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HEARINGS

BEFORE THE

COMMITTEE ON
INTERSTATE AND FOREIGN COMMERCE

HOUSE OF REPRESENTATIVES

EIGHTY-THIRD CONGRESS

SECOND SESSION

ON

H. R. 8356

A BILL TO IMPROVE THE PUBLIC HEALTH BY ENCOURAG-
ING MORE EXTENSIVE USE OF THE VOLUNTARY PREPAY.
MENT METHOD IN THE PROVISION OF PERSONAL HEALTH

SERVICES

MARCH 24, 25, 26, 30, 31, APRIL 1, 2, 5, 8, MAY 5, 6, AND 7, 1954

U.S.

rholdenes, Printed for the use of the

Committee on Interstate and Foreign Commerce

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COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE

CHARLES A. WOLVERTON, New Jersey, Chairman CARL HINSHAW, California

ROBERT CROSSER, Ohio JOSEPH P. O'HARA, Minnesota

J. PERCY PRIEST, Tennessee ROBERT HALE, Maine

OREN HARRIS, Arkansas JAMES I. DOLLIVER, Iowa

DWIGHT L. ROGERS, Florida JOHN W. HESELTON, Massachusetts

ARTHUR G. KLEIN, New York JOHN B. BENNETT, Michigan

WILLIAM T. GRANAHAN, Pennsylvania RICHARD W. HOFFMAN, Illinois

F. ERTEL CARLYLE, North Carolina JOHN V. BEAMER, Indiana

JOHN BELL WILLIAMS, Mississippi WILLIAM L. SPRINGER, Illinois

PETER F. MACK, JR., Illinois ALVIN R. BUSH, Pennsylvania

HOMER THORNBERRY, Texas PAUL F. SCHENCK, Ohio

LOUIS B. HELLER, New York JOSEPH L. CARRIGG, Pennsylvania

KENNETH A, ROBERTS, Alabama HERBERT B. WARBURTON, Delaware MORGAN M. MOULDER, Missouri STEVEN B. DEROUNIAN, New York

HARLEY O. STAGGERS, West Virginia THOMAS M. PELLY, Washington J. ARTHUR YOUNGER, California

ELTON J. LAYTON, Clark

PROFESSIONAL STAFF
KURT BORCHARDT

ANDREW STEVENSON
SAM G. SPAL

A. E. STOCKBURGER

Page

Text of H. R. 8356.

1

White House press release, May 17, 1954.

447

Report of

Agriculture Department.

15

Bureau of the Budget..

16

Federal Trade Commission-

14

Health, Education, and Welfare Department.

Labor Department.---

15

Statement of-

Allman, Dr. David B., member, board of trustees, and chairman,
committee on legislation, American Medical Association.

295
Beers, Henry S., vice president, Aetna Life Insurance Co..

207
Biemiller, Andrew J., member, national legislative committee, Amer-
ican Federation of Labor...

241
Bohlinger, Alfred J., Superintendent of Insurance, State of New York. 401
Childs, Joseph W., vice president, United Rubber, Cork, Linoleum,
and Plastic Workers of America, CIO..--

415
Cruikshank, Nelson H., director of social insurance activities,
American Federation of Labor..

241

Ellenbogen, Theodore, Office of the General Counsel, Department of

Health, Education, and Welfare...

53

Ellickson, Mrs. Katherine P., associate director, CIO department of
research and education...

415

Faulkner, Edwin J., president, Woodmen Central Life, Woodmen

Accident, and Woodmen Central Assurance Co., Lincoln, Nebr.- 102

Hipple, W. H. J., 3d, Atlantic City, N. J.

405
Hobby, Hon. Oveta Culp, Secretary of Health, Education, and Wel-
fare.--

17
Howard, Dr. Ernest B., assistant secretary, American Medical Asso-
ciation

295
Keefer, Dr. Chester Scott, Special Assistant for Health and Medical
Affairs, Department of Health, Education, and Welfare

17, 53

Magnuson, Dr. Paul B., president, Chicago Rehabilitation Institute - 323

McNary, William S., chairman, council on Government relations,

American Hospital Association

151

Miller, John H., vice president and actuary, Monarch Life Insurance

Co., Springfield, Mass..

173

Murphy, D. D., president, National Association of Insurance Com-

missioners.

335, 365

Myers, Robert J., chief actuary, Social Security Administration..

53

Perkins, Roswell' B., Assistant Secretary of Health, Education, and

Welfare.

17, 53

Rockefeller, Nelson, Under Secretary of Health, Education, and

Welfare..

17

Sifton, Paul, national legislative representative, United Automobile

Workers, CIO.

415

Smith, Frank E., director, Blue Shield medical care plans-

388
Sorg, H. Theodore, president, New Jersey Blue Cross plan.

275
Stuart, James E., executive director, Cincinnati Blue Cross plan.

53, 409
Additional information submitted for the record by-

Aetna Life Insurance Co., letter from Henry S. Beers, in reply to
questions by Chairman Wolverton.

237

American Alliance, statement of..

437

American Federation of Labor, answers by Nelson H. Cruikshank to

questions of Chairman Wolverton..

273

Additional information submitted for the record by-Continued
American Hospital Association:

Page
Letter from William S. McNary ---

170
Letter from Kenneth Williamson, director, Washington Service
Bureau.

154
American Medical Association, letter from Dr. F. E. Wilson.

319
Blue Shield medical care plans, letter from Courtney H. Taber, mana-
ger, research division, transmitting information.

