Mr. PERKINS. Since the bill does not do this, I wonder if it is appropriate or fruitful for me to try to answer on this point.

Mr. WILLIAMS. Let me say this. I don't mean to ask loaded questions; but it is my thought that in approaching any legislation, the first consideration should be given the underlying philosophy of that legislation, and whether or not it is consistent with our American processes as they are outlined in the Constitution, and whether or not the Congress has authority under the Constitution to legislate in that field. As you say, it is a philosophical question, but I think that it is very fundamental.

Mr. PERKINS. Well, if we can confine ourselves to the purposes of this bill, we conceive that the purposes of the bill are to encourage the more extensive use and more extensive availability of voluntary prepayment plans of the beneficial type.

Mr. WILLIAMS. My question, in response to that is, Is that a proper function of government?

Mr. PERKINS. We certainly think so.

Mr. WILLIAMS. To encourage participation of the people in any particular private business in the United States?

Mr. PERKINS. I would state it this way. We think that anything that has the tendency of making available to the people better protection against expenditures for medical care so that they in turn can receive better medical care, is something that promotes the welfare of the American people.

Mr. STAGGERS. Will you yield?

Mr. WILLIAMS. I will yield to Mr. Staggers.

Mr. STAGGERS. I would just like to say, in connection with bringing in the analogy of social security, that that is not a private enterprise. It is a nonprofit organization which is carried on by the Government for the welfare of the people, and according to the thinking that he is indulging in, that along the line of encouraging people to get into a private profit-making endeavor, I think that his philosophy is wrong. Social security does not do that at all.

Mr. PERKINS. Well, there are other areas. I think it is certainly true in the case of compulsory automobile insurance which many of the States have. I am not sure of this-Are there any cases in which unemployment compensation is farmed out by the States?

Mr. STAGGERS. Certainly there would be, but I think even in that, the Government is not in that venture at all. That is allowed. But, you are talking about something else. May I proceed?

Mr. WILLIAMS. Yes.

Mr. STAGGERS. I think that this is an entirely different matter from the protection of or helping a private organization. I think that we can say that. And, I will not pursue this any further. But, as to the social security, I want to say that I do not believe that that is analogous at all.

That is all I have.

Mr. WILLIAMS. I do not care to belabor this point. I want to ask 1 or 2 more questions, and then I am through. I certainly do not feel that any Government program that requires compulsory participation of individuals in any kind of a social-welfare plan-and I use social security as an example is consistent with our form of government. My objection to social security is that it is a compulsory program and the individual has no freedom of choice.

I do not believe that the Government has the right to tell me-and I say that realizing that the Supreme Court has ruled otherwise-but, I personally do not feel that the Government has the right to tell me how to spend my own money to provide for my own future—my own personal future. I think that is a matter for my own individual determination. And, for that reason, I congratulate the administration for bringing in what is very obviously a voluntary program; I think that program though should be clearly in the interest of promoting the general welfare before Congress considers it. I think that should be shown affirmatively. I am very sure you agree with me on that. You may have your ideas of what is general welfare, and your ideas may differ from mine. It is for that reason that I asked this series of questions.

Now having stated my position with regard to compulsory programs, would not that, even so, more nearly serve the general public welfare than a program of this kind? You understand, I would oppose such a program, but would it not obviously be directed more at promoting the interest of the general welfare?

Mr. PERKINS. As to the features of a compulsory program
Mr. WILLIAMS. I hope I have made myself clear.

Mr. PERKINS. Well, when you say that, I assume we have to test it in terms of its efficiency, or what it would accomplish or achieve. When you are satisfied in those terms

Mr. WILLIAMS. It is a question of interpreting the meaning of "general welfare," I presume.

Mr. PERKINS. Well, as I understood it, you asked whether or not a compulsory program would be better in promoting the general welfare. We do not think it would.

Mr. WILLIAMS. Well a compulsory plan would include everybody and everyone would be affected. This plan would include, or benefit, only those who are able to take out insurance policies. Is not that right?

Mr. PERKINS. I suppose that is true, that is, if you look at the segment-you do not know how large it is-which would not possibly ever get benefit from the voluntary prepayment plan, some plan of compulsory insurance which is applicable to the country as a whole might have a more direct benefit to those people who could not possibly come under this kind of an operation.

