June 1, 1962

CONGRESSMAN'S REPORT

By Morris K. Udall

"Medicare"--The Battle of Madison Square Garden

The "Battle of Madison Square Garden" between President Kennedy and the American Medical Association has touched off a great mass of mail pro and con on the question of medical care for the aged. Though "Medicare" may never reach the floor of the House this year, the time has arrived when my constituents are entitled to a statement of my position. I intend to vote for the Administration's King-Anderson Bill as a sound solution to what nearly everyone considers a major national problem.

The "Medicare" proposal would extend the Social Security program to provide hospital services, home nursing services, outpatient hospital diagnostic services and home health services for persons 65 and over who are covered by Social Security and the Railroad Retirement Act. The bill would not pay doctor bills. It would be financed by an increase of 1/4 of one per cent of employees' pay and a similar increase in the contributions of employers. Also, the taxable base on which Social Security contributions would be calculated would be increased from $4,800 to $5,200.

For the average wage-earner this increase would amount to approximately $1 per month. With this increase he would be earning, for himself and his wife, some insurance against major hospital expenses after age 65.

LONG IN COMING

Like most big issues, this one has been long in coming; there have been similar proposals under discussion for years. The present bill began taking shape about two years ago when Governor Paul Fannin of Arizona and 29 other governors voted for a resolution calling on the Congress to enact health insurance for the aged through the Social Security system. The end of that long effort may be approaching, or it may carry over to next year. Ultimately some legislation will probably be enacted.

HEAVY MAIL

In recent weeks I have received many hundreds of cards, letters and telegrams on the King-Anderson Bill. The ratio has been better than 3 to 1 in favor of its passage. However, what people write means more to me than actual numbers, and I have been most interested in the views expressed on this important question. While I have been following the hearings in the House and Senate most carefully, I regard my correspondence as an equally important source of information. Occasionally, I will receive a message that contributes little to the debate (like the Mesa doctor's telegram, "NO TO KING-ANDERSON A THOUSAND TIMES NO NO NO."), but most of my mail has been informative and helpful. Here are a few examples:
 

Tucson doctor: "I have never had it brought to my attention that anyone suffered from lack of medical care because they were unable to pay for it." Retired doctor in Phoenix: "As a doctor having served the health needs of people for 40 years, I can testify to the fact that the average person above 65 years is unable to provide the necessary health coverage."
Doctor's wife, Tucson: "I believe it would encourage the placing of our older citizens in institutions instead of encouraging them to remain active members of their community." Tucson man: "I have no hospitalization as I have been cancelled out by the company I had the insurance with because I had a claim at one time of total disability."
Doctor's wife, Tucson: "...will inevitably result in the overcrowding and overutilization of hospitals and nursing homes..." Payson man: "Instead of remunerating me, they cancelled my Health and Accident Policy without notice, although the premiums were guaranteed by my deposited pension... We are in need of health insurance and have none because of the cost."
Tucson couple: "The Medical Care Plan would interfere in every way and be an insult to our abilities to care for ourselves." Sun City housewife: "As I have another 17 years to work under Social Security, I certainly would prefer to prepay now for medical care needed when I am 65."

 
Doctor's wife, Yuma: "Since the data compiled by the Medical Association states that 75% of our people over 65 years of age already have their own health insurance policies, why are the politicians. ..trying to take over the control of the health of these people?" Retired professor, Tucson: "I have not found non-cancellable hospitalization and medical service insurance policies available as indicated by most speakers and writers who are against the Social Security medicare."
Tucson man: "Not only is it unconstitutional to provide compulsory medical aid, but it is also very unwise. It is just another socialist scheme to destroy our sovereignty." Tucson retiree: "The average retired middle-class person, who is the real backbone of the American way of life, cannot stand a major sickness without becoming a pauper. He deserves a greater freedom from fear in his later years."
Tucson housewife: "I am opposed to the King bill because there is no demonstrated need for such legislation." Tempe man: "I've invested over $2,000 in insurance and hospital plans. When I needed them most, they cancelled."
Prescott housewife: "Old people who need free medical care are already getting it." Phoenix man: "Most of we oldsters would rather suffer than accept charity, and if there is a way to assist us compatible with American pride and dignity, we urge you to consider it carefully."
Eager family: "Most old people lay away a nest egg for old age." Safford man: "I am 79 years old and have spent $10,000 in the last 10 years for medical aid...I can't stand much more."
Prescott housewife: "The aged people do not need this system of help, and it is just another way to take the individual's dignity away from him and make weaker people become captives to a dole system." Glendale man: "Have you ever known a single American who would trade his Social Security check for an old age pension? Of course you haven't! The former he feels he has earned; the latter is a dole."
Scottsdale man: "Americans today, in general, are financially better equipped to pay their own medical bills than ever before in history." Mesa housewife: "I associate with the best class of people, I think, and there are not many of them who can afford a doctor, so try to doctor themselves the best they can."
Tucson man: "The Kerr-Mills law provides free hospital, medical, surgical and nursing care to anyone over 65 who does not have the necessary funds...Isn't this the traditional American way?" Tucson man: "I'm tired of hearing all of these fine words about the Kerr-Mills law. First of all, it's charity, and secondly, we don't have it in Arizona."
Scottsdale doctor: "...it would help a great many individuals who are over 65 who are already insured by their own insurance policies. These policies are non-cancellable. Tempe man: "At 75 years of age my medical and hospital needs cannot be met out of meager savings and income. Insurance policies cancelled when I needed them most."

