In these situations, the cost of alterations in order to obtain a facility which could be used indefinitely would be high and might well be prohibitive.

Mr. SCHADEBERG. May I ask a question at that point?

Mr. EVERETT. Yes, sir.

Mr. SCHADEBERG. Is that based on a study you have made or just general information?

Mr. HUGHES. This is based on a discussion with the VA of the character of the beds which might be available as nursing home beds.

Mr. EVERETT. Mr. Hughes, I was at Little Rock a few days ago. They have two hospitals, there, a general hospital and also a NP hospital. They have a geriatrics ward and are able to maintain the patients there at $10 a day. The patients in the frozen beds in the general hospital under the same medical director are costing $25 to $26 a day.

Now those patients over at the NP hospital are getting just as good treatment as the patients over in the general hospital.

That is a point the committee is very concerned with, to get the veterans in these frozen beds into the nursing home care type so we can get those beds for veterans who are acutely ill and on the waiting lists.

Do you see the point that this committee is very interested in?
Mr. HUGHES. Yes, sir, I do.

The point we are attempting to make here is that hospital per day or per bed costs are a composite of a wide range of care. Some of the patients are seriously ill, needing special nurses and so on, and others, like the 3,700 previously referred to, are essentially on a nursing home basis.

If the nursing home group were shifted out of the VA hospitals there would be some effect at least on the per bed costs within the hospital itself, the effect being to raise them slightly, because the remaining patients would require more expensive care. This was the point of our observation.

Mr. EVERETT. Any questions?

Go right ahead, sir.

Mr. HUGHES. Finally, the achievement of a reduction in Government expenditures would depend on whether the hospital beds which are released by shifting patients to nursing homes would be closed or whether they would be filled by new patients. If nursing home beds were added to the present 125,000 authorized bed capacity of the VA hospital system, certainly both VA construction and operating costs would be increased.

The other three approaches to nursing home care-contract care, grants to States for veterans homes, or pension supplements for nursing home care-would all increase Federal expenditures for non-service-connected care for veterans.

Although some of the proposals before the committee may appear modest, any venture into the area of nursing home care would be likely to become a precedent leading to expansion of benefits in future years.

With no clearcut guidelines for benefits once started, there would be continuous pressure to extend and expand any nursing home care program established. Proposals which would provide contract care or pension supplements after discharge from VA hospitals would

also be hard to limit and there would be a substantial risk of converting the VA hospital system into an entryway leading to free nursing home care for non-service-connected ailments.

The scope and cost of any program which would provide nursing home care to all the veterans who might need or want such care for non-service-connected conditions would be large in the immediate future, even though only about 10 percent of our 22 million veterans are past age 65.

Toward the end of this century when we would expect to have 7 or 8 million veterans in this age bracket, costs would be larger yet in the ratio of 3 or 4 to 1.

We have roughly estimated the nursing bed requirements and operating costs through the year 2005 when it can be expected that the increasing number of veterans reaching advanced ages will start to decline.

A minimum estimate based on a 1953-54 study of actual utilization of nursing home beds in 13 States indicates that 80,000 nursing beds would be required through the year 2005, costing $800 million to build. Operating costs for them at present prices would reach a peak of approximately $300 million a year and would require cumulative expenditures of nearly $7 billion during the 40-year period.

Somewhat less conservative estimates, using estimates of nursing home bed requirements as estimated in Hill-Burton studies, indicate that 130,000 nursing home beds for veterans would have to be built by the year 2005 at a cost of $1.3 billion. Continued operating costs for such facilities, at today's prices, would approach $500 million a year at the peak and aggregate in excess of $10 billion over the next

40 years.

