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(Voluntary Health Insurance)




Washington, D. C.

The committee met at 10 a. m., the Honorable John W. Heselton (acting chairman) presiding.

Mr. HESELTON. The committee will please come to order.

Before starting the formal part of the hearing, in behalf of the committee I want to welcome a group who are guests of the committee. Under the auspices of the American University there is being conducted what is known as the Washington semester program, a cooperative program of 47 colleges and universities from all parts of the Nation. It is designed to give the students a realistic and firsthand knowledge of the operations of the National Government. They attend this hearing as one of the sessions of their seminar on government in action. They will later discuss what they see and hear at a further seminar session at the university.

I might say to whoever is in charge of the program I am sure the committee will welcome having the results of that discussion. If they could be reduced to writing and sent to the committee, I am sure that the chairman and all of us will be very much interested.

The students who will attend today are juniors and seniors chosen on an honor basis from Alfred University, Bethany College, Cornell College, Drew University, Earlham College, Grinnell College, Hunter College, Nebraska Wesleyan University, Park College, Rockford College, Sheppard College, Simpson College, Stetson University, Washington College, and Western Reserve University.

As I said, I am very happy for the entire committee to welcome you here. I hope that you will get a lasting example of the method of so-called committee hearings, which is not frequently understood. I think almost all major legislation that passes through the House and Senate is substantially in the form in which the legislative committees and the Appropriations Committee report such legislation. It is rare that a committee report is turned down by either the House or the Senate.

Possibly, in order to make this particular hearing of more direct interest to you I should outline some of the jurisdiction of this committee, which is the Committee on Interstate and Foreign Commerce. It is one of the oldest committees in Congress. I believe it was the third committee appointed after Congress became an institution.

Under the provisions of the Reorganization Act of 1947 this committee and other committees were given specific jurisdiction in certain

fields. The jurisdiction of this committee is among the broadest of any in the House. I will run over briefly its jurisdiction.

First, interstate and foreign commerce generally.

Second, regulation of interstate and foreign transportation, except transportation by water not subject to the jurisdiction of the Interstate Commerce Commission.

Third, regulation of interstate and foreign communications.
Fourth, civil aeronautics.

Fifth, Weather Bureau.

Sixth, interstate oil compacts; and petroleum and natural gas, except on the public lands.

Seventh, securities and exchanges.

Eighth, regulation of interstate transmission of power, except the installation of connections between Government waterpower projects. Ninth, railroad labor and railroad retirement and unemployment, except revenue measures relating thereto.

Tenth, public health and quarantine.

Eleventh, inland waterways.

Twelfth, Bureau of Standards, standardization of weights and measures, and the metric system.

I believe the first public health institution operated by the Federal Government was the building of a seamen's hospital back in the last century. Since that time the Federal Government's jurisdiction over a great many of the health institutions has been broadened and its interest in public health matters has been broadened. The hearings we have been holding so far have brought us up to date with testimony as to the great advances that have been made, not only through the medical profession, but through Government institutions and the people who are engaged particularly in research in these Government institutions.

I am sure those who are here this morning will be willing to let me read briefly the initial statement of our chairman who, incidentally, has been called away and unfortunately will not be here this morning but hopes to be able to return tomorrow for the hearings.

The initial statement that he made some 10 days ago is already in the record and does not need to be recorded, but I will read it as follows:

(The initial statement was read.)

I think that gives to our guests something of the background of the progress that has been made during these particular hearings.

This morning the Committee on Interstate and Foreign Commerce opens its second series of hearings in the committee's hearings on health problems.

From October 1 through October 12 this committee received extensive testimony on the present state of research into the causes and control of some of the major diseases of mankind. The committee has been impressed by the splendid cooperation that exists among the private and public agencies and the men and women in these agencies who have devoted their lives to research in the fields of major diseases. These research activities have produced marvelous results with regard to prevention and treatment of several of these diseases. The very fact, however, that we are now able to treat many of these diseases and prolong human lives has resulted in new problems of an

economic nature. Extended hospitalization and medical attention prove exceedingly costly. While society has made provision for the very poor to be taken care of if they require extended hospitalization and medical treatment, and while the very rich are able to take care of themselves in that regard, the large majority of our people do not appear to be protected sufficiently from the high cost resulting from extended serious illness.

Many plans are in existence which seek to give protection against medical and hospital expenses. It is our purpose in this second series of our hearings to go into the question of how extensive this coverage is. The committee is concerned with the cost of such protection and whether it extends to major or catastrophic medical and hospital expenses. We are also interested in learning of the arrangements under different plans now in existence which have been made with hosptials and physicians. The committee likes to learn about the experience gained with existing plans, including the difficulties that have been encountered in the administration of such plans. Growing out of the experience with existing plans, the committee hopes to learn of ways and means by which voluntary protection can be improved and broadened.