449
Buerki, Dr. Robin C., letter from..

437
California State Department of Insurance, letter from John R.
Maloney, Commissioner.-

371
Carlton, Winslow, statement of.

439
Congress of Industrial Organizations, statement of Dr. Morris Brand,
before Senate committee, April 22, 1954.-

431
Connecticut General Life Insurance Co., letter from F. B. Wilde,
president.

448
Faulkner, Edwin J.:

Companies writing reinsurance exclusively, including health and
accident reinsurance.

113

Direct writing companies which also write health and accident

reinsurance

113

Growth in number of people covered by hospital, surgical, and

medical expense protection, graph.-

104

Letter from, in answer to questions by Chairman Wolverton - 143

Members of insurance committee, United States Chamber of

Commerce

137

Report of the chairman of the insurance department committee,
Ūnited States Chamber of Commerce.

116

Frelinghuysen, Hon. Peter, Jr., letter from..

436

Health, Education, and Welfare Department:

Application for reinsurance, chart.

33

Consultants to the Secretary in considering H. R. 8356.-

38
Family income groups, distribution of hospitalization insurance,
fiscal year 1953, chart.--

23

Family income, percent spent on medical care, fiscal year, 1953,

chart...

20

Increase of insurance protection, 1939–52, chart-

19

Kinds of insurance carried by 59 percent of population, 1953,

chart.

23

Memorandum from Robert J. Myers re possible reinsurance pre-

mium rates under H. R. 8356..

64

Persons with no hospitalization insurance, 1952, chart-

22

Private medical care expenditures paid by insurance, 1952,

chart..

21

Proposal, persons insured under health plan X, chart..

32

Proposal, seven major characteristics of reinsurance program,

chart-

30

Reinsurance, chart-

31

Reinsurance payment formula, chart---

Scope of protection inadequate among insured families, chart-

25
United States private expenditure for me lical care, chart-

21

Health Insurance Plan of Greater New York, statement of Dr. George

Baehr, president and medical director-

99

John Hancock Mutual Life Insurance Co., letter from Paul F. Clark,

president

447

Magnuson, Dr. Paul B.:
Answers to questions of Chairman Wolverton.

331
Letter from

332
Monarch Life Insurance Co., letters from John H. Miller, vice presi-
dent and actuary -

184, 201

National Association of Insurance Commissioners, letter from Donald

Knowlton, president, transmitting resolution.

448

New Jersey Blue Cross plan, statement of H. Theodore Sorg, president,
in reply to questions of Chairman Wolverton.

291
Physicians Forum, Inc., statement of Dr. Allan M. Butler, vice chair-

441
Tarrant County (Tex.) Medical Society, resolution of

440
Wainwright, Hon. Stuyvesant, statement of ---

436
Warren, Lindsay, Comptroller General, letter from.

434

man.

HEALTH REINSURANCE LEGISLATION

WEDNESDAY, MARCH 24, 1954

HOUSE OF REPRESENTATIVES,
COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D.C. The committee met at 10 a. m., in the committee room of the House Committee on Interstate and Foreign Commerce, Hon. Charles A. Wolverton (the chairman) presiding.

(H. R. 8356 and the reports thereon are as follows:)

[H. R. 8356, 83d Cong., 2d sess. ] A BILL To improve the public health by encouraging more extensive use of the voluntary

prepayment method in the provision of personal health services Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That it is the purpose of this Act to encourage and stimulate private initiative in making good and comprehensive health services generally accessible on reasonable terms through adequate health service prepayment plans, to the maximum number of people, (a) by providing technical advice and information, without charge, to health service prepayment plans and to the carriers or sponsors thereof; and (b) by making a form of reinsurance available for voluntary health service prepayment plans where such reinsurance is needed in order to stimulate the establishment and maintenance of adequate prepayment plans in areas, and with respect to services and classes of persons, for which they are needed.

TITLE I-GENERAL

DEFINITIONS SEC. 101. As used in this Act

(a) The term “beneficiary” means an individual (1) with respect to whom a carrier, pursuant to a health service prepayment plan, undertakes to pay in whole or in part for specified personal health services furnished to him by others, or (2) to whom, pursuant to such a plan, it undertakes to provide specified personal health services;

(b) The term "carrier" means a voluntary association, corporation, or partnership, other than an instrumentality wholly owned or controlled by a State or political subdivision thereof, which is organized under State law, and which is sponsoring, or is engaged in providing protection under insurance policies or subscriber contracts issued pursuant to, or is otherwise engaged in operating under, a health service prepayment plan;

(c) The term “Council” means the National Advisory Council on Health Service Prepayment Plans;

(d) The term “fund” means the Health Service Prepayment Plan Reinsurance Fund established by section 307; the term “account” means an account within the fund, established by the Secretary pursuant to that section;

(e) The term “health service prepayment plan” means a set of specifications under which a carrier undertakes, through a class or classes of insurance policies or subscriber contracts (as defined by the Secretary) or both, to do any or a combination of the following in return for insurance premiums or prepaid subscription charges :

(1) To reimburse specified beneficiaries or a class or classes of beneficiaries (or others with respect to such beneficiaries) in whole or in part for expenditures incurred by them for specified personal health services;

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