p the personal doctor-patient relationship of private medicine, and this has ecome one of the important issues in the AMA's opposition to socialized medine. President Kennedy, in announcing his health proposals, insisted that this program is not a program of socialized medicine” and that everyone would ave the opportunity to choose his own doctor and hospital. Mr. Reuther stated hat socialism in medicine means that all doctors would go on the Government ayroll, and the administration of hospitals would be taken over by Federal uthorities. This, he pointed out forcefully, is not even suggested in the social ecurity health program for people over 65. Dr. Annis and Mr. Reuther both atested to their common objective of providing the best possible medical care for ll Americans. This shared goal furnishes a reasonable starting point for the ompromise, which may be desirable.

What is right about the administration's program? Several progressive ideas ave been woven into this protection, which demonstrate enlightened awareess of current problems.

First, the principle of deductible insurance has been utilized requiring the atient to pay the first portion of the hospital or clinic charges, a stipulation esigned to control overutilization of medical facilities. Mr. Reuther's statenent that only a physician can admit a patient to a hospital is correct, but octors are often pressured into hospitalizing patients who insist on being dmitted; even though their condition may not require it. Every doctor of medicine is familiar with the request, "Put me in, Doc; I've got insurance that vill pay for it."

Next, the Kennedy proposal includes the medical and financial advantages f progressive patient care. All patients do not need hospitalization, and the ocial-security-linked program includes outpatient or clinic service, care in ursing homes and in the patient's home. With general hospital costs pushing 50 per patient-day in northern and Far West institutions, hospital service must e utilized only when other means cannot meet the medical needs of the patient. Also, the principle of prepaying medical care needed during “the autumn of ife" over the period of the worker's productive years is sound, equitable, and eflects the assumption of individual responsibility, which is traditional in America. This is a pioneer characteristic of strength, quite in keeping with the New Frontier.

All of these features provide great tensility, beauty, and wearing quality to the fabric used by the Kennedy designers.

But now let us examine the cut of the cloth.

Although there is greater incidence of illness among the aged, the passing of hat magic milestone of 65 does not mean that medical problems shower down on each American as he steps up to collect his first social security check and that he is promptly and invariably swept away to financial disaster. Indeed, his may have happened to him months or years before the age of retirement; or, on the other hand, he may never suffer prolonged and costly illness. There fore, to assume that medical problems begin at 65 is similar to saying that "life egins at 40." Any program of improved medical care ought to include every ige group in its protective coverage.

Dr. Annis stated that of the 16 million Americans over 65, 4 million need help with their medical finances. The social security program proposes to inlude everybody now under this Federal retirement system, without regard to heir need for aid. The fact that the employer also contributes to social security means that the price of the goods he sells must go up to cover this increased cost. Thus a hidden tax, paid by all, helps to support a program of medical are for 12 million people who do not have financial problems caused by illness. This, it would appear, is a rather cumbersome and costly approach to the

Problem.

Then, too, there are persons who are not covered by social security, who would e excluded from the benefits of the proposed medical care system. The doctors hemselves would not benefit from the coverage the Kennedy program would provide for their patients. This might not be serious for physicians as a group; for they have above-average income and can provide for themselves, but it does oint up the inequities of the suggested system.

Oldsters without financial difficulties caused by illness (the 12 million menioned by Dr. Annis) would be provided with extra protection not actually reuired. The question would then arise, "What shall I do with the insurance I have?" The most probable answer would be to drop the protection afforded by private enterprise through Blue Cross or a commercial company. This would mean that not only would Government be competing with private industry, but almost 7 percent of the population would receive benefits where a need does not

now exist. The money to pay for this additional, unnecessary coverage would be derived from taxation levied against the remainder of the people. The situa tion would be most inequitable at the outset of the program, when those already at retirement age would have made no contribution toward the benefits they would receive.

These are the principal values and disadvantages of the President's proposed 'health scheme for the aging.

Now let us see how the advantages can be retained while reducing to a minimum the drawbacks just listed, so that a well-fitting garment of health protection may be produced for every American.

A unique plan for the care of medically indigent patients, utilizing commercial and Blue Cross insurance and assessing the taxpayer for only that part of the 'medical care bill which the patient himself cannot pay, has been in operation in Memphis, Tenn., for more than 3 years. The principles and methods employed by the Memphis plan are suggested as a basis for the compromise program which may conceivably be needed.