This morning the committee will have an opportunity to inform itself with regard to the protection made available by commercial insurance companies on the basis of group insurance plans. It is my understanding that our first witness this morning, Mr. Henry S. Beers, vice president of the Aetna Life Insurance Co., will devote his statement to a discussion of group health insurance in general. Mr. Beers will be followed by Mr. Edmund B. Whittaker, vice president of the Prudential Insurance Co. of America, who will discuss particularly major medical insurance which is designed to give protection against catastrophic medical and hospital expenses.

These two gentlemen, in turn, will be followed by two witnesses who will talk about the experience of their respective insurance companies with group health insurance-Mr. A. M. Wilson, of the Liberty Mutual Insurance Co., and Mr. Charles G. Hill, of the Massachusetts Mutual Life Insurance Co.

Before proceeding with the first witness I would like to take the liberty of placing in the record a very brief excerpt from a recent speech delivered by Mrs. Oveta Culp Hobby, Secretary of the Department of Health, Education, and Welfare, before the national meeting of the American Hospital Association, San Francisco, August 31, 1953. I do so because I hope in these few days of hearings the major points she has made in this excerpt will be a matter of interest to the witnesses who will testify here, and so they will be in a position, perhaps, to comment specifically on the points she makes. She says:

I realize that a hospital administrator is like a man standing in the center of a seesaw; he has to throw his weight first on one side and then on the other to maintain a delicate equilibrium between the two ends.

He is a man caught between the pressures of economics and the pressures of medical advances; between the upsurging idealism of what a hospital aspires to offer human beings in medical care, and the downpressing realism of what the hospital can afford to do if it is to remain in existence at all.

That you do so well at all times is a great achievement. But the hospital administrator must be constantly on the alert never to let his cash register problems so absorb him that he becomes a hotel keeper. Let him always keep a clear definition in his mind of the differences between the professional services of his hospital and its hotel function.

Unfortunately, you must also grapple with another, and a very important, problem of hospital economics-the individual's ability to pay. By way of illustration, here are three case histories-types which are, I am sure, all too familiar to you.

I know three couples, each of whom had a little girl. The daughter of the first couple was born prematurely. She weighed 2 pounds, but thanks to the best medical care, 3 months in the hospital incubator, and highly trained nurses at home, she is today a strapping 10-year-old and the joy of her parents-their only child.

Her father said that she cost him $4,000 in her first year of life-with the result that they had to delay building their permanent home for several years.

The second couple's little girl was born defective, the fifth of their closely spaced children. The father was a journalist making $100 a week. The child lived a year, and most of that year was spent in a hospital. When she died, her parents felt sorrow, but their friends considered it a blessing.

Now the father is paying off what seems to him a monumental debt, and the mother sees her other four children doing without many essentials to pay for the baby who died.

The third couple's little girl was adopted. Both parents worked, and when the child developed a cyst in the eyelid, they took her to a private pediatrician. Running the routine blood test before the operation, the doctor discovered that she had leukemia. Thanks to the resources of the community, he was able to transfer her from his private patient list to a part-pay clinic list in the hospital. He knew that the parents could have afforded the originally planned operation, but could not possibly afford the long-term illness ahead.

These three cases make a story. The first family was taxed by the costly first year of their little girl, but was sufficiently well-to-do not to be crippled by it. They were glad to pay their bills.

The second family, people who would normally expect to pay their own way and who neither by education nor background could expect charity, were severely hurt.

The third family are the kind who pay their own bills when they can, but are able to accept partial or total charity when they need it.

The first and third of these families feel only gratitude to the private enterprise system which made possible the superb medical care which helped them keep their beloved children alive.

The second family is today frankly and ardently in favor of socialized medicine. Now I shall be completely candid. Speaking as a layman, I believe that an overwhelming majority of the American people have no desire whatsoever for socialized medicine in any form.

The professional services are so geared and so priced that the middle-income American-if still under 65-can pay the bills for an appendectomy, obstetrics, tonsillectomy, or any other average medical problem.

But we have not yet found a way to save any average American family from destruction by the catastrophic illness. And we have not found a sure way to see our retired senior citizens through the increased illnesses of age.

Some private foundations have helped. The National Foundation for Infantile Paralysis, for instance, has been the salvation of thousands of families which have suffered a severe case of poliomyelitis.

But tuberculosis, strokes, congenital defects, cancer, arthritis, and many other diseases by their very duration can still wreck many a family's economy.

The prepayment plan launched at Baylor University Hospital in Dallas has provided a start on one answer-a wonderful and inspiring start. Hospital leadership promoted and led in the development of that plan into the Blue Cross which today has almost 45 million members.

Millions of families now have a measure of assurance that they will receive hospital care when they need it, and hospitals have gained a financial stability that they never had before. But is this enough? I think we will all agree that it is not. More is needed, and we must find the way to achieve that more within our private enterprise system.

The Federal Government would, I know, be going against the wishes of the American people were it to enter this field. President Eisenhower has said: ***We are opposed to Federal compulsory health insurance with its crushing cost, wasteful inefficiency, bureaucratic deadweight, and debased standards of medical care. We shall support those health activities by Government which stimulate the development of adequate hospital service without Federal interference in local administration. We favor support of scientific research. We

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