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This situation is not new.

For more than a decade we have failed to meet the problem.

There is a sound and workable solution. Hospital insurance based on Social Security payments is clearly the best method of meeting the need. It is a logical extension of the principle -- established in 1935 and confirmed time after time by the Congress -- that provision should be made for later years during the course of a lifetime of employment. Therefore:

I recommend a hospital insurance program for the aged aimed at two basic goals:

First, it should protect against the heaviest costs of a serious illness -- the costs of hospital and skilled nursing home care, home health services, and outpatient hospital diagnostic services.

Second, it should provide a base that related private programs can supplement.

To achieve these goals:

1. These benefits should be available to everyone who reaches 65.

2. Benefit payments should cover the cost of services customarily furnished in semi-private accommodations in a hospital, but not the cost of the services of personal physicians.

3. The financing should be soundly funded through the Social Security system.

4. One-quarter of one percent should be added to the Social Security contribution paid by employers and by employees.

5. The annual earnings subject to Social Security taxes should be increased from $4,800 to $5,200.

6. For those not now covered by Social Security, the cost of similar protection would be provided from the administrative budget.

Under this proposals the costs of hospital and related services can be met without any interference whatever with the method of treatment. The arrangement would in no way hinder the patient's freedom to choose his doctor, hospital, or nurse.

The only change would be in the manner in which individuals would finance the hospital costs of their later years. The average worker under Social Security would contribute about a dollar a month during his working life to protect himself in old age in a dignified manner against the devastating costs of prolonged hospitalization.

Hospitalization, however, is not the end of older people's medical needs. Many aged individuals will have medical expenses that will be covered neither by social security, hospital insurance nor by private insurance.

Therefore, I urge all States to adopt adequate programs of medical assistance under the Kerr-Mills Legislation. This assistance is needed now. And it will be needed later as a supplement to hospital insurance.

II. HEALTH FACILITIES

Good health is the product of well-trained people working in modern and efficient hospitals and other facilities.

Extension and Expansion of Hill-Burton Program

We can be proud of the many fine hospitals throughout the country which were made possible in the last 16 years by the Hill-Burton program of Federal aid.

But there is more still to be done:

-- too often a sick patient must wait until a hospital bed becomes available;
-- too many hospitals are old and poorly equipped;
-- new kinds of facilities are needed to care for the aged and the chronically ill.

I recommend that the Hill-Burton program -- scheduled to end on June 30, 1964 -- be extended for an additional five years including the amendments outlined below.

1. Planning

Hospital care costs too much to permit duplication, inefficiency, or extravagance in building and locating hospitals. Individual hospitals and other health facilities should be located where they are most needed. Together, these facilities in a community should provide the services needed by its citizens. This means planning. Therefore:

(a) I recommend that the Congress authorize special grants to public and nonprofit agencies to assist them in developing comprehensive area, regional, and local plans for health and related facilities.

(b) I also recommend that limited matching funds be made available to help State agencies meet part of their costs of administering the Hill-Burton program, so that these agencies can plan wisely for our hospital systems.

2. Modernization

The Hill-Burton program has done much to help build general hospitals where they were most needed when the program began -- particularly in rural areas.

While rural and suburban areas have been acquiring modern facilities, city hospitals have become more and more obsolete and inefficient. Yet city hospitals are largely responsible

-- for applying the latest discoveries of medical science;
-- for teaching the new generations of practitioners;
-- for setting the pace and direction in care of the sick.

They must have adequate facilities.

A recent study showed that it would cost $3.6 billion to modernize and replace existing antiquated facilities -- more than three times our annual expenditures for construction of all health facilities.

The present Hill-Burton Act cannot meet this critical need. Further neglect will only aggravate the problem. Therefore:

(c) I recommend that the Act be amended to authorize a new program of grants to help public and nonprofit agencies modernize or replace hospital and related health facilities.