rare cases-and I examined him in some length, and he said, "That is right, I am always being accused of being anti-Catholic."

I said, "That kind of thing has been straightened out in this Nation within the past year?"

He said, "That is true. It has been on the books for a couple of years."

He says he does not like it himself. There is nothing to indicate it will be changed. That is the way it is.

Mr. MAHON. The record will speak for itself.

There was an interrogation along that line. I did not want to put the Navy in an improper position.

General WERGELAND. Just to show you what our situation is, when Medicare started, we had 1.27 children per family. Now we are up to 1.78 children per family.

MEDICAL CARE BENEFITS FOR RETIRED PERSONNEL

Mr. MAHON. I have here a copy of proposed legislation, H.R. 4227, which would authorize hospitalization in civil hospitals for retired members of the armed services under group insurance sick and accident policies, based on specified payments of premiums from retired pay. Since this bears a very close relationship to the program which you direct, I assume you are familiar with the proposal.

Would you comment on the matter and express your opinion as to whether or not this is the sort of thing

General WERGELAND. I am familiar with the bill. It is H.R. 4227 introduced by Mr. Boggs, and we had a similar bill introduced last year.

Mr. MAHON. Yes.

General WERGELAND. I have not had an opportunity to talk to General Heaton about this.

I might state this is strictly my personal opinion-I would much prefer handling it under the Medicare program rather than under group insurance.

I believe the Army probably would feel that same way about it all the way through. I think the Army and the Department of Defense will object to that bill as it is.

Mr. MAHON. Are Veterans' Administration hospitals available for use by military dependents, or retired personnel?

General WERGELAND. They are available for retired personnel. I believe there has been some consideration of them being used for outpatient assistance to the military personnel.

Mr. MAHON. Off the record.

(Off the record.)

CHANGES IN PROGRAM TO MORE FULLY USE GOVERNMENT HOSPITALS

Mr. WHITTEN. I recall through the prior years when we dug into this program in great length about the failure to use hospitals close by military installations and various other things of that kind which increased the cost of the program. I would like, with the chairman's permission, for you to put in the record the changes you may have made over the past several years to improve that situation to fully

utilize the available Government hospitals to the fullest degree practical.

Mr. MAHON. Without objection you can insert a statement in the record at this point.

General WERGELAND. I will be glad to do that.

(The information to be supplied follows:)

In September 1958, a permit system was initiated. Complete freedom of choice between civilian and uniformed services medical facilities remained the prerogative of those dependents who were residing apart from their sponsor. However those dependents who resided with their sponsors were required to apply for their medical care to a uniformed services authority. If the necessary medical care was available, such case was rendered in the uniformed services medical facility. In those cases where, because of shortages in staff or facilities, the medical care was not available, the dependent was issued a medicare permit. This permit (now known as the nonavailability statement) authorized the dependent to seek care from civilian sources.

By this single action, the optimum utilization of medical facilities of the uniformed services was assured. Dependent patient loads in the Federal hospital system showed an immediate upturn and rapidly reached the estimates established by the Surgeons General as optimum levels. We plan to continue the permit system in operation.

Mr. ANDREWS. Do you consider under this program eligible dependents of active duty members to be only the wives and children? General WERGELAND. The spouses of the active duty personnel and their legitimate children.

Mr. ANDREWS. What about the case of a man who has a dependent mother and she is receiving an allotment?

General WERGELAND. No, sir; they are not included. The law does not include them.

RISING MEDICAL SERVICE COSTS

Mr. ANDREWS. You speak on page 7 of the effects of rising medical service costs. Will you elaborate on that?

General WERGELAND. Yes, sir.

We have had a gradual increase in our hospital service costs in the program although it is not increasing quite as rapidly as before. We estimate a 2 percent increase this year in the hospital service cost. You will find a variance between this current year and next year of $1.24 a day for hospitalization.

Mr. ANDREWs. What about medical fees?

General WERGELAND. We have made no changes in the fees of the doctors. We do not anticipate any increase.

Mr. ANDREWS. Whatever increase you have will be in the cost of hospital services?

General WERGELAND. That is correct.

Mr. OSTERTAG. What did you say, $1.24?

General WERGELAND. $1.24 per day-a rise.

FREE CHOICE OF HOSPITALS OF DEPENDENTS NOT LIVING WITH SPOUSES

Mr. ANDREWS. A wife or husband has no choice about selecting a civilian hospital against a military hospital if there is space available for the patient in the military hospital?

General WERGELAND. And she lives with her sponsor.

Mr. ANDREWS. In the case where a wife lives in a separate city from her husband?

General WERGELAND. She has freedom to choose where she wishes

to go.

Mr. ANDREWS. Suppose there is a military hospital in her home, or near the city where she resides, does she still have the free choice?

General WERGELAND. The law says she has free choice, and there are sufficient numbers of other dependents living with their sponsors to keep our military services medical facilities at an optimum capacity by use of the permit system.

Mr. ANDREWS. If she is with the husband and there is space available in the military hospital, she must go there? General WERGELAND. That is right.

COST PER PATIENT DAY

Mr. ANDREWS. Could you tell me what the difference between the cost per patient per day is between the civilian hospital services and the military hospitals, or service hospitals?

General WERGELAND. We do not have the service hospital costs. We can tell you exactly what it costs us as far as the civilian hospital services are concerned. In the fiscal year 1960, those figures are the actual costs we paid during the fiscal year 1960. Those are true and genuine.

Mr. ANDREWS. For civilian hospitals?

General WERGELAND. For civilian hospitals.

Mr. ANDREWs. What is the average?

General WERGELAND. This includes the cost of the physician's care as well as the hospital's, for fiscal year 1960, it is $50.11 for all services; $45.20 for the Army; $53.60 for the Navy; $50.50 for the Air Force; Public Health Service, $51. That includes the doctor fees. It is the total cost per day for the care.