Literally hundreds of my letters have told stories of personal hardships to older persons who have been unable to meet medical expenses, who have gone without care they needed, who have lost all the savings of a lifetime with one catastrophic illness. I don't know how anyone could ignore these facts or fail to recognize that there is a great human need that is not being met by the wealthiest nation in the world.

EARNED BENEFITS vs. CHARITY

Nearly every member of Congress favors some plan of action. The main point at issue is one of earned benefits, which a person can accept with dignity, versus charity. Two years ago the Congress enacted a charity program known as the Kerr-Mills Act. A state which wants to participate in Kerr-Mills must pass enabling legislation and appropriate money to match the federal funds. Only 26 states have put the program into action. The Arizona Legislature has done nothing and there is little likelihood that it will act in the near future. This illustrates one of the ironic facts about current problems. Those Arizonans who talk the most about states' rights and who say "let Kerr-Mills do the job" are the ones least anxious for Arizona to meet its responsibilities by passing Kerr-Mills legislation.


 
Thus far the Kerr-Mills program has been anything but a success. Last year, for example, 92% of all federal money expended went to the states of New York, Massachusetts and Michigan. Inequities were enormous. The average payment per recipient in Illinois was $506.86, whereas the average payment in Kentucky was $15.62. And this is the program the American Medical Association describes as "the common sense approach to solving a problem that concerns us all."

Under the Kerr-Mills program all but the poorest are left out. To receive aid an aged person (and, in some states, his children as well) must pass a "means" test and swear that he is in poverty. By comparison, the King-Anderson Bill would add medical care to Social Security insurance coverage and include persons who have already retired.

IS IT ACTUARIALLY SOUND?

Opponents of the bill (and of Social Security in general) talk a great deal about the actuarial soundness (or unsoundness) of Social Security financing. They compare the Social Security system with private insurance companies and say there should be money "in the bank" now to meet future needs. What they fail to recognize is that under a universal government program full cash reserves are not necessary. A social insurance program of this nature is financially sound if future income will support future disbursements. Like Social Security itself, this addition to the system can function successfully without recourse to general taxation.

Four years ago, during the Eisenhower Administration, a top-level advisory committee made a thorough study of the financing of Social Security and concluded that the program is "sound, practical and appropriate." I am confident this is still true today.

It is interesting that the arguments against "Medicare" are the same arguments used against Social Security 25 years ago, and that system has never yet had to go to the Congress for appropriations from the general fund. Social Security funds now total $22 billion and are expected to reach $80 billion by 1980.

WHO IS FOR IT?

Many Arizonans assume that medical care is a program sponsored and favored only by Democrats. This is not the case at all. The Republicans in Congress are divided into about 4 groups including
 

(a) a small minority who argue that Kerr-Mills will fill all current needs;
(b) those who favor Social Security financing but would add the "Rockefeller" option so that participation would be voluntary;
(c) a large group including Republican Chairman William Miller, Congressman from New York, who would pay for hospitalization of all persons over 65 from general tax revenues at a cost of some $2 billion per year, and
(d) a small number like Congressman Hastings Keith of Massachusetts who support the President's plan.

Watching the lines form on this battle has been interesting. The American Medical Association has led the fight against it, using essentially the same arguments that it used against Social Security and the same predictions of lost liberty it used against Blue Cross-type insurance programs in the 1930s.

This is not to say that individual Arizona doctors are unconcerned about meeting the medical needs of the aged. Our state has a fine group of doctors, and we can be proud of them. They give much of their time to charity cases. Nationally, medicine has made great strides in recent years, and I for one would never want to see our doctors lose the incentive to move ever ahead in medical progress. However, doctors are busy people and can't be expected to be experts in social problems. I think their leaders have allowed themselves in this instance to see monsters that don't exist. The likelihood of this country adopting socialized medicine (which I strongly oppose) has never been more remote. On the contrary, I believe passage of a sound program of medical insurance under Social Security financing will effectively demolish any argument that might otherwise crop up for socialized medicine.