I would like to ask Dr. Keefer whether he has any special comment to make..

Dr. KEEFER. Well, I conceive this program to be a purely voluntary one and to encourage more people to assume individual responsibility for health and for health protection.

A great many people in the past 10 or 15 years have come to a realization that health insurance protection is vital and essential, due to the unpredictable cost that may occur in any individual year. So that what people really want is health protection at a price that they can afford to pay.

Mr. WILLIAMS. I would certainly prefer this program to anything like a compulsory health insurance plan. As a matter of fact, I would oppose a compulsory health-insurance program as long as I stayed in Congress and would oppose it as a citizen after I go out of Congress; but taking the two together, and in either case, it has not yet been made clear to me that either program would be a proper func

tion of the Federal Government. I think that should be shown very clearly to the committee. I do not know whether other members of the committe have the same doubts or not, but I think that should be shown very clearly before this bill is given any consideration.

Mr. PERKINS. Well, I think, sir, you should test this bill in the same way that you test any other bill that comes before you and determine that it would be very clearly a bill designed with the effect of promoting the general welfare.

Mr. WILLIAMS. I am through, Mr. Chairman. Thank you, sir. The CHAIRMAN. We are getting to a point where I am expecting at any moment the bells will ring for a call of the House, but until that does happen, if nobody has any further questions, I will ask a few myself.

I hope I can get an opportunity to get them in the record. If not, as I have mentioned, we will come back at half past 1 or 2 o'clock, provided it is possible to get an hour or so in during the afternoon, when the House would be in general debate. That would enable those of us who are interested to be here to do so, and certainly I would be here even if I should be the only one, if I do not get the chance to ask these questions before the bells ring.

Now, you are aware of the fact that I have introduced two bills on this subject. One, H. R. 6949, and the other, H. R. 8356, which is the basis of these hearings.

There are some rather distinctive differences between the two bills. I think that in some respects the differences are fundamental in character.

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It is not my intention to enter into a discussion as to which is right and which is wrong, but I would like to get the answers of the Department and the reason that it has to justify its thinkings in these fundamental matters.

Now, the first difference that I note is that in the bill that I originally introduced-please do not take it because I introduced the bill that there is that pride of authorship that makes me as sensitive as though I was talking about a child that belonged to you. As I have explained on other occasions, this bill H. R. 6949 was originally prepared in, I think, 1950, or thereabouts, and it was brought to my attention by Governor Stassen who at that time was president of the University of Pennsylvania. They were his thoughts that were put into this bill that I introduced and Governor Stassen had the help of the medical faculty at the University of Pennsylvania medical school. I am a graduate of that institution and I assume I was selected to introduce the bill particularly because of that and because I am a member of this committee. So I introduced the bill, as I expressed it at the time, with the idea of creating discussion. I hope that the bill has in some measure contributed to the discussion that has followed and that lead up to the introduction of the present bill, H. R. 8356.

Now, section 1 of the first bill that I introduced made only nonprofit prepayment plans eligible, whereas this present bill that I have introduced makes both commercial and nonprofit plans elegible.

Will you express for the record the thinking that went into that inclusion of commercial as well as nonprofit plans?

Mr. PERKINS. Yes, sir. As you stated, the administration bill does not exclude any type of carrier or prepayment plan for any health service.

It is the administration's view that because this plan is nonsubsidized, that is, general revenues not being used to make payment to carriers without the compensating reinsurance premium being charged to the carrier, that it is entirely appropriate that we should include the commercial carriers and not only appropriate, but further that in order to make maximum, take maximum advantage of the competitive spirit, that exists in this area, that it would be wise to make a reinsurance service available to the commercial and nonprofit, understanding at all times that it is only the service that is bought and paid for by the carrier. The reinsurance formula of the bill is such that no profits are underwritten.

The CHAIRMAN. As I said, I am not going to enter into any discussion upon the merits of one proposition as compared to the other, but in view of the fact that I believe that these are fundamental matters, I want this record to reflect your thought, the thought of the Department, and those who are interested in this particular bill we have before us.

