Blue Cross and Other Private Health Insurance for the Elderly
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BLUE CROSS AND OTHER PRIVATE HEALTH INSURANCE FOR THE ELDERLY HEARINGS BEFORE THE SUBC OMMITTEE ON HEALTH OF THE ELD.ERLY OF THE SPECIAL COMMITTEE ON AGING UNITED STATES SENATE EIGHTY-EIGHTH CONGRESS SECOND SESSION PART 1 WASHINGTON, D.C.-APRIL 27, 1964 Printed for the use of the Special Committee on Aging U.S. GOVERNMENT PRINTING OFFICE 33-420 WASHINGTON: 1964 For sale by the Superintendent of Documents, U.S. Government Printing Offile Washington, D.C., 20402 - Price 20 cents SPECIAL COMMITTEE ON AGING GEORGE A. SMATHERS, Florida, Chairman PAT McNAMARA, Michigan EVERETT McKINLEY DIRKSEN, Illinois CLAIR ENGLE, California BARRY GOLDWATER, Arizona HARRISON A. WILLIAMS, JR., New Jersey FRANK CARLSON, Kansas MAURINE B. NEUBERGER, Oregon WINSTON L. PROUTY, Vermont WAYNE MORSE, Oregon KENNETH B. KEATING, New York ALAN BIBLE, Nevada HIRAM L. FONG, Hawaii FRANK CHURCH, Idaho E. L. MECHEM, Now Mexico JENNINGS RANDOLPH, West Virginia EDMUND S. MUSKIE, Maine EDWARD V. LONG, Missouri FRANK E. MOSS, Utah EDWARD M. KENNEDY, Massachusetts RALPH YARBOROUGH, Texas J. WILLIAM NORMAN, Jr., Staff Director JORN GUY MILLER, Minority Staff Director SUBCOMMITTEE ON HEALTH OF THE EInERLY PAT McNAMARA, Michigan, Chairman CLAIR ENGLE, California EVERETT McKINLEY DIRKSEN, Illinois MAURINE B. NEUBERGER, Oregon BARRY GOLDWATER, Arizona WAYNE MORSE, Oregon FRANK CARLSON. Kansas EDMUND S. MUSKIE, Maine HIRAM L. FONG, Hawaii EDWARD V. LONG, Missouri FRANK E. MOSS, Utah RALPH YARBOROUGH, Texas JAY B. CONSTANTINE, Research Director NOTE.-Three bearings on Blue Cross and other private health insurance were held as follows: Part I-Washington, D.C., April 27, 1964. Part2-Washington, D.C., April 28,1964. Part 3- Washington, D.C., April 29,1964. Part 4A-Appendix. Part 4B-Appendix. II CONTENTS CHRONOLOGICAL LIST OF WITNESSES Page Opening statement of the chairman -_- 1 Dr. Ida C. Merriam, Director, Division of Research and Statistics, Social Security Administration - 3 Dr. Forrest E. Linder, Director, National Center for Health Statistics, USPHS; accompanied by Theodore D. Woolsey, Deputy Director; and Dr. Philip S. Lawrence, Chief, Health Interview Statistics Division, National Center for Health Statistics -13 Walter M. Foody, Jr., vice president, Continental Casualty Co., Chicago; accompanied by Paul Singer -16 Edward J. Kelly, first vice president, Bankers Life & Casualty Co., Chicago; accompanied by Miss Zita Stone, associate general counsel; and J. F. Kelleher, public relations director - 36 Nelson H. Cruikshank, director, Department of Social Security, AFL- CIO; accompanied by Lisbeth Bamberger, assistant director - 54 STATEMENTS Cruikshank, Nelson H., director, Department of Social Security, AFL- CIO-40 Dirksen, Hon. Everett McKinley, U.S. Senator from Illinois - 2 ADDITIONAL INFORMATION Foody, Walter M., Jr., Continental Casualty Co., letter dated May 8, 1964, to Senator Fong - 25 Kelly, Edward J., first vice president, Bankers Life & Casualty Co., letter dated June 2, 1964, to Senator McNamara -42 Medical assistance for the aged: Recipients and payments for recipients by State, table 4 -12 mn BLUE CROSS AND OTHER PRIVATE HEALTH INSURANCE FOR THE ELDERLY MONDAY, APRIL 27, 1964 U.S. SENATE, SUBCOMMITTEE ON HEALTH OF THE ELDERLY OF THE SPECIAL COmBMIrrEE ON AGING, Washington, D.C. The subcommittee met at 10:10 a.m., in room 4232, New Senate Office Building, Senator Pat McNamara (chairman of the subcom- mittee) presiding. Present: Senators McNamara, Williams, Neuberger, Muskie, Dirk- sen, and Fong. Present also: Jay B. Constantine and Frank C. Frantz, professional staff members; Patricia Slinkard, chief clerk; Toby Berkma-n, research assistant; and John Guy Miller, minority staff director. Senator McNAMARA. The hearing will be in order. Unfortunately, we have to start with an apology, because there was a quorum call the first thing and several of the Senators will be here in the next few minutes, we hope. They are responding to the live quorum. This morning, we begin 3 days of public hearings on a matter of great interest and importance both to the public and the Congress, the health needs of the 18 million Americans who are 65 years of age or over. Actually, the hearings will focus on just one phase of this broad problem. We will be concerned with the cost, coverage, and benefits of health and hospital insurance protection available to the elderly from private insurance companies and the Blue Cross plans. As everyone here knows, there is a continuing public discussion over the need, or lack of it, for a social security-financed system of hospital insurance for the aged. On the one hand, there are those who say the private insurance in- dustry, plus existing Federal, State, and local programs, can do the job adequately. On the other hand, there are those who say they can't, and that additional legislation is necessary. It is important, I believe, to a fuller understanding of this public issue, to define as precisely as possible, the present and potential role of the private insurance industry, and Blue Cross, in meeting the health needs of the elderly. A number of serious questions have been raised in recent months over the ability of the private insurance industry and Blue Cross to meet these needs. Doubts have been concentrated in three major areas, the actual number of older persons who have some form of health insur- ance policy; the quality of that coverage in terms of benefits, and the cost of the protection. 