improving, as necessary, water supplies and sewage-disposal facilities and utilizing effective measures for the control of insects, rats, and other disease vectors;

2. Construction of hospital and health centers in order to achieve an equitable distribution of hospitals and health facilities, to encourage physicians to establish practice in areas wehere their services are needed, and to aid doctors to practice medicine of high quality;

3. Expansion of public health services so that health departments may be established in every part of the country and public health services made available to everyone, no matter where he may live;

4. Encouragement of more public and private research to discover means of = preventing and curing diseases and remedying conditions which sap the national vitality, and to make these findings available quickly to the whole population;

5. Provision of an educational program so that medical personnel may be trained well and in sufficient numbers to meet the needs, and to permit the continual retraining of doctors, nurses, dentists, and other health workers so that they may keep abreast of the latest developments in medical sciences;

6. Institution of a medical-care program to provide medical and hospital service to everyone who needs it, regardless of his ability to pay, and to insure all of the benefits of medical science to the whole population.

The Social Security Board has recommended for several years in its annual reports a compulsory medical-care insurance system.

"Neither the course of present developments in this country nor experience in other countries which have tried voluntary health insurance gives any indication that comprehensive and adequate arrangements to insure medical costs can be made in any way except through a compulsory insurance system. In this aspect of health security the United States faces a situation not unlike that in old-age security a decade ago. At that time, many employers had established sound retirement systems for their workers; some persons had banded together to provide for themselves as a group or had made adequate individual provisions through annuities or other forms of commercial insurance. It was clear then, however, as it is clear now for medical care insurance, that those voluntary arrangements could not be expected to extend to even a majority of the population in need of insurance or to the groups whose needs were greatest.

"Medical care insurance would enable self-supporting families to pay for and get needed medical services without any important alteration because of the insurance system in present forms or organization of medical practice. Moreover, families dependent on public funds could be covered through payment of contributions on their behalf by the agencies administering assistance. They thus would receive care in the same way in which others receive it; the stigma and, typically, the inadequacy of 'poor-law medicine' could be wiped out." (Ninth Annual Report, p. 30.)

TITLE I OF 8. 1606

The proposals of part A of this title, generally, appear most desirable. Certainly, availability of the basic public health services to every community is a prime requisite in a national health program. The Federal Government should assist the States in reaching this goal through provision of more liberal grants-in-aid than are now available.

Federal grants-in-aid to States now amount to not more than 10 percent of the total sum expended for public health work. S. 1606 would remove the present ceiling of $20,000,000 on Federal grants for public health services, and would obligate the Federal Government to supplement State funds (through a specified grant-in-aid formula) as necessary to provide these services. The occurrence of disease and illness anywhere in the country affects the whole country. Yet, as the President has pointed out, approximately 40,000,000 citizens live in communities which lack full-time public health services, largely because community financial resources are inadequate to provide them. The principle that the resources of the whole Nation should be available toward equalizing the opportunities of all its citizens to obtain public health service was clearly recognized as a national policy with the passage of the Social Security Act in 1935. The wisdom of this policy has been repeatedly demonstrated since that time. The significance of S. 1606 in this regard is that provision is made for effectuating this policy in fact for the country as a whole.

While I approve the proposal to remove the present statutory limitation upon the total amount of Federal funds which should be made available to the States for public health work, and to entitle each State to a predetermined percentage of its. expenditures in this field, this approach requires that the definition of "publ health work" be scrutinized with care, since the definition would determine which of the expenditures by a State would give it a call upon the Federal Treasury We have not had opportunity to complete our study of the implications of the definition in the bill, but the two following comments may presently be made:

1. The definition overlaps, in certain respects, services for which funds could be granted under part B and part C of title I, and services which would be provided under title II of the bill. Authority is provided in the bill for the Federal agencies concerned to enter into agreements for the coordination of the several parts of the program, and it may be that duplication could thus be avoided; but I believe the bill should be closely examined from this point of view. I assume that parts A and B of title I are intended to deal primarily with the community aspects of health services, and to leave individual care to be provided mainly under title II. In this connection I wish to invite your attention to the Pres dent's statement:

"Of course, Federal aid for community health services-for general public health and for mothers and children-should complement and not duplicate prepaid medical services for individuals, proposed by the fourth recommendation of this message."

2. I recommend that that part of the definition of "public health work which excludes the maintenance and operation of hospitals be so modified as to permit funds under this part to be made available for hospitalization of the chronically ill. Title II provides hospitalization for only a limited period, the maximum duration of benefit being 60 to 120 days a year, and care in mental and tuberculosis institutions is specifically excluded. This leaves the problem of chronic illness largely untouched. Provisions for more adequate care of the chronically ill are needed by all States-desperately by some. Many institu tions for all or special categories of chronic illness give little more than custodial care. The problem of caring for the chronically ill, moreover, is increasing a the average age of the population advances. Federal assistance in meeting these problems is urgently needed.