The above estimates do not make allowance for an almost certain heavy increase in the utilization rate which would result if the Government undertook to provide funds for purchase of nursing home care for all aged veterans who might want it. For example, under our minimum estimate, only 13 additional veterans out of each 1,000 over age 65 would be expected to be in nursing homes, and under the higher estimate, the utilization rate would rise to 21 per thousand. While some veterans are already in nursing homes, including at least part of the pensioners who receive aid and attendance allowances, the figures cited above are not large utilization rates in the light of the national health survey data which indicate that

(1) About three-fourths of the aged have at least one chronic condition, such as high blood pressure, arthritis, diabetes, heart disease, and mental disorder, and that:

(2) Although about 5 percent of the elderly people are in institutions, another 8 percent are invalids who, though not in institutions, are unable to get along without help from others. Mr. ELLSWORTH. Back on page 6 your statement reads: "Utilization rate would rise only by 21 per thousand." But you read it as follows: "Would rise to 21 per thousand."

Mr. HUGHES. Yes, sir.

The total rate on the more liberal basis would be 21 per thousand. The "to" was intended to convey these were additional to those already in nursing beds.

The language here was a little bit difficult, but the total rate is 21. Mr. ELLSWORTH. OK, I understand.

Mr. HUGHES. Under these circumstances, if finances were no barrier because the care was paid for entirely by the Government, it is obvious that the cost of a VA nursing home program might readily be several times as large as our higher estimate.

Any proposals which might lead to the provision of nursing care for millions of our older veterans should likewise be considered in the context of the nature and scope of the problems of aged people in general and from the viewpoint of the existing and proposed programs to assist them.

A report on "The Older American," to be issued in the next few days by the President's Council on Aging, points out that there are nearly 18 million people over 65 in the United States and that their economic and social condition is, in many respects, far from adequate.

The impact of the aged on the economy and on Federal finances is, of course, greatly increased simply by the fact that the number of older people in the population is increasing rapidly-from 3 million in 1900 to 12.3 million in 1950, to nearly 18 million at present.

Even more significantly, the proportion that they represent in the entire population is also rising sharply-from 4 percent in 1900, to 8 percent in 1950, to 9.3 percent at present. Despite this rapid increase in the number and proportion of aged, however, their situation is significantly better than a decade ago.

In 1950 the 12.3 million Americans 65 and over had a total income of about $15 billion, while in 1961 the 17 million 65 and over had a total income of about $35 billion. Yet, there are admittedly still needs to be met in the health area, and among the unmet health needs of the Nation's aged the problem of nursing home care ranks high.

The Federal Government is making large contributions toward improving the condition of the Nation's aged people through many programs which benefit veterans and nonveterans alike.

Public programs, including veterans' programs, played a major role in achieving the improvement in income of the aged cited above. In the current fiscal year the Federal Government will spend more than $17 billion from budget and from trust funds for people over 65 and, in addition, will provide special tax benefits of over three-quarters of a billion dollars for this group.

In 1952, the special Federal expenditures and tax benefits for this group were less than $4 billion. Of foremost benefit are the cash benefit programs. In fiscal 1963, $16.5 billion will be spent for income maintenance payments to the aged. Old-age survivors and disability insurance programs will provide $11.3 billion of this total.

Veterans' compensation, pension, and insurance programs, $1.9 billion; public assistance, approximately $1.5 billion; and other programs, $1.8 billion.

From the standpoint of this committee's particular interest in the condition of veterans, it is useful to note that an estimated 90 percent of World War I veterans and 95 percent of World War II and Korean conflict veterans will ultimately qualify for social security payments.

Furthermore, under the terms of the Veterans' Pension Act of 1959, a single veteran who receives an average OASDI benefit of $76 per month and has no other income can also qualify for a VA pension of $70 a month. Beyond that, if he is in need of aid and attendance, he can receive an additional $70 a month from the VA.

Under existing laws, therefore, the veteran who has no income except social security and who is ill or disabled from causes unrelated to his military service is in a much better position than a nonveteran. The 1960 census showed that the median income of nonveterans in the age 65 and over group was less than two-thirds that of veterans$1,509 for nonveterans versus $2,368 for veterans.

The favorable economic position of veterans is enhanced even more when it is recognized that with the present VA hospital system, approximately half the hospital care required for veterans without service-connected disabilities is provided at Government expense, according to a study made in 1957.

