 35 of these 159 groups. These 35 groups have paid about $12 million in Blue Cross subscription charges during the 4 years ending December 31, 1954. Hospital charges per day average $17.39 for retirees against $22.19 for members of the active parent group. Hospital charges per case were $250.88 for retirees and $151.15 for actives. The same general tendency seems to be evidenced in Blue. Shield costs. Blue Shield average cost per service for these same 35 groups of retirees amounted to $41.46 while for the parent groups the average cost per service was $34.71.

This greater cost is due primarily to the length of hospital stay among the older groups. The admission rate per member is quite comparable. It must be remembered here that about 20 percent of hospital admissions under Blue Cross are for maternity care. Naturally, retiree groups do not use the hospital to any extent for this purpose. Their greater use of the hospital for surgical and medical treatment seems to about equalize the loss of maternity admissions— making the overall admission rate the same.

However, the average length of stay per case for those in our retiree groups runs 14.4 days or just about twice the average for the plan as a whole.

1

It is interesting to note that a study 1 made by the Social Security Administration in 1952 found that utilization by the noninstitutional aged population was 106 percent higher than utilization by the general population. The survey also found that the hospital admission rate for the 65 years-and-over group without prepaid hospitalization was 60 percent of that for those over 65 who had hospital insurance. However, the average length of stay was very much longer for the noncovered group-being 27 days per admission as against 14.7 days for the covered group. This latter figure certainly conforms to our own experience of 14.4 days per case. It seems obvious from this report that the noncovered aged group need more hospital care than they receive and that once forced into the hospital, it is for a major 'cause of prolonged duration.

If we assume that (1) those over 65 have at least twice the utilization of the general public, (2) 5 percent of Blue Cross adults are now at least 65, and (3) we will eventually have more than 10 percent of our adults over 65, then we can see an overall increase in utilization of from 5 to 7 percent from this cause. Some of this may be overcome in the future by making use of convalescent homes and outside nursing care in certain cases.

There is another important point regarding the aged and hospitalization coverage. This is "the ability to pay." I believe our present arrangement for retiree groups goes a long way to help solve this problem. To push this development was one of the two major recommendations for covering the aged made by the commission on financing of hospital care-of which I had the honor to be a member. The other recommendation was the inclusion of a provision in the Federal Old Age and Survivors Insurance program for hospitalization protection for needy beneficiaries receiving monthly income-maintenance benefits. under this program, provided

(a) That the certification and administration of funds for hospital benefits be the responsibility of State and local agencies, and (b) That the protection be provided by the local administering agency through purchase of voluntary prepayment from OASI funds or by direct payments to hospitals on a reimbursable cost basis from such funds.

All of the experience I have referred to so far comes from the Michigan Blue Cross and Blue Shield plans. I have also some limited data which was developed by a joint American Hospital AssociationBlue Cross Commission committee from data submitted by 14 Blue Cross plans located in various parts of the United States. This data is much less favorable in terms of utilization by the aged than the Michigan experience.

According to the national study, adults from 20 to 64 years of age use approximately 1,035 days of hospital care per thousand members. This figure includes routine obstetrical care. Blue Cross members 65 years and over used approximately 2,800 days per thousand members. It was the conclusion of the committee that the excess hospitalization for ages 65 and over, as measured in days of hospitalization,

Source: I. S. Falk and A. W. Brewster: Hospitalization and Insurance Among Aged Persons, a Study Based on a Census Survey in March 1952. Department of Health, Education, and Welfare, Social Security Administration, Bureau Report No. 18, Washington, April 1953.

might run as high as 21⁄2 days per person per year or possibly slightly more. The committee's conclusion was that the cost of this care for persons 65 and over would be nearly three times the cost of hospital care for those under 65. It seems to me that this latter conclusion fails to take into consideration the lower average daily hospital cost for the older people. Based on the data available to the committee, it would seem to me that the committee's estimates are on the high side, but that may be wishful thinking.

The 14 plans participating in the national study reported percentages of persons over 65 from a low of 2.3 percent to a high of 11.2 percent in group remittance and group conversion membership. Group remittance alone varied from 1.8 percent to 6.9 percent adults over 65. The group conversion category varied from a low of 5.2 percent to a high of 23.9 percent adults over 65. The average would appear to be about the same as Michigan or slightly higher. Under the nongroup category, the variations are greater. One plan reported 43.2 percent of its nongroup adults in the over 65 group.