1 2 PRIVATE HEALTH INSURANCE FOR THE ELDERLY A fourth area we hope to explore is the availability of this protection to those who do not now have it. Finally, we hope to develop enough factual information, so that interested persons, including the Congress, can make objective judg- ments on the central question, which is: Is there adequate health insurance protection available from private sources for people over 65 at a price they can afford? To that end, the Subcommittee on Health of the Elderly has invited the major health insurance companies in the field; the industry's associations; officials of the Blue Cross plans; representatives of appro- priate Government agencies, including experts on medical economics; representatives of labor and consumer groups; and other interested and knowledgeable persons to testify. It is a pleasure to note that all of those invited have accepted, and have stated their intention to cooperate with the subcommittee in de- veloping the necessary information. This includes not only the formal testimony being presented today, but also answers to questionnaires submitted several weeks ago to sev- eral of the largest insurance companies offering special policies to senior citizens. We have asked all of our witnesses to limit their oral testimony to about 5 minutes, which will be a summary, with the understanding that the full text of their statements will be placed intact in the permanent record of these hearings. We are doing this so that members of the subcommittee, who have had an opportunity to study the statements in advance, -will have more time for questioning, to develop additional pertinent information. Our first witness this morning is a representative of the Social Se- curity Administration, Dr. Ida C. Merriam, Director of the Division of Research and Statistics. Senator DIRKSEN. Mr. Chairman. Senator McNAAMARA. Senator Dirksen. Senator DiRKSEN. At the beginning of the hearing may I submit a statement? Senator McNAAMARA. Senator Dirksen has a statement to be sub- mitted for the record, and without objection it will be included at this point in the record. (The statement referred to is as follows.:) STATEMENT BY HON. EVERETT MCKINLEY DIRKSEN, U.S. SENATOR FROM ILLINOIS It is our aim that medical care be available to all Americans under a system providing- 1. Greatest possible freedom of choice; 2. Minimum financial burdens; 3. Optimum personal dignity; and 4. Maximum flexibility for continued efficient growth of the world's finest medical care. In achieving this purpose, there is a role for government. Most appropriately it should give priority, in order, to local, State, and Federal assistance. The late President Kennedy noted this when he said "Effective public health meas- ures and medical care depend, in the last analysis on action at the community level." The role of government should be held to the minimum practical if the primary role of individual responsibility with freedom is not to be usurped. If excessive tax burdens are to be avoided, government's role should be limited to supple- mentation of private initiative, both corporate and individual. The role of the PRIVATE HEALTH INSURANCE FOR THE ELDERLY 3 Individual and family, which years ago stood almost alone as the medical care bulwark along with voluntary charity agencies, remains preeminent. That the freedom and dignity which are coadunated with individual respon- sibility should be destroyed is unthinkable to most Americans. During the last 30 years, however, we have seen emergence of a new force in provision of medical care-voluntary health insurance. Its acceptance by the American people has given unparalleled evidence of their determination to continue exer- cise of intelligent, individual initiative wherever possible. Necessitated by increasing complexities in society which have been more than matched by new developments in medicine, this new force is a product of Ameri- can corporate initiative. Health insurance, under consideration today with special reference to older people, constitutes a remarkable demonstration of the responsiveness of America's singular talent for corporate initiative, both profit and nonprofit. It will be interesting to review the way in which it is responding to the need of older Americans. Use of the present tense in reference to its effort on behalf of older people is especially appropriate because these are truly new developments. Health insurance accomplishments to be reviewed during these hearings have almost all occurred in the last 5 to 10 years. Major experiments have been undertaken during the last year or two.