Important efforts have been made in recent years to strengthen and expand the general programs which help meet the nursing home needs of all our aged citizens. For individuals who are in need, many States provide medical vendor payments under their public assistance programs and the enactment of medical assistance for the aged (Kerr-Mills) program in 1960 further broadened the opportunity for States to assist their aged.

During calendar year 1962, estimated total expenditures for nursing home care from all sources under these two federally aided programs totaled more than $300 million.

Of even greater potential significance is the hospital insurance program which the President has recommended. This program is designed to provide assured access to hospitalization and to skilled nursing home care for our aged citizens-veteran and nonveteran alike— as a matter of right and without a means test.

It would insure all costs of up to 180 days of care per year in skilled nursing home facilities affiliated with hospitals after the transfer of the patient from a hospital. It would also pay all costs up to 240 health-care visits in any one calendar year by community visiting nurses, physical therapists, or other health specialists.

One of the crucial bottlenecks in nursing home care now and in the near future is the shortage of facilities. The President indicated in his health message of February 7, 1963, that less than one-third of the need has been met and that an additional 500,000 beds for longterm patients were required to meet today's needs.

The President's 1964 budget included funds for proposed legislation to increase the authorization under the Hill-Burton Act for assistance to the States in constructing nursing homes from $20 to $50 million annually. In addition, the Housing and Home Finance Agency insures mortgages on private nursing homes, and the Small Business Administration also makes business loans for nursing homes.

Another area receiving increased attention in the last several years is the development of the community health facilities and services for the care of the aged. The Public Health Service is concerned with the development of a full range of health facilities and services, so that patients who have achieved maximum benefits from hospital care in general hospitals can be discharged to facilities for less intensive care, or to their homes.

The Community Health Facilities and Services Act of 1961 (PubLaw 87-395) was an important stride in stepping up Federal funds for research and experimentation for the development of techniques and methods for home and community care of the chronically ill and aged.

Under the special project grants for the development of community services authorized by this act and under preexisting authority, the public health program for chronic diseases and health of the aged has. been expanded from a little over $1 million in 1961 to more than $50 million in the 1964 budget, which is now before the Congress.

Through this and other programs of general applicability, the Public Health Service enters into many contracts and cooperative agreements and makes grants for research on projects directed toward achieving the goals in which your committee is also interested.

For example, studies are now being made of ways in which nursing care can be available more satisfactorily to patients in their own homes in both urban and rural communities, of the operation of daycare centers, and of ways in which rehabilitation services can be carried on after discharge of the patients from hospitals.

As you know, the 1964 budget for the Veterans' Administration contained $150,000 for a study by the Veterans' Administration of techniques of transferring patients from VA hospitals to community facilities. We believe that with funds under the project to finance administrative expenses, the Veterans' Administration can utilize its existing authorities for testing and developing cooperatve working. relationships with a number of local communities for pooling resources for the outplacement and community care of veterans who have received maximum care in VA hospitals.

In summary, the fundamental question raised by the bills being considered by your committee is whether the Federal Government should enter the field of providing nursing home care for a special group of our citizens-veterans with illnesses or disabilities not caused by wartime service-or whether it should, instead, rely on more broadly applicable Federal, State, and local programs which are designed to help make available such care for all our citizens.

There is, of course, no question that, in view of the growing number of aged people in our society, improved means should be found of making available medical and nursing home services. But, we do not believe that veterans without service-connected disabilities should be singled out for special benefits in this area.

A number of Federal agencies now administer programs applicable to the population at large, including veterans, which provide Federal impetus and financial support for the construction of nursing homes and the provision of services to individuals in them.

Additional programs of general applicability have been recommended by the President. It is our belief that these general programs are the appropriate vehicle for meeting the needs of veterans dealt with by these bills who do not have service-connected disabilities.

For the reasons which I have noted, the Bureau of the Budget opposes the extension of veterans programs to include nursing home care or special financial assistance for such care as provided in the bills listed in this statement.

I am authorized to advise the committee that enactment of such legislation would not be in accord with the program of the President. Thank you, Mr. Chairman.

Mr. EVERETT. Mr. Schadeberg.

Mr. SCHADEBERG. I have a few questions.