The City of Memphis Hospital is a 700-bed institution, the major portion of which is used to provide medical service for acutely ill patients who cannot afford private care. This municipal hospital, which is also the clinical teaching facility for the University of Tennessee College of Medicine, once gave care away, free, to all who were eligible for admission. In 1952, however, the directors of the institution recognized that there are degrees of indigency, that only a small percentage of the hospital's patients were so destitute that they could af ford to make no contribution toward the cost of their care. The remainder of the patients, while not able to pay for private care, could pay some part of the bill. This part-pay group was then asked to be responsible for a portion of the cost of the service they received, and this portion was scaled to each patient's ability to pay. This system worked relatively well, but the job of collecting even small sums from those who had been used to receiving free service was an hill task.

To simplify the accounts receivable problems, the Memphis plan was put into operation in November of 1957. This plan requires that each citizen who expects to use the municipal hospital purchase commercial or Blue Cross insur ance which will pay benefits equal to that portion of the cost of the hospital service for which he is judged responsible. For example:

A family man whose income ranges between $200 and $325 a month is expected to carry hospitalization insurance which will pay $8 a day room and board charges up to 30 days' stay in the hospital and will cover $80 of the expense of diagnostic services and treatments such as X-rays, drugs, and laboratory tests Suppose he is confined to the hospital for 10 days. His insurance would par $80 room and board and $80 miscellaneous expense. This 160 total is 71 percent of the average $225 cost of hospitalization of the city of Memphis hospi tals. (The current $22.50 per patient day cost in the John Gaston unit of the Memphis Municipal Hospital is considerably lower than the per diem expense in other general hospitals.) The remaining $65 is paid by city taxpayers and comes from the general municipal fund.

Families with less than $200 a month income are required to have proper tionally less insurance coverage. These requirements are divided into three simple groups; and as long as the insurance held by the patient pays as much as the minimum benefits stipulated for his income group, the patient's respons bility to the hospital is completely discharged. The very low income groups and those receiving welfare assistance, pay nothing. Insurance requirements are based on the local welfare department's estimates of minimum budgets for average size families living in the Midsouth. Premium cost of the insurance for the average size family is well within the amount shown for miscellaneous medical expense on these budgets and less than the percentage of income spett on the average, by American families for medical care. Services of the doctors are rendered without charge, and clinic fees are nominal; therefore the major medical expense these families have is the cost of their insurance protection. which is held to a reasonable level.

At the time the Memphis plan was announced, Nat Williams, columnist for the Tri-State Defender, a semiweekly newspaper serving the Negro community.

wrote:

"Now somebody's going to kick sure as you're born. Some folk don't feel they should be expected to pay their way when there's a chance to mooch. Gangs of folks feel the world owes them a living. Too many colored folk have been observed riding up to the John Gaston Hospital in late model cars for a couple of dollars' worth of treatment. Somebody's got the idea that if Negroes

can meet those high car notes, they should be able to pay comparatively low hospitalization insurance rates.

"Out of this hospitalization insurance requirement, an important segment of the Memphis Negro population will be given a direct lesson in grownup responsibilities. More of your folks will learn how necessary it is to read every word written on the policies they receive. There'll be fewer collections taken up in churches anxious to help some unfortunate member. Fewer folk will indulge in the traditional dodging the insurance man. Insurance will take on a clearer meaning to most folk. And finally, there ought to be an increase in self-respect *** in many quarters. Now whatchubet."

Nat Williams was right. There was good community acceptance of the Memphis plan, and during the 3 years since its inauguration, revenue from insurance sources has more than doubled.

Full charges are levied against those patients who fail to purchase the prirate insurance of their choice, but this policy has been only partially successul in stimulating them to get the needed coverage later. The education of city hospital patients to their responsibilities is a continuing task.

Experience with the Memphis plan has helped to crystallize several important specifications which are basic to a workable and progressive health service system:

(a) The plan must have built-in monetary incentives which make it profitable o participate.

(b) Health insurance protection for the aged must accumulate during the person's working years, as proposed in the Kennedy program.

(c) Premiums must be community rated, rather than completely experience ated, in order that all persons, regardless of their age, can afford to have the Coverage.

(d) The program must be sufficiently comprehensive to include clinic, nursing lome, and at home services as well as hospital care.

(e) The emphasis must be on positive medicine the practice of health maintelance as well as restoration.

