Page images
PDF
EPUB

THE VOLUNTARY HEALTH SERVICES PLAN ACT IN ILLINOIS

An address by Thomas J. Burke, president, Janitors Union, Local 25, Chicago, Ill. On May 28, 1953, Senate bill No. 589 was introduced in the Illinois Legislature by Senator Marshall Korshak, of Chicago, at my request. This bill amended sections 8 and 20 of the Voluntary Health Services Plans Act, approved June 27, 1951, by the then Governor, Adlai E. Stevenson, of Illinois. That act, as you will remember, provided for the organization and operation of nonprofit corporations for the purpose of furnishing hospital, medical, nursing, and related health services to members and subscribers. That act has been described as the greatest step forward in group medical care in the history of Illinois, and I am happy to have played my small part in putting this law on the statute books of Illinois.

In 1951 we were forced to accept certain restrictive and unreasonable re quirements not imposed upon other similar nonprofit plans in order to pass the act. Now Senate bill 589 was introduced in order to remove those restrictions and I am very happy to report to this great meeting that we were successful in having the Illinois Legislature approve this bill last Friday, June 26, 1 day before adjournment. In fact, the bill was passed in less than 1 month, and achievement of success in itself.

The changes brought about by the enactment of this bill will bring great relief to us in operating Union Health Services, Inc., incorporated last December 1. This corporation is the first and only voluntary health services corporation in Illinois, and was organized by Janitors Union, Local 25, of Chicago. The changes brought about by the passage of this bill are threefold:

1. The bill clarifies the meaning of the term "working capital," by changing it to "original capital." Although this may appear to be of little importance, yet if that term had been improperly construed, it could have restricted our operations. I will not bore you with other details on this point other than to say that we are now satisfied with the statutory language.

2. The most important change wrought by the act was to remove the unfair and restrictive requirement that we could not accept from our members or subscribers in any 1 year sums of more than 4 times the working capital of the|| corporation at the beginning of each fiscal year. Thus, if our capital was $100,000 at the beginning of the year, we could not accept premiums or payments of more than $400.000 during that year. This would restrict expansion, the giving of additional benefits to our members and their families and might well prevent other groups from joining ours in an effort to provide complete and adequate medical and hospital care to their members.

I want to illustrate for your bentfit the unfairness of that requirement. First, it has no counterpart in any other insurance law in the State of Illinois. No other company, whether profit or nonprofit, was so restricted in its operations. The Blue Cross and Blue Shield plans had no such limitations. It was apparent that this so-called four-times requirement, as it has been referred to, was grossly unfair.

I have been told that of the 38 States having nonprofit plans of a similar nature, not one had that requirement imposed upon it. It was advised therefore, by our attorneys and others, that we should attempt to have this secion of the law removed prior to the commencement of business.

At the last minute some opposition developed on the floor of the House against the removal of this restriction. This opposition, it now seems, stemmed from commercial insurance companies writing accident and health insurance in Illinois and elsewhere. However, we were well prepared for them since our legislative sponsors, the director of insurance, and other interested parties had been advised that not even the commercial companies were so restricted and hampered. Thus, we were able to convince the Illinois Legislature of the fairness of our position and our cause prevailed late last Friday night as the House of Representatives passed our bill by a big majority.

3. The third and final change made by Senate bill 589 was to remove a requirement that the aggregate working capital should never be less than $66,000. We objected to this because the term "aggregate working capital" was not defined, because other special reserves were required of us annually, and because this money is needed for salaries of doctors and nurses, for operating expenses and for the purchase of professional equipment and perhaps real estate. We further felt that we were being discriminated against because neither Blue Cross nor Blue Shield had any such requirement imposed on them.

This does not mean that we will not have ample reserves and surplus on hand to meet emergencies, since good business practices dictate such reserves in order to forestall any possibility of insolvency.

We feel confident that we have now removed those obstacles in the law which were detrimental to the operation of voluntary health services corporation. We look forward with cheerful enthusiasm to a great plan of medical, hospital, and nursing care for our members and their kids and we are now in a position to give our members better health at less cost.

The CHAIRMAN. Mr. Myer.

Mr. Dillon S. Myer was born at Hebron, Ohio, and in 1914 graduated from Ohio State University. He has been in several phases of Government employment since the year 1934, including the Agricultural Adjustment Administration, the Agricultural Conservation Adjustment Service, and later as head of the War Relocation Authority whose job it was to relocate the Japanese on the west coast.