Since demonstration and training of personnel are closely related to the development of the whole public health program, it may be wise to remove the $5,000,000 ceiling upon expenditures for such activities after the first year and to earmark for demonstrations and training of personnel a specified proportionperhaps 3 percent of the total annual Federal and State public health expenditure.

Finally, the bill should be designed specifically to encourage the local partici pation which is essential to public health programs. It should be a requiremer: that State plans encourage local administration and financial participation under State standards. However, in order that required local financial participation shall not impede the development of adequate services, especially in communities with insufficient financial resources, the bill should require that the States shal provide for such distribution of funds within the States as to ensure meeting in full the needs of all localities, in accordance with standards established by the States. Such a reuirement, as a condition for approval of State plans under section 101 (with respect to section 314 (f) (2) of the Public Health Service Act would be in accord with the principles that underlie Federal grants adjusted to the economic resources of the States. 9

If specific legislative provision is to be made for maternal and child care and for services to crippled children, the provisions of part B of title I seer appropriate for dealing with this phase of public health services. I assume tha they will be discussed fully, and their appropriate relationship to title V of the Social Security Act will be indicated, by the Department of Labor. I have already called attention to the duplication between parts A and B, and to the desirability of a better dovetailing of these provisions.

The proposals of part C of this title, making Federal financial aid available to States to provide medical care for needy persons, are generally sound and desirable. The provision that State and local agencies may arrange to have care furnished to needy persons through the health insurance system established

by title II is of particular importance, because of the encouragement this gives to the provision of high quality care for needy persons and to the effective coordination of the several parts of a national health program. Of course, if provision were made for universal coverage under title II there would be no need for the special provisions of part C of title I.

I shall wish to make some further recommendations later with respect to part C, especially concerning the treatment of inmates of public institutions.

All three parts of title I contain provisions for grants varying between 50 percent and 75 percent of State expenditures, depending on the per capita income of the States. I am strongly in favor of a variable matching provision. The formula contained in the bill is one of several formulas which achieve the general result of varying Federal grants in accordance with the economic and fiscal capacities of the States. I believe it is a sound formula. Whether or not this precise formula is used, however, I think it important that the formula for the three parts of title I be identical, in order to avoid financial incentive to the States to include particular services or groups of persons under one part of the program as against another.

TITLE II OF S. 1606

This title would establish a system of prepaid personal health service benefits, including medical, dental, hospital, nursing, and laboratory services. The provisions are generally workable and in accord with the President's recommendations. Under the provisions of this title, a large part of the population-probably something like 80 to 85 percent-would be eligible for prepaid personal health services on the basis of automatic coverage as workers or dependents, or as beneficiaries of other parts of the social insurance system. The bill also provides for supplementary coverage of groups not covered automatically, through voluntary arrangements made by public agencies on their behalf. The bill thus goes a long way toward meeting the objective stated by President Truman of "the broadest possible coverage for the insurance system." It falls short of the President's recommendations with respect to three large occupational groups. The President said: "I believe that all persons who work for a living and their dependents should be covered under such an insurance plan." S. 1606 fails to cover automatically railroad workers, Federal workers, State and local government workers, and their dependents. I recommend that title II be amended to include the first two groups, through deletion of the exclusions in section 217. Questions have been raised as to the compulsory coverage of State and local employees under the present old-age and survivors insurance system, because of doubt as to whether the Federal Government can, under our Constitution, require the States to pay premiums as employers. That question does not necessarily arise under S. 1606, since the bill contains no provisions as to the method of financing. Nevertheless, I would recommend that coverage of this group be extended through voluntary agreements unless, of course, there were universal coverage.

The proportion of the total population who would be eligible for prepaid personal health services might be further increased through a broadening of the definition of dependents of insured workers to include all persons actually dependent on the worker for support. Dependent nondisabled children over 18 and dependent sisters, brothers, aunts, and relatives-in-law would be among the groups not now covered under S. 1606, who could be brought within such coverage.

I believe, however, that the goal of a national health program should be to assure medical, hospital, and related services to every person who needs them, without regard to his employment, source of income, or ability to pay; and that no individual should be excluded from ready excess to needed health and medical care. Complete coverage, moreover, though not the only possible method, would be the simplest and most effective way of assuring that medical service would not be stratified so that certain segments of the population, such as the needy, would receive a lower standard of care. It would also make for simplicity, efficiency, and economy of administration, and would eliminate the procedures necessary to establish eligibility. The greater simplicity would conduce to more ready and fuller utilization of the services by the people, as well as to lesser costs of administration. Finally, if general revenue financing is to carry any considerable part of the cost of the health service benefits, the equity of excluding any groups from

the benefits may be questionable. In view of the above considerations, I would recommend that the Congress also give consideration to making the provisions of title II applicable to the entire population. If this be done, the provisions of title I, part C, would become unnecessary.