The compromise suggested by these specifications could work in this fashion : Similar to the Memphis plan, each citizen would be required to purchase health protection, from the company or in the plan of his choice and to the extent of his ability to pay. A simple, basic specification of benefits would be established for each income group. The average cost of this protection would be ascertained; so that the requirement for each income group would not exceed 1 specific and reasonable percentage of the citizen's gross income. Each person would be expected to purchase at least this minimum protection.

He would report the extent and source of his health insurance coverage in his annual income tax return, which information could be easily verified with the company or plan indicated. As long as the purchased protection, covering all persons on the income tax form clamed as dependents, met the minimum requirenents for the gross income reported, the taxpayer would have met his obligaion of financial preparedness in case of illness. In the event he failed to purhase the protection he could afford, the average cost of the annual premium for his protection would be due and payable as income tax, with the existing, appropriate penalties for nonpayment. The money thus collected would be available for return to the States to support hospitals and other health institutions and

programs.

The taxpayer would, under these circumstances, have a double incentive. First, the fear of penalties under the income tax law would inspire most Amerians to comply, and the purchase of insurance would be preferable to the payment of additional taxes. Second, those who did not buy insurance protection would not only have to pay the extra tax but would be liable for the payment of ospital or clinic charges in the event they became ill.

The money collected in taxes under this proposal would not be used to pay The patient's share of the hospital expense but would apply only to that part of the cost which indigent patients could not pay. This situation would lead most people to prepay their medical care costs to the extent of their financial ability.

Financial responsibility for personal medical care might be compared with he automobile driver's financial responsibility laws as they operate in several States. These require that those who drive must carry liability insurance or have ufficient resources to pay for damages to others' property or injury to other persons. The Samaritan tradition in the United States will not permit suffering persons to be turned away from the receiving wards of our hospitals because hey cannot pay for the service they need. It is logical, then, to require those

who can afford it to buy insurance so that they will not cause their fellow taxpayers to suffer financially. We are indeed our brother's keeper, but we don't want to pay his hospital bills for him when, with a little planning, he could have been prepared to pay them himself.

In Memphis, the city hospital's insurance specifications have not inhibited or particularly influenced the freedom of the commercial companies to design and market the plans they have felt would appeal most to the public. The orig inal criteria for benefits were patterned after existing hospital insurance policies. All the city of Memphis hospitals requires is that the total dollars paid for each hospital stay by the insurance company meet the established requirement of the patient's financial classification. The form of the protection is a matter between the patient and his company. Thus, the municipal government does not dictate to the insurance companies and stimulates, rather than competes with, private enterprise. While some companies do sell policies of the exact benefit specifi cations and refer to them as "John Gaston Insurance," most merely state that their coverage is sufficient to meet the hospital's minimum requirements.

In the Memphis plan operation, we find that many part-pay patients of re tirement age do not have insurance, either because it is too costly or coverage which they once had has been dropped or canceled. However, specifications for insurance to cover the oldsters could be written into the proposed requirements: so that, just as the Kennedy program calls for an accumulation of medical care benefits over the working period of the individual's life, protection during re tirement could also be had through private health insurance. The principle would not change, merely the method.

"Community rating" of the premiums for Government-specified private insurance would spread the cost over a wide base just as the social security mechanism is expected to do. This principle is identical to that which operates in any group insurance; that is, the larger the group and the wider its age spread, the greater the leveling of premium cost which may be achieved. There are periods in the life of the family which are particularly costly because of medical expense. These are the early, child-bearing years when dollars to the obstetri cian, the pediatrician, and the hospital pay for medical needs of the expanding family, and the twilight years, when the incidence and chronic nature of illness increases. The middle years, while the children are in their teens and the par ents are still vigorous, are relatively low-cost years as far as medical expense is concerned. When any insured group includes a sufficient number of healthy families to offset the ones experiencing the trying and costly early and late pe riods, the premiums for all can be uniformly reasonable.

The astuteness of the administration's health program planners was clearly demonstrated by the full range of medical services which they included in the Kennedy proposal. While the hospital is important as the center for the caref the acutely ill, it is only a part of the many-faceted health service picture. To be sure, the centralization of special apparatus and skills in the hospital is an economic necessity; for almost no one keeps a cobalt machine in his carport: and, although appendixes have been removed while the patient reclined on the kitchen table, almost no open-heart surgery is performed outside of the hospital These special processes and the equipment to carry them out contribute to the already high readiness-to-serve cost of the hospital, and persons who do not need these complex and expensive services should stay out of the hospital. Presently a significant number of our private, general hospital beds are occupied for the convenience of the patients in them or their attending physicians, not because these patients' medical problems necessitated their hospital stay.

