that has been done on this vital subject, beginning last fall. The chairman, with that broad vision that he has and with that great interest that he has in this whole subject, spent part of the time last fall, a time that was supposed to be a recess for Members of Congress, organizing and holding a series of hearings here dealing with all of the major diseases, having before the committee specialists in every field. And that series of hearings, plus the hearings that have continued since the 2d session of the 83d Congress, convened in January, I think, have been more enlightening and have laid a foundation for greater progress in this entire field than any series of hearings held at any other time by any other committee of Congress. I think the chairman is due much credit for organizing those hearings, for the vision to push forward, and I just want to say that, as a minority member, that credit should go to the chairman of this committee. I Mr. CHILDS. We in the CIO appreciate the chairman's interest in conducting these hearings. And we were not trying to issue a new challenge. We have just sort of given emphasis to an old one. am sure that you will find our organization and the other great labor organizations in this country and other people will be supporting your efforts in bringing about a truly complete medical program for the people that need it. The CHAIRMAN. I have found very often at Sunday school, church, and fraternal meetings that when the chairman of a particular event endeavors to pay a compliment he very frequently gets into trouble by not recognizing everyone who is entitled to it. So that when I speak so glowingly of my good friend from Tennessee who has helped so effectively, I am speaking not only of his personal interest but I am speaking of that which he represents in the other members of the committee, because at no time can a chairman or can any single member of a committee accomplish anything that is worthwhile by his own efforts. It can only be by a combination of the efforts of the entire committee. And in that respect this committee has been particularly fortunate that its membership, without exception-and that is really saying somehing, but I do say without exception-have always been interested in this type of legislation and have proven very helpful. It is not easy to accomplish things as a pioneer. It is hard work, and we recognize that this is largely a pioneering effort, so that while we have a vision as to what ultimately should be done, we are practical enough to realize that you cannot always accomplish what you would like to do in the first instance. But by continued effort we do have in mind that we can accomplish ultimately, and we hope at not too distant a day the things that are most worthwhile. Now, Mr. Heselton, as one of those who has always been helpful, do you wish to say something? Mr. CHILDS. Mr. Chairman, I think that your committee will long be remembered after the McCarthy committee is forgotten. You are doing a constructive job. The CHAIRMAN. Is there anything further? In view of the circumstances that Mr. Heselton or no one else has anything to add to what has already been said, I assume that what has already been said covers the subject. We will insert in the record the excerpt from the testimony of Dr. Morris Brand, which you have offered, at this point. (The material referred to is included in the testimony of Dr. Brand inserted below.) The CHAIRMAN. The committee is also in receipt of a letter from Dr. Morris Brand enclosing his complete statement given before the Subcommittee on Health of the Senate Labor and Public Welfare Committee on April 22, 1954, which will be inserted in the record at this point. (The material referred to follows:) TESTIMONY IN BEHALF OF THE CONGRESS OF INDUSTRIAL ORGANIZATIONS AND THE I am the medical director of the Sidney Hillman Health Center in New York City where preventive, diagnostic, and curative medical services are provided to members of the New York Joint Board of the Men's and Boys' Clothing Workers, ACWA. Previous to this position I was the associate and, for a time, acting medical director of the Health Insurance Plan of Greater New York (HIP). The CIO and ACWA wish to express their appreciation for being given the opportunity to present their comments and suggestions on health legislation which will affect in particular about three-quarters of a million ACWA union members and dependents, and in general this Nation's population of 160,000,000 persons. With the happiness and welfare of so many at stake, it is not surprising that both organizations are anxious to present their points of view with the hope that Congress will stop the repetitious and costly surveys and start building for a healthier America. On several occasions facts and statistics revealing the unmet health needs of the Nation have been collected, masticated, digested, absorbed, and assimilated. Among the many studies, excellent and provocative information can be found in the reports of (1) the Committee on Costs of Medical Care, (2) the National Health Survey, (3) the Selective Service rejections, (4) the 1951 report to the Senate's Committee on Labor and Public Welfare when Senator Lehman was chairman, and most recently (5) the President's Commission on the Health Needs of the Nation. The health principles formulated by the Commission is as adequate a foundation as one can hope to find for the excellent recommendations which the Commission made in its report. These recommendations, if properly implemented and dovetailed with our medical profession's excellent and vast potential knowledge and skills, would raise our country's health to the highest degree possible. Mr. Wolverton's speech before the House of Representatives on February 3 last on the introduction of H. R. 7700 and the bills S. 1153 and H. R. 3582 introduced respectively by Senators Ives and Flanders and Representative Javits, are manifestations that our administration and many of our Nation's legislators, regardless of their political affiliations, are aware of the urgent need for a wider distribution of modern medical services. Unfortunately the proposed formulas are inadequate and weak. They do not permit a constructive approach to better health. The CIO and ACWA therefore maintain that the only way to create the health structure that will be functional, valuable, and have firmness, stability, and meaning for the 160,000,000 people (and many more to come) is to 1. Establish a coordinated and integrated national health program for comprehensive medical and hospital services, including national health insurance. 2. Provide aid to professional schools through grants for training health personnel. 3. Provide aid in the building of hospitals and group medical practice clinics with a minimum of State and local matching funds. 