Regardless of the extent of the coverage which Congress might provide, there would be no inconsistency with existing provisions of law for medical and hospita service to particular groups, such as members of the armed forces, veterans, mer chant seamen, and the beneficiaries of Federal and State workmen's compensa tion laws. Special facilities and services designed to meet the special needs of particular groups would, of course, continue to be required; but all of these groups would become entitled to many services which either they or their dependents do not presently enjoy. It may safely be assumed that they would get their money's worth, or more, for any contributions they might be required to make to a health insurance system.

The basic "methods and policies of administration" set forth in the bill are in accord with the President's recomendation. As the President said, people must remain free to choose their own physicians and hospitals, and doctors must remait free to accept or reject patients and to participate in the system full time, part time, or not at all.

It is generally agreed that the administration of such a program as is contemplated by title II should be decentralized to the maximum extent that is practicable, and that the State and local governments should assume their full share of administrative responsibility. Likewise, the values of regional organization of services should be assured so that patients everywhere can readily cross State and local political boundaries when necessary to obtain professional services in other localities.

The provisions of S. 1606 which require that the Surgeon General give priority and preference to utilizing the facilities and services of State and local governments are in keeping with Federal policy generally. At the same time, it is essential that the availability of benefits and adequacy of services be assured for the entire country by Federal authority. S. 1606 very properly places on the Federal Government the responsibility to see that the services are available, an authorizes it to specify minimum standards to insure satisfactory quality of services, whether provided through State or local agencies or directly by th Federal Government.

State and local participation in the administration of the program is in the already established pattern of public health. If this pattern continued under title II of S. 1606, it would have the great merit of bringing preventive and

curative services under effective coordination.

It must be recognized that the utilization of State and local agencies in the administration of this title will call for some measure of Federal control over the expenditures within a State or a political subdivision, in order to avoid the possibility of excessive costs either for administration or for the actual provision of services. For this reason I suggest that the bill be amended to establish or to authorize the Surgeon General to establish appropriate limitations upon the amounts which would be made available to agencies cooperating in the admin'tration of the program.

By providing that the Surgeon General of the Public Health Service sh administer the program, the bill gives assurance that there will be coordination between the preventive, curative, and public health aspects of health legislation Section 204 would establish an advisory council to advise the Surgeon Genera on "questions of general policy and administration." In my judgment the b is wise in providing that the council's functions in the program shall be purely advisory.

In his message, the President stated that research in medicine and allied fields is an essential part of a general research program to be administered by a centra Federal research agency, and that it is also an essential part of a national healt program. He called attention to the need for coordination of the two research programs, and pointed out that legislation dealing with medical research should provide for such coordination. Section 213 of the bill, which provides specifi sums for the first 2 years and thereafter a proportion of the amount expended for personal health service benefits for grants-in-aid for medical education and research, is in accord with the President's recommendation.

S. 1606 contains no provisions for the raising of revenue.

It seems to me wise

to consider the benefits to be provided by such a bill separately from the nature of the premiums or taxes which, once the benefits have been decided upon, may be found necessary to finance them. For this reason I shall confine my remarks to one general observation.

As the President pointed out, the people of the United States have been spending, on the average, nearly as much for medical, hospital, and related services as the estimated cost of the health benefits to be furnished under the bill. I believe it is sound policy that individual contributions, in the form of earmarked taxes, should provide a substantial part of the revenues necessary to finance the program.

We are continuing our study of the bill, and hope to have available for your committee in the near future more detailed comment and suggestions with respect to particular provisions of this legislation.

We are advised by the Director of the Bureau of the Budget that, while there is no objection to the presentation of this report to your committee, this advice should not be construed as involving any commitment as to the relation to the program of the President of our alternative proposal to afford universal entitlement under the medical care insurance plan.

Sincerely yours,

WATSON B. MILLER,
Administrator.

IS THE BILL SOCIALISTIC?

The CHAIRMAN. Mr. Miller, it is charged by some that this insurance program proposed in this legislation is socialistic. Have you anything to say about that?

Mr. MILLER. I wish that I understood more about what the term means. I realize that the words "socialized medicine" have been used so much, and sometimes carelessly. I think, that they have almost become a dictionary term. I think that we are a social nation, and as far as this proposal being a socialistic one, it cannot be more than democracy in its highest essence because this program cannot be inaugurated, and if it were inaugurated it cannot flourish without the consent and support of the American people. If democracy means socialism, I accept the soft impeachment.

The CHAIRMAN. Well, do you think that it is a proper function of the Government to undertake a program which will be of such benefit to a large section of the country that at present is unable to secure the medical care and attention necessary for the preservation of their health?

Mr. MILLER. Mr. Chairman, Lincoln had a lot of quaint methods of expressing truisms. Once he said that his conception of government was to do for the people only the things that they were unable to do for themselves. I have great pride in the advance of American medicine. I think perhaps you and the other Senators here present, some of you at any rate, will recall that for perhaps two decades before coming to the Government I at least stood on the threshhold of medicine, although I had brains enough not to try to invade the profession or try to practice it or prescribe for people.

However, I learned something, as much as a layman should be trusted with, about medicine, and I have great pride in American medicine and American medical people and in the advances in research and in the understanding of ideological factors and diagnostic pro