After the war, he was executive director of the Coordinating Committee of the Department of the Interior, and then became Commissioner of the Public Housing Administration. In 1947, he became president of the Institute of Inter-American Affairs. In 1950, Mr. Myer resigned and became Commissioner of the Bureau of Indian Affairs in the Department of the Interior, and stayed with that position until March 20 of this year.

After serving with the Government for almost 20 years, Mr. Myer began work with Group Health Association of Washington, D. C., a prepayment medical cooperative organization where he is now employed as executive director.

Mr. Myer, we will be pleased to hear from you.

STATEMENT OF DILLON S. MYER, EXECUTIVE DIRECTOR, GROUP HEALTH ASSOCIATION, WASHINGTON, D. C.

Mr. MYER. Thank you. Mr. Chairman, may I make a brief preliminary statement to my prepared statement by pointing out that Group Health Association is really not an insurance plan as such. It is a service agency, because we provide the medical service directly, and is not set up and organized under the insurance laws. The association is incorporated under the laws of Washington, D. C., as a nonprofit membership corporation. There are at present 7,500 members and 19,600 participants being served by the organization.

The service area is the territory within a radius of 15 airline miles from the White House.

Any person 18 years of age or older is eligible to become a member of the association by the individual admissions procedure or as a member of a group.

The business of the association is managed and controlled by a board of nine trustees elected by and from the members of the association. The chief administrative officers are the medical director, a physician who is a nonvoting member of the board and serves as chief of the professional staff, and the executive director who is the chief lay administrator and nonvoting executive officer of the board of trustrustees.

The Group Health Association provides prepaid comprehensive medical services and hospitalization within the area and dental service for members based on a schedule of charges for services rendered. It

provides hospital coverage outside the area but not medical service unless recommended by the chief medical officer.

The association has its own full-time medical staff and, in addition, has retained the services of a number of part-time physicians, mostly specialists.

It has also a staff of full-time dentists and a number of part-time dentists on its staff.

It maintains its own clinic and clinical facilities, including medical laboratory, equipment for electrocardiograph and basal metabolism tests, X-ray, physical therapy, optical shop, pharmacy, and dental laboratory.

It operates a health room under contract for the convenience of the employees of the International Monetary Fund and the International Bank.

All members and their listed and qualified dependents are eligible for services, subject to any limitations imposed on the membership and providing the member's account is in good standing.

The services provided to all full service members are as follows unless limitations are imposed:

Medical and surgical examinations and treatments, physical therapy treatments, surgical operations, and obstetrical care. (These services are provided at the medical center of the association, in the hospitals in the service area, and in the home.)

Professional consultations are provided when approved by the medical director.

Refractions of eyes, X-ray diagnosis, superficial X-ray treatments laboratory tests and examinations, when provided in the medical

center.

Hospital and ambulance services to full service members.

Hospitalization services are limited to a period not exceeding 90 days in any 1 calendar year or in any one illness, or in any continuous period of hospitalization. These services include (a) bed and board in semiprivate room and general nursing care included in daily room charge; (b) use of operating or delivery room; (c) services of anesthetist; (d) surgical dressings including casts; (e) limited routine medications; (f) routine laboratory tests (urinalyses, blood counts, serology tests).

For hospitalization procured outside the area not more than $11 per day for semiprivate room, and operating room or delivery room and anesthetist's charges not to exceed those within the area are also provided.

Hospitalization and services relating to the termination of pregnancy are not provided unless husband and wife have both been listed for services for a period of 10 months immediately prior to delivery. Elective surgery is not provided during the first 10 months of membership.

In cases of members or dependents enrolling by the individual admissions procedure, the association, upon recommendation of the medical director, imposes limitations for services including hospitalization, for conditions which existed prior to admission to membership. All acute conditions existing at the time the applicant's final acceptance of membership has been received will automatically be restricted without the process of notification.

