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in the hospital and the other would want them at home, and the doctor and the patient would be at loggerheads before long.

8. Should coinsurance (i. e., insurer bearing portion of cost) be required with regard to all insurance policies which may be reinsured under bill and should maximum and minimum of coinsurance percentage be stipulated ?

Answer. I believe that the coinsurance basis is the logical basis for writing any policy, and a deductible clause is certainly coinsurance. The object of this insurance should be to cover all people for all things at a price they could afford to pay; there would have to be latitude concerning the patient and the doctor and the company as to which class-luxury or minimum—the insured would want to come under. This poses quite a delicate problem among the reinsurer, the insurer, and the insured and his doctor.

9. Should policies have a deductible feature so that benefits are payable only after “deductible” has been paid for by insurer himself?

Answer. Emphatically, yes.

10. Should requirement be contained in bill that individual applications for insurance must be granted; and if so, what limitations should be placed on this requirement.

Answer. I believe that these reinsured policies should be available to every citizen who wants to apply for them and pay the premium. The only limitations should be in the amount of luxury the applicant wants to pay for.



Washington, D. C. DEAR MR. WOLVERTON : I sent you several days ago the two questionnaires you gave me when I appeared before your committee, on which I indicated my

I hope they will give an idea of my personal thinking about reinsurance, but I add this note to the other information.

My conception of this reinsurance is to encourage insurance companies to write a policy which will give the average income subscriber complete protection on medical and hospital expense, over $50 on medical care and over 5 days on hospital care. The premium should be based on furnishing all services to all subscribers for any condition which is disabling to cover minimum service, and when I say minimum service I do not mean that the patient should not have just as good care as someone who is paying more, but I mean that all luxuries should be cut out.

The hospital rate should be fixed at the lowest minimum of hospitals in the particular area. The medical fees should be fixed at what the Veterans' Administration is paying for home care, that is, agreed fees between the State medical society and the Veterans Administration. This seems to work satisfactorily, at least while I was medical director, and we had no trouble with the medical profession or the hospitals on this basis.

The Federal Government, on this basis, should guarantee the companies against loss on this one type of policy only. The companies may write any type of policy they wish, but the Government will not guarantee them against loss on any luxury policy they choose to sell.

I believe on this basis complete medical coverage could be put within the reach of every individual in this country. We have made a rough estimate in the report of the Commission on the Nation's health, and believed this type of policy could be issued on a broad basis for $50 a year. If such a policy could be worked out on a wide distribution basis, I would not be surprised if the Government could insure veterans who are entitled to medical care, and others for whom they are responsible, for much less than it costs them to run hospitals.

I am sure insurance men will find many faults with this, and I do not claim to be an insurance expert, but if we want broad coverage for the American people, who cannot afford to pay the costs for serious illness or injury, it would be a Godsend. Sincerely yours,

PAUL B. MAGNUSON, M. D. The CHAIRMAN. We appreciate your willingness to come here on such short notice and to give use the benefit of your advise and counsel. I am inclined to believe that we may be calling upon you further for some advice with respect to this type of legislation. Judging by your past willingness, I assume that you will continue to be willing to be helpful to the committee.

Dr. MAGNUSON. I will take all of the time that I am not now giving to the Rehabilitation Institute, which, incidentally, we started last Wednesday with 25 patients.

The CHAIRMAN. That is splendid. You deserve a great deal of credit for the interest that you are taking in that matter, and I hope that the course that you pursue and the success that you will undoubtedly have will incline others to take up the same type of work in other sections of the country. Dr. MAGNUSON. Thank


sir. The CHAIRMAN. That is all, Doctor. The committee will now adjourn. (Whereupon, the committee adjourned at 10:55 a. m.)

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Washington, D.C. The committee met at 10 a. m., pursuant to call, in room 1334, New House Office Building, Hon. Charles A. Wolverton (chairman) presiding.

The CHAIRMAN. The committee will please come to order.

This morning the committee will continue its hearings on H. R. 8356, the so-called reinsurance bill.

These hearings were interrupted by the Easter recess of the House and other business that the committee has had before it in the interim.

We have scheduled 3 days of hearings on this bill and this morning we shall hear from 2 witnesses.