4. Provide aid for the extension and expansion of State and local public health services. 5. Provide aid to maternal and child health services and expansion of program for the physically handicapped children. 6. Provide for the development of a mental health program to improve our mental hospitals and for the training of psychiatrists and other mental health personnel. 7. Provide aid in the understanding and prevention of chronic diseases and increase the facilities and services for the chronically ill. 8. Extend rehabilitation services to provide aid for those who become disabled each year. The recent curtailment of funds for health services-limited as they aremay mean financial economy for the moment. In the long run, however, these economies will prove costly because of their harmful impact on the health of our citizens. Our people's health must not be sold short for a handful of silver. S. 3114 (H. R. 8356) With regard to the companion bills, S. 3114 and H. R. 8356, the CIO and ACWA are impressed with the intent and purposes set forth in the preambles, but because there is no relationship between the preamble and the body contents, they disapprove both measures as wholly inadequate to serve any useful purpose. The labor organizations are of the opinion that the reinsurance bills will not add to the health and well-being of this Nation because the health status can be improved only by a program of national health insurance which will provide comprehensive preventive, diagnostic, and curative medical and ancillary services in the home, office, and hospital to every individual in accordance with their needs. Heroic measures are needed to provide the American public with the modern medical knowledge and skills which can be provided by our excellent medical profession. To maintain the financial and other artificial barriers between the public and the profession is wasteful, both of the vast potential of American medicine and people's health resources. Both the CIO and ACWA are of the opinion that the proposed acts are so general in terms that it would place upon the Secretary responsibilities of a detailed analysis of each applicant for reinsurance coverage which would demand a large and costly administrative establishment. Furthermore, if many plans applied for coverage within a brief period of time it would create a serious administrative handicap and give rise to additional criticism of governmental bureaucracy. The bills also lack specific standards and criteria for implementations to fulfill the intents and purposes set forth in the declarations. The proposed acts would extend reinsurance to private insurance carriers as well as nonprofit organizations. It is difficult to believe that any carrier would be interested in experimentation in fields which if unsuccessful would lead to a cost of 25 percent of the losses. Recent abrupt cancellation of various policies by commercial carriers is evidence of their ultraconservatism and fear of undue losses. Notwithstanding the Federal Government's willingness to pay 75 percent of the losses, stockholders are interested in successful dividends and not in unsuccessful costly experiments. Those carriers which may be interested in additional services or wider coverage will of necessity have to establish a premium charge based on sound actuarial accounting. Otherwise they would not, in accordance with the bill's provisions be entitled to the reinsurance. To deliberately charge a low premium for the experimental period may attract new buyers but it is obvious that they will not continue their subscriptions when the premium rates will be adjusted upward to meet the actual costs. The labor organizations do not believe that the bill will find a means of providing coverage for retired persons, low-income groups, unemployed and those disabled by chronic illness because such persons generally do not have the funds to purchase any insurance coverage. The bill provides for a national advisory council and specifically classifies only four members who shall be experienced in the administration of health service plans. It would serve the public's interest in a fuller measure if labor and other consumer organizations would be designated as consumer representatives and of the 4 representatives mentioned above, at least 1 should represent nonprofit hospital service plans and another nonprofit comprehensive medical service plans. The comment made by Mr. Edwin J. Faulkner on March 26 before the House Interstate and Foreign Commerce Committee when testifying on the reinsurance bills are worth repeating. He stated: "Government reinsurance of health insurance plans would introduce no magic into the field of financing health care costs. Reinsurance can distribute risks among insurers just as insurance distributes them among policyholders, but no matter how far this distribution is carried, it must be sound to succeed. Reinsurance does not increase the ability of the insurer to sell protection to the unwilling buyer. "Reinsurance does not reduce the cost of insurance. Reinsurance does not make insurance available to any class of risk or geographic area not now within the capabilities of voluntary insurers to reach." To summarize briefly, the ACWA opposes the reinsurance bill because it will in no way begin to solve the health needs of the Nation. However, the CIO and ACWA take this opportunity to recommend for this committee's consideration the following suggestion for use of the $25 million for practical pilot studies. Congress should appropriate the $25 million to be used as grants to nonprofit hospital and medical care plans which, regardless of their present coverage, would agree to (1) provide comprehensive medical services in the homes, hospitals, and doctors' offices; (2) provide total hospital services in accordance with needs; (3) remove waiting periods, limitations against age, sex, race, and preexisting conditions; (4) eliminate deductible features; (5) broaden their underwriting rules to permit enrollment of individuals or individual families; (6) enroll the retired, unemployed, and those with low incomes who ordinarily cannot purchase existing voluntary insurance plans; (7) provide psychiatric treatment; (8) add dental services and enter into many other areas which because of the lack of sound actuarial information have been considered unsound financially and therefore avoided. Plans such as the health insurance plan which provides a medical service program through 30 medical groups, the Permanente plan, the Blue Cross, and Blue Shield, should all be invited to participate in these pilot studies. These experiments should be approved by a national advisory council and conducted by the United States