Only a certain portion is hospital cost, but we can break that down for you, too.

Mr. ANDREWS. I wish you would for the record.

General WERGELAND. Yes.

(The information to be supplied follows:)

Division of cost per patient-day for civilian medical care under medicare 1

1 Based on expenditures of $58,696,274 through Dec. 31, 1960. Does not include $5,203,726 in fiscal year 1960 funds to be expended subsequent to Dec. 31, 1960.

Mr. ANDREWS. That is the total cost per day for a patient, including hospital services and medical fees?

General WERGELAND. Yes, sir.

We will show you the actual costs per day average for fiscal 1960 because we have that figure.

Mr. ANDREWS. Do you not have some estimate as to the cost for a patient for one day in the service hospitals?

General WERGELAND. Mr. Fogelberg, who represents the service from the Army point of view, may be able to give you a figure. Mr. FOGELBERG. The average cost per inpatient day of operating Army hospitals, for fiscal year 1960, was $25.68.

Mr. ANDREWs. Do you have it for the other services?

Mr. FOGELBERG. Yes; for the Air Force, it was $31.62; for the Navy, $22.11; for the general medical service hospitals of the Veterans' Administration, it was $23.44.

Mr. ANDREWS. Do you have the Marine Corps figures there?
Mr. FOGELBERG. That is part of the Navy figure.

Mr. ANDREWS. They are below the Army and considerably below the Air Force?

Mr. FOGELBERG. Yes, sir. That is basically due to differences in policy.

Mr. ANDREWS. The cost of keeping a military dependent in those hospitals is figured at that same cost for a serviceman?

Mr. FOGELBERG. No, sir. This is the overall cost of taking care of all patients in these Federal facilities. Special studies have indicated that it costs more to provide care to dependents within a service facility than it does an active duty person.

Mr. ANDREWs. Why?

Mr. FOGELBERG. They take more care. They are in for a shorter duration. That is reflected in the rates of reimbursement which are charged.

I might illustrate that by quoting a rate for you, sir.

Mr. OSTERTAG. You are speaking of per diem costs in the first instance?

Mr. FOGELBERG. Yes, sir.

The per diem reimbursement rates are based on the average cost of operating those hospitals.

For example, if we put an active duty Army person in an Air Force, Navy, or any other Federal hospital, we pay at the rate of $23 per patient day. If we put one of our military dependents in there it is $34. It is a difference of $11 per patient day, and that is supposed to reflect the cost differential between treating an active duty person and the dependent of an active duty person.

Mr. OSTERTAG. The dependent probably gets more nursing?

Mr. FOGELBERG. They are in for a shorter duration.

General WERGELAND. The acuteness of the case.

Mr. OSTERTAG. In arriving at the daily cost of operating the service hospitals, do you take into consideration the personnel pay of the servicemen who are at the hospital?

Mr. FOGELBERG. Yes. It includes the pro rata share of all costs of operating the hospital. That includes military personnel and all other costs.

Mr. OSTERTAG. Including doctors?

Mr. FOGELBERG. Doctors yes, sir, enlisted men and the like.

Mr. OSTERTAG. Percentagewise, you show there are more patients in your service hospitals.

General WERGELAND. Yes, sir.

TOTAL COSTS OF PROGRAM

Mr. OSTERTAG. But dollarwise, the civilian hospitals get far more than the service hospitals where it costs twice what it is in the civilian hospitals.

I believe you stated in the fiscal year 1960, the cost of this program was $63.9 million.

General WERGELAND. Yes.

Mr. OSTERTAG. What does your appropriation show for military? Mr. FOGELBERG. It is in project 2420, page 407.

Mr. OSTERTAG. This program is costing more than these figures shown on page 3.

Mr. FOGELBERG. The civilian portion of the program under the Medicare Act is under project 2440,

General WERGELAND. This is only the civilian portion of it.

Mr. FOGELBERG. The direct costs of operating Army hospitals, dispensary and dental service units, are in project 2420, and for fiscal year 1960, the cost was $63,623,150.

Mr. ANDREWS. What I would like to know is how much did the program cost overall? How much did you spend in military hospitals in fiscal year 1960?

I have the figure of $63.9 million for civilian hospitals. What was the military cost, or the cost for the use of military hospitals?

General WERGELAND. We would have to get that all together, services and civilian portion of Medicare.

Mr. FOGELBERG. There is another confusing thing here, sir. This budget is prepared on what we call a direct obligational basis, that is, the amount that Congress appropriates to this program. However, we do a lot of work for other services on a reimbursable basis.

So to get the total cost for fiscal year 1962 for project 2420, which is for the operation of Army hospitals, dispensaries, and dental service units, the amount estimated for fiscal year 1962 is $110,814,000, of, which $67,888,000 represents direct obligational authority, or appropriated funds. The difference between those figures represents reimbursements from other services.

Mr. ANDREWS. I want to try to find out what this Medicare program cost. You have given us the figures for the cost of civilian hospitals. Mr. FOGELBERG. Yes.

Mr. ANDREWS. I would like to have you add to that for the 3 fiscal years, 1960, 1961, and 1962, the cost of the Medicare program to the military hospitals.

If you do not have it at this time, supply it for the record.

Mr. FOGELBERG. I will be glad to do that.

(The material requested is on p. 261.)

Mr. ANDREWs. What I want to know is the overall cost of the medicare program, for those 3 years.

Mr. WHITTEN. Would you like an indication as to whether that reflected any return, or charge for hospitals, or was it just out-of-pocket daily cost?

With regard to Government hospitals, unless some point is made of it, you will have a problem as to what the total investment of the Government is in the hospital and whether the figures are just merely the cost of day-to-day operations.