You will note that the median amount expended for medical care. by the 50 million families in the United States was 4.1 percent of the family income; 29 million people spent under 5 percent of their family income for medical care; 17 million spent between 5 and 20 percent of their family income; and 4 million incurred medical-care costs between 20 and over 100 percent of the annual family income. This chart shows the wide variation in the cost of medical care from one family to another.

Now, what is medical care insurance accomplishing at present?

In the year 1952 the United States private expenditure for medical care was $9.4 billion (see chart C). This was divided as follows: For hospitalization, $2.8 billion; for physicians' services, $2.9 billion; medicine and appliances, $2.2 billion; dentists' services, $1 billion; nurses, $.2 billion; and all other expenses, $.3 billion. Of the total of $9.4 billion, 17 percent was paid by insurance, or a total of $1.6 billion.

I would like to concentrate attention on those two lower items, hospitalization and physicians' services, because they are the two items covered by insurance.

This next chart (D) shows the private medical care expenditures paid by insurance in 1952. Of the $2.8 billion private expenditure for hospitalization, 38 percent or $1.1 billion was paid by insurance. Of the $2.9 billion paid for physicians' services, 19 percent was covered by insurance, the total being $.5 billion. You will note that the amount covered by insurance for hospitalization is greater than that covered for physicians' services.

The third major point that I want to discuss is the area of need. Chart E shows those persons with no hospitalization insurance. There are 63 million people with no hospitalization insurance. This chart can be divided into three segments. First, this segment on the lower left, where there is no special problem, includes people who do not choose to buy insurance for some reason or another. They are young and do not feel illness is in the cards for them so they do not feel they need to be protected.

The next group-the right half of the pie-includes earners and families with predominantly low incomes; farm families; and people in temporary or casual employment.

Another group, shown in the upper left quadrant, includes nonearners. In this group you have the aged and chronically ill and those people on public assistance. Some are unable to purchase insurance because they cannot afford to purchase it due to low income, and others because they are not acceptable for insurance.

I would like to relate the distribution of hospitalization insurancethe most widely covered insurance today-to family income. Chart F shows that, of families with incomes above $5,000 a year, 71 percent are covered by some type hospitalization insurance. Of families with incomes under $2,000, 25 percent are covered by some type of hospitalization insurance.

It is well to remember that this is the most widely covered group, namely, those with hospitalization insurance. Those with medical coverage, or with surgical coverage, are much less well covered.

The next two charts illustrate how the benefits may be extended. The kinds of insurance carried by 59 percent of the population are as follows (chart G):

Approximately 12 percent carry hospitalization insurance only; approximately one-quarter carry surgical and hospital insurance combined; probably one-fifth have medical, surgical, and hospital insurance; about 3 percent carry comprehensive insurance, that is to say, inclusive benefits not only in hospitals but outside of hospitals. So that we have 59 percent covered and 41 percent uncovered.

One might say that extension of benefits would include more people with surgical and hospital benefits, more with medical and surgical benefits, and more with comprehensive benefits.

The scope of protection in these various areas, hospitalization, surgical coverage, and gross or inclusive medical care is shown on chart H. These data are based on Health Information Foundation Survey carried out by the University of Chicago, which I mentioned a few moments ago.

In hospitalization coverage you have room and board, laboratory, drugs, X-ray services. Of the 59 percent of the families in the survey who had insurance and who were hospitalized, between 80 and 100 percent of the hospital bills was covered by insurance. In 2 percent of the insured families with bills, less than 20 percent of the hospital bill was covered by insurance.

For surgical procedures, 45 percent of the insured with surgical bills had between 80 and 100 percent of their bills paid for by insurance.

Considering the gross costs of medical care, you will note that only about 8 percent of the sampled population had between 80 and 100 percent of their total bills for medical care covered by insurance.

From chart H you will note that there is better coverage today in respect to hospitalization insurance than exists in the surgical field. There is much better coverage in these two fields than for the total medical care bill.

In summing up, one can say there has been rapid growth of health insurance plans and that coverage has been increasing, but areas remain in which extension in coverage and in scope of benefits is greatly needed.

Secretary HOBBY. Gentlemen, from what Dr. Keefer has described to you, it is clear that much remains to be done in the voluntary health insurance field. A large segment of our population has no insurance protection, and for many of those with some insurance, the scope of the protection is not adequate.

Mr. Chairman, we need more and better voluntary health insurance. The expansion of the present coverage of prepayment plans must be vigorously pressed forward. To achieve the full potential of private plans, pioneering efforts must continue. Sponsors of health-insurance plans must be encouraged to move forward in a spirit of practical experimentation, with a readiness to undertake new risks.

We believe that the enactment of this bill, by providing an opportunity for broader sharing of these risks, would hasten the expansion and improvement of voluntary health-insurance plans.

MAJOR PROVISIONS OF H. R. 8356

I shall now describe the major features of the bill before you. Before proceeding to the heart of the bill, which is title III, I should like to invite attention to certain significant provisions in titles I and II.