Public Health Service for the Department of Health, Education, and Welfare. Controlled pilot studies should provide information which could be used to advantage many more times the value of the sum expended. H. R. 7700 The ACWA agrees with the declaration of policy and purposes set forth in title VII of H. R. 7700 that "there is a serious need throughout the country for a greater number of hospitals and related medical facilities and services"; "to stimulate private lending institutions *** to loan funds by which medical centers, hospitals, clinics and other medical facilities can be financed, built and operated on a self-sustaining, self-liquidating basis"; "to encourage the extension of voluntary, repayment health plans providing comprehensive medical and hospital care of high quality to the people at reasonable costs within their means"; and "to increase the opportunities and facilities by which doctors may associate themselves together in groups in order to broaden the distribution of high quality medical care through general practitioners and specialists working together *** and emphasizing preventive medicine, detection of disease, and early diagnosis." The CIO and ACWA accept the bill in principle because they believe that it will probably encourage the organization of prepayment medical care and hospital plans, group medical practice, and the building of medical facilities. The following recommendations which in no way alter the purpose of the bill are presented for consideration: 1. Since medical groups with or without prepayment insurance plans usually pass through a most trying financial period in the first few years of operation, it is suggested that the value of the bill would be enhanced if it would provide for a deferment of payments on principal for the first 2 years and then based on the group income a gradual increase in payments up to the 5th year after which a specific and constant repayment would be required. 2. The bill calls for a premium charge up to 12 percent for the insurance. This figure superimposed on a mortgage interest rate up to 6 or 62 percent will cause considerable loading on the subscribers' premiums. However, since the mortgagee's principal is protected by the insurance provided under this bill, the interest rate should be limited to the prevailing rate of interest for mortgage loans to business in the area. The premium charge for the mortgage loan insurance should be eliminated because the expansion of facilities and medical and hospital insurance plans will repay the interest in the form of 'healthier communities. 3. In section 702 (g) the definition should be broadened to include comprehensive plans established by lay groups, such as labor unions, cooperatives, industries, and citizen groups who may engage individual physicians as well as groups of physicians to provide services to the subscribers. Also, it should not exclude the possibility of a hospital staff establishing a group medical practice facility and prepayment plan. Furthermore, a group practice unit as defined in this section states that the organization of physicians must have "more than one specialty represented in the group." It is recommended that in order to establish some sense of balance of professional skills in a medical group that this be revised to read "must have as a minimum a specialist in internal medicine, a general surgeon, and an ophthalmologist-otolaryngologist." 4. Section 702 (h) should have included the word "physician" in line 20 (p. 7) before the words "groups of physicians." This will permit "health service association" to employ or enter into contracts with individual physicians as well as a group of physicians, etc. 5. Section 702 (i) defines "medical care contract" and "hospital service contract" in a manner that does not conform with existing practices. Most hospitals provide for more than "bed and board" and provide for some of the services as defined in the "medical care contract" and it is therefore suggested that legislation should not interfere with present practices so as to force changes which are at this moment controversial. Passage of H. R. 7700 in the House will be of no value if the Senate does not have a companion bill to consider. The CIO and ACWA, while approving the above bill in principle, notes that failure to pass this bill would not be a handicap to the development of group practice prepayment health service plans on condition that S. 1052 and H. R. 6950 which provide for Federal low-interest loans to group practice prepayment health plans are approved in its stead. The mortgage loan insurance feature should be add to both bills so that it would be available as added protection where a medical group, lay group, or hospital prefers to obtain a mortgage loan from a private commercial source. Mr. Chairman, the CIO and ACWA again wishes to express appreciation for the opportunity to present their comments for health legislation. The CHAIRMAN. We thank you again, Mr. Childs. We are very glad to have had the benefit of your help in further consideration of this legislation. Mr. CHILDS. Thank you. (The following information was submitted for the record:) Hon. CHARLES A. WOLVERTON, COMPTROLLER GENERAL OF THE UNITED STATES, Washington 25, April 1, 1954. Chairman, Committee on Interstate and Foreign Commerce, House of Representatives. MY DEAR MR. CHAIRMAN: I should like to call your attention to certain provisions of the bill H. R. 8356, a bill to improve the public health by encouraging more extensive use of the voluntary prepayment method in the provision of personal health services, presently pending before your committee which I feel should receive the careful consideration of the committee. The purpose of the bill is stated to improve the public health by encouraging the more extensive use of the voluntary prepayment method in the providing of health services. To carry out such purpose, the bill provides for the establishment in HEW of a National Advisory Council of Health Service Prepayment Plans; authorizes the Secretary to make studies and collect information on health service prepayment plans and to make such information available; and establishes a reinsurance fund designed to protect insurance carriers from abnormal losses as a result of the issuance of health insurance. This fund generally would be comprised of reinsurance premiums paid by the sponsors of health service prepayment plans participating in the program. However, to provide working capital for the reinsurance fund, an appropriation of $25 million would be authorized from which advances repayable with interest could be made to the fund when and as needed. Also, the bill provides that for the first 5 years of operation the administrative expenses of operation of the pro |