Marion Folsom, Secretary of Health, Education and Welfare in the Eisenhower administration, takes the same point of view. "There does not seem to be any sound basis for describing a plan financed through Social Security as 'socialized medicine' nor should such a plan lower the quality of medical care," Mr. Folsom has said. "The individual would still have the same free choice of hospitals and doctors that he has now."

Lining up in support of the King-Anderson Bill are organizations of retired persons, the American Nurses' Association, many individual doctors and an extremely high percentage of respondents to polls all over the country.

I have taken note of the surveys made by colleagues of mine--particularly those from conservative Republican districts, where favorable results would have to be significant. I have been amazed to discover that heavy majorities have piled up in favor of the King-Anderson Bill in nearly every such district.


 
In Phoenix, which can hardly be described as a hotbed of liberalism, political science students at Union High School polled all areas of Maricopa County. The results showed 1,401 persons interviewed favoring the King-Anderson Bill, and 510 opposed, for a favorable response of 73 per cent. While Phoenix is not in District 2, I have had a great deal of mail from there on this question, and my mail has clearly confirmed this sentiment.

My Republican colleague, Rep. Hastings Keith of Massachusetts, recently described the King-Anderson Bill as "financially and philosophically sound" and "the true conservative approach to a problem we can no longer ignore." A former underwriter with one of the nation's largest insurance companies, Congressman Keith represents one of the most solidly conservative districts in the country. I regard his support of the bill as highly significant.

Because public sentiment is so strongly in favor of the program many members of the Congress, originally on record as opposed, have grasped at straws to put themselves on record as favoring medical care for the aged, if not the King-Anderson Bill. The bill introduced by Rep. Frank T. Bow, Republican of Ohio, is a case in point. Supported by Congressman Miller, the national chairman, and others, this bill includes physicians' fees and other liberalizing provisions, would cost the government $2 billion the first year and more later, and would take all of this money out of general taxes without providing one cent of additional revenue. And this proposal is being advocated by people who call the King-Anderson Bill "socialized medicine."

IS THIS A PERFECT BILL?

Those who criticize the King-Anderson Bill fall into two general categories--those who say it goes too far, and those who say it doesn't go far enough. Curiously, some critics seem to alternate between these contradictory propositions.

Limiting coverage to persons receiving Social Security checks is the shortcoming most frequently cited. However, the bill will cover 14.7 million out of 17.8 million persons in this country over 65 years of age, and it will apply to 95 per cent of all present workers. Keeping coverage within the Social Security system is the only means I know to make the program self-supporting and keep it from becoming public-supported charity. The King-Anderson Bill is not perfect; but I believe it is a sound approach.

WHAT IS THE PROBLEM?

Why is there so much concern about medical care for the aged? Here are the facts:

Older people have greater medical needs - Persons over 65 require 2,332 days of hospital care per thousand people compared with 883 days for those under 65.

Hospitalization lasts longer - The average stay for a person over 65 is 14.9 days, compared with 7.6 days for younger persons.

Medical costs are higher - Average yearly private spending for medical care of people over 65 is nearly twice as much as the rest of the population.

They have less income - Two-person families with head 65 or over have median income of $2,530 a year, compared with $5,314 for those under 65.

They have fewer assets - Four out of 10 older families have either no liquid assets or less than $200 in such assets.

They have less insurance - Insurance available to the aged is expensive, limited, restrictive, cancellable, and excludes pre-existing conditions. And only about half the aged have this, compared with 70% insurance coverage for younger people.

Recent improvements in medical care have added to our population over 65. At the same time, the costs of medical care have risen tremendously, reflecting the acquisition of expensive new equipment and general increases in the costs of providing medical services to the public. The result has been a steady increase in the number of persons on fixed incomes for whom medical costs have become a major problem.

CONCLUSION

The American Medical Association wrote me last January: "No one has yet produced documented evidence that the aged are not receiving the medical care they need." The statements in hundreds of letters received in my office seem to indicate the AMA hasn't looked too hard to find that evidence. It exists. It exists in Arizona, where the Kerr-Mills program has never been accepted, and it exists in 23 other states which have no such program. It even exists in states where the program operates, for most of the people who write me would never be able (or willing) to meet a poverty test. The poor and destitute can always get some kind of help, I imagine, but what of the good, hard working, honest Americans who have tried to prepare for the expenses of old age and found that skyrocketing medical costs have priced needed medical services out of sight? I believe the resources of our nation can very well be used to spread the risk among our people to provide necessary care and make the prospect of old age a less fearsome prospect. And I believe the insurance approach of the Social Security system is the proper mechanism to accomplish this end.


Previous Report: May 17, 1962 -- The Trade Expansion Act of 1962: "A Bold New Instrument of American Policy"
Next Report: June 21, 1962 -- "Out of the Fryingpan--Hope and a Lesson for Arizona"


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