The services provided in a sound program must be the most economical for the medical needs of the patient; and, as the administration's program sets forth, the entire spectrum of health services should be included. The private insurance companies and plans have been extremely slow to offer coverage to meet some of these nonhospital medical needs, as have communities to provide adequate nursing homes and home care programs. The pressures on both to correct these deficiencies will increase as the cost of staying in the hospital

continues to rise.

A program to meet the problems of personal medical finance should have builtin features which stimulate the maintenance of a high level of health as much as it protects against the cost of "physiologic repair bills." Regular physical examinations and dental prophylaxis, covered by insurance, could be a step toward prevention of more serious health problems and larger medical bills. Perhaps a monetary incentive would stimulate people to take better care

of themselves. Some industries and the Armed Forces insist that their members have periodic checkups, but most individuals tend to put them off if the cost is going to come out of their pocket. If a patient's insurance covered this health maintenance service, he might well say, "How about a physical, Doe, my insurance will pay for it."

The compromise program here outlined could be expected to have two advantageous results.

First, it would reduce the magnitude of the health care for the indigent problem to its lowest possible level. When each person recognizes prepayment as the way to cope with medical expenses and assumes responsibility for his own care, to the full extent of his financial capacity, the problem melts down to manageable proportions. Medical care, to the American mind, is the fourth necessity, preceded only by food, shelter, and clothing. Recognition of the necessity to plan for it and pay for it has not yet advanced as far as it can. Leadership of the Federal Government in this compromise program would prove a great stimulant in effecting this recognition. Then, care of the outright indigent and help for the part-pay patient could be worked out through already established means.

One of the gratifying results of the Memphis plan has been the way that persons in the high part-pay income group have been stimulated to take care of all of their hospital needs through private facilities. We know that this happens because we can measure the patient load in one unit of the city of Memphis hospitals which is used for private patients. This is the E. H. Crump Memorial Hospital. Prior to the Memphis plan, many employers did not provide group insurance for their Negro workers. When the city hospital began to require part-pay patients to purchase Blue Cross or commercial insurance coverage, some employers made group hospitalization available to their lower paid workers. Although no Blue Shield-type coverage for doctors' bills is required in the Memphis plan, many industrial group policies include professional fee benefits. As a result, workers who had previously received all of their hospital care in the John Gaston or charity unit of the municipal institution sought the services of private physicians and, as the need arose, were admitted to the Crump unit as private patients. This happened in spite of the fact that they were still eligible for admission as part-pay patients to John Gaston Hospital. In these instances, because of prepayment, patients pay more of their medical expense than they are actually required to do. This is a highly commendable trend in the exact opposite direction of the welfare state.

Second, this compromise program would upgrade the health of all Americans, regardless of age, and safeguard the most valuable asset this country has the people.

STATEMENT OF THE MEDICAL ASSOCIATION OF THE STATE OF ALABAMA IN

OPPOSITION TO H.R. 4222

Mr. Chairman and members of the House Ways and Means Committee, I am Dr. M. Vaun Adams of Mobile, Ala., where I have practiced my chosen profession of medicine for 30 years. I am speaking today as a representative of the Medical Association of the State of Alabama and as president-elect of that organization. I have served in several key positions in the association, including chairman of the committee on legislation for the past 4 years.

Our medical association is a scientific, educational organization composed of legally licensed practitioners of medicine. The association was organized in my hometown (Mobile, Ala.) on December 1, 1847, and has grown to its present size of 2,138 members as of June 1. This membership includes 90 percent of the practicing physicians in the State.

We in Alabama are unique. Since 1873 the State law has designated the Medical Association of the State of Alabama as the State board of public health. In this capacity the association, acting through its State board of censors when sitting as a State committee on public health, has throughout the years led the fight for improved health for the people of our State, as well as for improved facilities and services offered by the State and county health departments. It has proven to be a smoothly functioning system which has brought constant public health improvements. Our concern for the health of the people of Alabama has been directed to individuals of all ages and not to a limited age group.