Now, the second matter I would like to call your attention to is section 8 of the original bill which all policies issued by a plan must be reinsured. The present bill provides that a company may issue simultaneously reinsured and not reinsured policies.

Mr. PERKINS. On that point, sir, we feel that the maximum utilization by carriers would exist where they had been given the flexibility to have several types of plans outstanding, as many of them now do; and we feel that the speeding up process and experimentation process can really assist where the carrier has an opportunity of taking an experimental or new plan and adding it to his other plans, rather than substituting it for them, that we can get the best, speediest, coverage in that way.

The CHAIRMAN. Another point, under the original bill that I introduced, hospitalization contracts and medical care contracts calling for cash benefits may not be reinsured, whereas under this present bill, both contracts calling for cash benefits and contracts calling for services may be reinsured.

Mr. PERKINS. On that point, sir, again, the administration believes that the maximum use by carriers would exist if we made the reinsurance scheme as open and as available as possible. We would like to see the greatest type of experimentation and differentiation in the field, in the sense that we do not want to confine the stimulating operations of the Federal Government to any particular type of carrier. We think that the direct service carrier as well as the other type of carriers can perform a real function. It is only by the continuing operation of all types of carriers which are all trying to reach the same objective many of them approaching it in different ways-and we think to offer encouragement to all these different parties is the best way to approach it.

The CHAIRMAN. The orginal bill provided separate reserve funds of (1) $25 million for hospitalization reinsurance and (2) $25 million for medical-care reinsurance. The present bill provides for a single reserve fund of $25 million for both types of contracts but the Secretary may establish separate accounts.

Mr. PERKINS. Well, on that score I would like to just make a preliminary statement and then ask any of my associates if they have any particular comment.

My guess would be that the difference betwen the medical care and the hospitalization is not sufficiently distinct so that we would feel that it would be preferable to simply regard the two as merged. I think that under the many different types of plans we have in existence already and which are growing up, that the distinction is going to become more and more blurred and there is no necessity of creating separate funds for these separate types of services which now seem to be categorized to some extent. We think they will become less so. Dr. Keefer, would you like to comment on that, or, Mr. Stuart, would you like to comment on it?

Mr. STUART. It would seem to me that Mr. Perkins' statement represents a point of view of the people who are interested in the program that more and more, as we come to view this whole problem, we think in terms of the problem of illness rather than the specific problem of hospital care and medical care, and we are working together in coordination the 2 forces, hospitalization and doctors to solve the problem and very often it is 1 problem instead of 2.

The CHAIRMAN. Other questions have come to my mind I could ask, but for the purpose of getting the answers, I am withholding any comments on answers that are made.

I will say that my silence, which is sometimes mentioned as giving consent, does not necessarily give consent. In other words, I would not want it to be assumed that I had a fixed view with respect to the original bill that was introduced. Already you have said something that appeals to me very greatly, as to why that bill should be different from the provisions as you have them in the present bill. So that I hope that my lack of comment will not be misunderstood.

Mr. PERKINS. Not at all, sir. We think it extremely helpful to elicit this type of difference.

The CHAIRMAN. The bill originally introduced provided that a corporation might borrow up to $25 million from the Treasury. The present bill does not have any borrowing power.

Mr. PERKINS. I think it is not quite fair to say that there is no borrowing power. In effect, the $25 million provided in H. R. 8356 is an authorization for a capital-advance account to be set up in the Treasury which amounts to a line of credit which could be called upon by the Federal reinsurance fund.

So that it has many similarities to a borrowing power, and I do not think there is more than a technical distinction there.

The CHAIRMAN. Section 4 in the original bill provides that all power be given to a new Federal corporation which has a board of directors of three members to be appointed by the President and confirmed by the Senate, whereas under the present bill all powers_are given to the Secretary of Health, Education, and Welfare, and an Advisory Council of 12 members is to be appointed by the Secretary. Mr. PERKINS. One reason for that distinction, I would suppose, sir, is the fact that H. R. 6949 actually provides for a corporation, whereas this bill, H. R. 8356, does not provide for the formalities of a corporation.

There is a certain amount of inflexibility and a lot of trappings have to go along with the setting up of a Federal corporation, and it was felt that the maximum efficiency of operation could be achieved by having it a departmental unit, although this is not absolutely and