The following special services are provided but, at present, only upon payment of charges by the members: Medicines, drugs, X-ray films, and materials, surgical appliances, such as orthopedic devices and crutches, eyeglasses, artificial limbs and eyes, and hearing devices; laboratory services not available in the medical center; such services and use of equipment and materials in connection with deep and superficial X-ray treatment, radium treatment, laboratory services, physical therapy; oxygen tanks or tents and materials; blood transfusions and intravenous infusions. Other services which members must finance are the services of a personal nurse, treatment, services supplies, and other items prescribed or ordered by physicians not in a contractual relationship with the association and its members but employed by an individual member, including fees of such physicians; hospitalization in excess of that provided for in the bylaws except that in any case involving the termination of pregnancy by normal delivery or otherwise, the member shall bear the first $125 of the hospitalization expenses. A charge of $3 is made for the first house call in any one illness.

Services not furnished by the association are the following:

1. Treatment or hospitalization of industrial accident cases or other cases if such services are provided under Federal or State employees compensation laws, or under other laws or Government regulations, to the extent of such provisions;

2. Plastic surgery, correction or treatment of deformities and birthmarks, if not malignant, chiropody and psychiatry, but hospitalization for these services, except psychiatry, may be provided subject to the applicable provisions of the bylaws;

3. Any treatment or hospitalization for tuberculosis, drug addiction, or alcoholism after the time that the medical director recommends commitment to, or hospitalization in, an institution.

The Group Health Association is now 16 years old, having been organized in 1937 within a single Government agency. In 1938 membership was opened to all Government employees and later it was opened to anyone in the area. The association has had many problems to face throughout the years. In spite of the problems it has grown both in size and in the kind and amount of services rendered. Three years ago the association purchased the Arlington Building in midtown Washington and finally brought all of the clinical services. under one roof in November of 1952.

The financing of the building was a real problem but with the aid of the special membership assessment the problem has been met even though the mortgage payments are still a bit burdensome.

We find it difficult to present information about the work of the association in such a way as to insure that it will be read and absorbed by all of the members. Consequently two general membership meetings are held annually and numerous small meetings have been arranged in order to interest members in the work of the association and to provide needed information.

We have not yet solved the problem of how to level out the cost of services to our members who are restricted because of preexisting conditions without raising the cost of other members unduly.

We do not render medical or surgery services to members when

away from the area. Some study is now being made of the problem to see whether reasonably adequate protection can be provided for members when away from home.

The cost of prepaid comprehensive medical care and hospitalization services is such that a large segment of the population feel they cannot afford such coverage. An intensive study is now being made of our records to develop some actuarial figures on cost of services to various types of participants. These actuarial figures will be useful in reviewing our dues structure and other charges.

We are also hopeful that a practical method can be worked out in cooperation with groups of employees and their employers for providing services to groups on contract or develop plans whereby pay ments may be based upon a percentage of the payroll so that the total amount will provide comprehensive service to all members of the group and their dependents without imposing a hardship on the lower paid members of the group.

Mr. Chairman, I have presented this statement as a short and rather simple statement of the basic services provided and the limitations of service, with the expectation that if there were any questions about details, they would be raised in question form, and I did not provide any of the detail as regarding costs and other factors that may interest the group. I am available for questioning, if you wish.

The CHAIRMAN. Any questions, gentlemen?

Mr. HARRIS. Mr. Chairman, I would like to ask a question. First I would like to say, Mr. Myer, that we are glad to have you come before the committee.

Mr. MYER. Thank you, sir.

Mr. HARRIS. I have had occasion to have your association in the past. I remember the job you did in various positions in the Federal Government. Now, to have you come before the committee and explain the program and its interest to the public in this area is of interest to me. Where is your clinic?

Mr. MYER. Our clinic is at 1025 Vermont Avenue NW., just between K and L Streets on Vermont Avenue.

Mr. HARRIS. Do you have a medical center there?

Mr. MYER. We do have; yes, sir.

Mr. HARRIS. How many hospital beds do you have?

Mr. MYER. We have no hospital beds other than emergency beds at the clinic. We utilize the local hospitals for the services provided where it does require hospitalization.

Mr. HARRIS. Local hospitals?

Mr. MYER. Local hospitals, yes, sir. We have access to the hospitals within the District, and we do utilize those hospitals and pay them for the services which are providing for hospitalization.

Mr. HARRIS. I knew in connection with our efforts on this committee, of which I am a member, when we had the hospital center program. that we did not have any information as to this group having a hospital here in the District.

Mr. MYER. No; we have none.

Mr. HARRIS. I wondered about your hospital facilities. I noticed that you said in your statement that you charge your members, or your members' cost was $11 per day for hospital.

« PreviousContinue »