of interest in it. At the present time, anyway, it is based upon perfectly good, sound business reasons, that the Blue Cross is not able to offer that kind of coverage to certainly hundred of thousands of people who might be willing to take it. Mr. McNARY. Part of it is opportunity, part of it is willingness to spend the money, and part of it is whether or not employers make a contribution. There are a great many factors that enter into the question of whether or not the individual will pay his own dollars out for health-insurance protection. Mr. HESELTON. But just under 20 cents a day is not very expensive as an expenditure for that type of protection. It seems to me from the general testimony that has been presented here, in that particular field a quick broadening of the coverage and fairly rapid development of the experience could be a very useful full part of the scheme of this particular proposal. It would enable the Blue Cross, for instance, to do something like that much more rapidly than it possibly could do so under existing conditions. Do you thing that is correct? Mr. McNARY. I think it would create an additional incentive. Mr. HESELTON. Thank you. Mr. HALE. Are there further questions? Mr. THORNBERRY. No questions. Mr. HALE. There being no further questions, we thank you very much, Mr. McNary, for very interesting and helpful testimony. The committee will stand adjourned until Monday next at 10 a. m. (The following letter was later received from Mr. McNary:) Hon. CHARLES A. WOLVERTON, MICHIGAN HOSPITAL SERVICE, Chairman, Committee on Interstate and Foreign Commerce, House Office Building, Washington, D. C. MY DEAR MR. WOLVERTON: I am sorry for the delay in replying to your letter of March 31, 1954. I have been out of the city attending the national conference of Blue Cross plans. I believe you have received a letter from Mr. Kenneth Williamson, director of the Washington service bureau of the American Hospital Association, reporting action taken by the conference of Blue Cross plans in support of the affirmative testimony which I had the honor of presenting to your committee on H. R. 8356 on March 26, 1954. The questions asked in the memorandum attached to your letter are questions which have concerned all of us in Blue Cross for many years. In my judgment, the proposed Health Service Prepayment Plan Reinsurance Act is designed to encourage Blue Cross plans and other carriers to seek answers to these and other similar questions. The issues pointed up by these questions are the imponderables with which we are all concerned in our day-to-day operations and in attempting to plan for the future. In my judgment, it would be unwise to attempt to spell out in a law those very standards and regulations which the law itself is directed toward experimenting with. In other words, as I see it, the Reinsurance Act is expected to encourage experimentation and should not be unduly restrictive. It should give considerable latitude to the Secretary and to the Advisory Council in the establishment of such necessary standards as will protect the public and still encourage the experimentation which the bill declares is necessary and desirable. In general, I would like to go on record, both personally and for Blue Cross plans as favoring standards and contract provisions which protect the subscriber or policyholder against arbitrary action by any carrier to deprive him of his rights. Blue Cross plans have always protected their subscribers by making it possible for them to continue their coverage after employment or other group connections are severed. Also, to the best of my knowledge, no individual Blue Cross subscriber has ever been canceled because he was a poor risk or because he had found it necessary to use plan benefits repeatedly. However, if noncancellable, waiver of premium, ceiling payment and other provisions are made mandatory, it may have the effect of discouraging experimentation with contract forms and benefits. This would tend to defeat the objectives of the bill. It is my opinion, therefore, that the bill itself should not contain standards which would unduly limit the type of experimentation which we all hope to see carried on. Very sincerely yours, WM. S. MCNARY, Executive Vice President. (Whereupon, at 3:45 p. m., the committee was recessed, to reconvene at 10 a. m., Monday, March 29, 1954.) HEALTH REINSURANCE LEGISLATION TUESDAY, MARCH 30, 1954 HOUSE OF REPRESENTATIVES, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Washington, D. C. The committee met, pursuant to adjournment, in room 1334, New House Office Building, Hon. Robert Hale, presiding. Mr. HALE. The committee will be in order. The committee resumes this morning its hearings on H. R. 8356, the so-called reinsurance legislation. Our witness this morning is Mr. John H. Miller, who is vice president and actuary of the Monarch Life Insurance Co., of Springfield, Mass. Mr. Miller appears on behalf of three trade associations in the insurance field: The Health and Accident Underwriters Conference, Chicago, Ill.; the Bureau of Accident and Health Underwriters, New York; and the Association of Casualty and Surety Companies, New York. I trust that Mr. Miller will explain the nature of these three organizations, what their respective membership is and to what extent, if any, the membership overlaps. Mr. Miller is well qualified to talk on the subject of insurance. He was associated with the Metropolitan Life Insurance Co. from 1927 to 1929. From 1929 until 1933, he was associated with a firm of actuaries, and since 1934, he has been an officer of the Monarch Life Insurance Co. We are pleased to hear from Mr. Miller, who is now recognized. Mr. Miller. STATEMENT OF JOHN H. MILLER, VICE PRESIDENT AND ACTUARY, MONARCH LIFE INSURANCE CO., SPRINGFIELD, MASS. Mr. MILLER. Mr. Chairman and members of the committee, we appreciate this opportunity of appearing before you to give our views on this proposed legislation. As the chairman has stated, I have been asked to appear on behalf of the three organizations named. The Association of Casualty and Surety Companies is a trade association, a voluntary association, representing through its membership 112 fire and casualty companies, companies which conduct a general line of insurance other than life-fire, liability, compensation, and many of them health and accident insurance. The second group is the Bureau of Accident and Health Underwriters, which represents many of these same companies and others 46789-54-12 as well in the field of health and accident insurance, both group and individually. The bureau has a membership of 89 companies. There is considerable duplication between the two. Perhaps as many as 60 or 70 companies are members of both. The Health and Accident Underwriters Conference represents other health and accident insurance companies. Its headquarters are in Chicago and it includes in its membership many western as well as eastern companies. There are 205 company members of the conference and there is duplication of or overlapping, or common membership of about 25 companies between those 2. The total of the 3 memberships, without regard to duplications yields the sum of 406 companies, and without having made an exact count, we estimate that the actual companies represented by 1 or more of the 3 organizations total somewhat over 300. With respect to the conference, there are some fraternal societies among its membership and I believe reciprocals, as well as the regular insurance companies. I should preface my remarks with the statement that I cannot speak for all of the members of these associations. There has not been time since the release of the bill for discussions aimed at reaching a consensus. My remarks today reflect the views of a representative group of insurance executives who have been able to get together to discuss the bill and agree upon this statement. We hope that it represents the center of gravity of the members of the three associations. The administration's health program deals with important aspects of the sickness and accident costs of the entire Nation. Its primary emphasis is on the provision of services and facilities for treatment of illness or injuries. The program includes proposals for diagnostic centers and for specialized institutions to meet the specific needs of our chronically ill and aged citizens, the provisions of medical facilities for rural areas, programs for the rehabilitation of disabled persons, promotion of public-health measures at the local level, and a study of improved income-tax treatment of medical expenses. We strongly favor the objectives of the program in general. I would like to comment on the highlights of the program from an insurance viewpoint. Insurance is concerned with providing a means of easing the financial burden of medical services, rather than with providing the services themselves. We are pleased that this program places major reliance on voluntary insurance as the most effective means of distributing the costs of sickness and accident. Insurance men are the first to recognize, however, that insurance does not reach every segment of our population. Insurance is beyond the reach of those of our citizens who do not have the purse to pay the premiums; their needs we believe must be handled by assistance at the local level. The services of voluntary insurance have been less in demand in rural areas than in urban areas, in part because medical facilities have been less easily available in some country districts. Insurance companies are continually studying the problem of providing more complete protection to a larger portion of the aged population and how to distinguish between those health-care costs of the aged which can be insured and those which cannot. |