As times goes on, we will have much more complete and more accurate data regarding the utilization of hospital and medical care by the aged. In my judgment, it is terribly important to the voluntary hospitals and to the present voluntary health care system to solve this problem. The fact is that older people need more medical care than young people. It does not answer the problem to provide fewer benefits at a higher cost to the individual at a time when his needs increase and his income is probably less. We think in Michigan Blue Cross and Blue Shield that we have taken an important step forward by making group benefits available at group rates to retired Michigan workers.

7. MEETING THE MEDICAL COSTS OF OLDER PEOPLE WITH COOPERATIVE PLANS

Robert E. Van Goor, general manager, Cooperative Health Federation of America, Chicago, Ill.

Delivered at the University of Michigan conference on aging, July 10, 1956

The Cooperative Health Federation of America is an association of prepaid group-health plans (and other organizations sympathetic to this movement) in the United States and Canada. Some 30 of its member organizations are health insurance and direct-service-health plans sponsored by consumer, community, labor, and rural groups. All are dedicated to enabling people to gain access, by their own efforts and at reasonable cost, to high quality health care which modern medical science makes possible.

Much of the following information was received in answer to a letter sent 11 Cooperative Health Federation of America member plans in the United States, representative of Cooperative Health Federation of America's health-plan membership. Not much statistical information is available from these plans on members over age 65. Other kinds of information were submitted which I think should be helpful when considering how best to meet and finance the health needs of older people.

COOPERATIVE HEALTH INSURANCE PLANS

Three of the eleven Cooperative Health Federation of America member organizations contacted are cooperative cash-indemnity health-insurance plans having a number of members in rural areas of States in the Northwestern, North Central, and Northeastern parts of the United States. These plans provide medical-surgical-hospital coverage for over-age-65 members of groups at the same premium rates and eligibility requirements as for under-age-65 members of the group. Two of the plans provide major medical expense insurance to all members of a group.

One of the plans has worked out agreements with several hospitals and with doctors in rural areas to accept its fee schedule, regardless of the member's age, as payment in full for services rendered. Two of the plans have developed rural-group coverage for all persons, regardless of age, through countywide farm organizations and cooperative creameries. The other plan, with no age limit whatever, has actually sought individual family memberships rather than group memberships.

All three cooperative-insurance plans surveyed provide coverage for over-age-65 persons through individual policies, too, but with varying degrees of benefit limitations and higher monthly premiums. All three reported higher claims costs for their over-age-65 members. Two of these three insurance plans have a limited health-education

program for members, but it is not geared specifically for older persons. One plan publishes a bimonthly magazine; the other sponsors a bimonthly TV program in the area where its members live.

AMBULATORY PLANS

Two of the 11 CHFA member health plans contacted are unionsponsored plans, providing through their own clinics direct health services to ambulatory patients, including retired persons over age 65. One plan serves both members and dependents; the other, the union member and his wife. One of the plans has maintained active contact with community agencies, both public and voluntary, through which additional services are available to supplement the clinic's services. Cash indemnity hospital and surgical coverage is paid for out of the unions' health and welfare funds. From April 1955 through March 1956, 19.6 percent of new patients registered at one of the unionsponsored ambulatory plans were over 60 years of age. Both plans carry general articles on health education in their regular publications. Upon retirement, the clinics' services are still available, with either the union or member paying a very modest annual premium. A retired member evaluated the direct service ambulatory clinic as one of the finest achievements of the union."

COMPREHENSIVE DIRECT-SERVICE PLANS

The remaining six plans surveyed provide direct medical and surgical services to their members. Four of the six also provide hospital benefits; three have their own hospitals. Members of the final two plans receive hospital benefits from another health plan, often Blue Cross. None of the six plans make cash indemnity insurance payments to members utilizing any of the benefits. Instead, their members receive, regardless of age, comprehensive-preventive and curative health services of high quality through prepaid group medical practice, with the consumer members having a voice in determining economic policy of the plan and the medical staff controlling the practice of medicine.

There are relatively few extra charges, so that a member need not hesitate, because of a dollar barrier, to see his doctor whenever he needs him.

One plan even provides restorative and maintenance-care dentistry. Three have out-of-service-area benefits for members taken ill or injured away from home. Visiting-nurse services are provided by two of the comprehensive direct-service plans.

Two of the plans do not accept as individual members persons over age 65. One accepts individual members over age 60, but with reduced benefits. All accept members in groups, regardless of age. Two of the plans accept only groups. All six comprehensive directservice plans issue noncancellable policies, accept conversions from group to individual membership without penalty, and continue coverage for retired persons without reducing benefits or increasing rates. The six comprehensive plans surveyed provide services to approximately 580,000 people. Four plans are in large cities, two in small towns. Four are sponsored by cooperatives, 1 by a labor union, and 1 is a community-type plan.