The first witness is Mr. D. D. Murphy, commissioner of insurance for the State of South Carolina, who appears this morning as official spokesman for the National Association of Insurance Commissioners.

Our second witness this morning will be Mr. Frank E. Smith, a director of the Blue Shield medical-care plan, Chicago, Ill. The committee had the privilege of hearing Mr. Smith last February in connection with the committee's general health inquiry. At that time Mr. Smith gave the committee detailed information with regard to the history of the development and operation of the Blue Shield medical-care plans.

Today, both of the witnesses will address themselves specifically to the bill the committee is now considering, namely, H. R. 8356, the reinsurance bill, which forms an integral part of President Eisenhower's health program.

Mr. Murphy, will you please come forward, take the witness seat and state for the record your name, the position you occupy, and the capacity in which you testify, so that this will all appear in its proper place in the hearings? STATEMENT OF D. D. MURPHY, PRESIDENT, NATIONAL ASSOCIA

TION OF INSURANCE COMMISSIONERS, CHICAGO, ILL. Mr. MURPHY. Mr. Chairman, my name is D. D. Murphy. I am the insurance commissioner of the State of South Carolina and president of the National Association of Insurance Commissioners. I represent the executive committee of the National Association of Insurance Commissioners.

We have a prepared statement which we have filed with your committee, and if it is the wish of the chairman, I will be glad to read that; or if you care for me to do so I will dispense with that.

The CHAIRMAN. I think it would be well for you to read it.
Mr. MURPHY. Thank you.

The CHAIRMAN. Then the questioning will take place after you have finished your statement.

I note in connection with your statement that there is a resolution of the National Association of Insurance Commissioners.

Mr. MURPHY. Yes, sir.

The CHAIRMAN. I assume you will make reference to that and have it incorporated as a part of your statement.

Mr. MURPHY. Yes, sir.

This resolution is by the executive committee of the National Association of Insurance Commissioners.

The CHAIRMAN. You may proceed with your statement.
Mr. MURPHY. The resolution reads:

Whereas the National Association of Insurance Commissioners is one of the oidest voluntary organizations of State regulatory officials in America ; and

Whereas this association has consistently since the year 1871 advocated insurance legislation in the public interest, and accordingly the executive committee of this association was called into session at the request of the President to consider H. R. 8356, 83d Congress, (2d sess.); and

Whereas said executive committee of the National Association of Insurance Commissioners, meeting in the city of Chicago, Ill., and considering the text of the bill has reached certin definite conclusions: Now, therefore, be it

Resolved by the executive committee of the National Association of Insurance Commissioners, That this committee does hereby approve as being meritorious and in the public interest the avowed and declared objective of improving public health in the Nation ; be it further

Resolved, That such executive committee does hereby voice strenuous opposition to the enactment of H. R. 8356, 83d Congress (2d sess.) for a number of reasons, some of which are as follows:

1. It is the considered opinion of the committee that the said H. R. 8356 in the final analysis is in truth and in fact a bill authorizing and providing for regulation of this phase of the business of insurance by the Federal Government and should be considered as such.

2. That the said H. R. 8356 will not in our opinion achieve the objects and purposes set forth in the proposed measure.

3. That the said H. R. 8356 if enacted into law would inevitably result in the socialization of health services and undesirable subsidization of health insurance by the Federal Government.

4. That the bill as drawn clearly places the Federal Government in the accident and health insurance business.

5. That the said H. R. 8356 is contrary to the public interest; be it further

Resolved, That the president of the National Association of Insurance Commissioners be and he is hereby authorized and directed to designate one or more members of said association to transmit copies of this resolution to the Committee on Interstate and Foreign Commerce of the United States House of Representatives and to the Senate Committee on Labor and Public Welfare and to any subcommittee of either of the said committees or to any other appropriate committee or subcommittee of the Congress, and to give before any such committee or subcommittee such testimony bearing upon the said H. R. 8356 as may be deemed appropriate and compatible with this resolution.

The National Association of Insurance Commissioners has always encouraged and fostered legislation, resolutions, and any other measures to encourage the broadening of health insurance in order that the public health of the country may be put on as high a plane as possible.

We wholeheartedly agree with the purposes expressed by the President of the United States in his health message to Congress on January 18 and heartily endorse the purpose as outlined by the President; however, we do not feel that these purposes can be accomplished by

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