ADVANTAGES OF A NATIONAL SYSTEM

To achieve the goals, a national health insurance system has many advantages over 51 State and Territorial systems; such as may result (from State-by-State action. A national system would encourage better distribution of professional personnel among the States as well as within States, and the construction of needed facilities. It would avoid the problems that result from the grossly unequal economic resources of the States for the support of health services, so that at least a minimum standard of adequacy can be achieved within a reasonable period of time in all States and in all communities. It would assume maintenance of continuity of insurance protection and ready access to services despite the mobility of population across State lines. It would achieve the administrative economy that results from avoiding the need to maintain and identify separate State-byState records for such persons. It would be freely able to use natural medical and hospital service areas, regardless of State lines. It would escape the competitive disadvantages for States that establish social insurance systems as against States that do not.

Every State that has considered the establishment of a social insurance system has shown itself reluctant to act by itself.

Senator DONNELL. Mr. Altmeyer, has any State in the United States as yet imposed a compulsory health insurance program upon the people of its own jurisdiction?

Mr. ALTMEYER. No, sir; that is what I am pointing out. There is genuine reluctance there for competitive reasons. There are now two States with temporary disability plans; that is, pay for part of the wage loss.

Senator DONNELL. Which are those two States?

Mr. ALTMEYER. Rhode Island has had one in effect for several years; and California, at its recent special session of the legislature. enacted such a law.

The Congress faced this problem in 1935 when it was first considering the original Social Security Act; and it concluded at that time that Federal action was needed to set up a national system of social insurance and to make State action possible for the establishment of State systems.

The logical, the efficient, and the economical way to have a national system of compulsory health insurance is to establish a truly national system.

May I now turn to a more specific discussion of those parts of the bill under which the Social Security Board would have some administrative responsibility.

TITLE I OF S. 1606

Title I deals with three groups of programs involving Federal grants-in-aid to the States for health services. Part A deals with public health services; part B with maternal and child-health services; and part C with the medical care of needy persons.

I strongly endorse the provision of variable grants-in-aid in all three parts of this title. I believe it is sound and necessary that the Federal grants should be proportionately larger to the poorer States. Also, since I believe that the variable proportions of such grants should be determined by a formula specified in the law, and that the

matching proportion required for each State should be the same for all of these related programs, I believe the variable grant provisions of the bill follow a sound pattern. If this uniformity were not retained, financial competitive situations would result in the States as between one program and another, and this would have unsound and undesirable effects.

The Public Health Service has already testified with respect to parts A and B of title I. I should like to comment on part C.

Sickness causes suffering and economic loss among all people, but it affects certain groups of people more than others. Among lowincome families and people on the assistance rolls, illness comes oftener and lasts longer, on the average, than among others. Medical care is especially important to these persons not only to prevent or cure sickness but also to reduce dependency.

The three groups of needy persons covered by assistance programs under the Social Security Act are likely to have especially heavy medical needs since they are old or blind or are children in dependent families. Larger-than-average medical needs likewise exist among the group served by general assistance, which is financed wholly by the State or locality or both, without Federal financial participation. In many communities, in fact, only handicapped persons are eligible for general assistance. The bill wisely provides for including medical care for all these groups.

The provisions of the assistance titles of the present Social Security Act make it difficult to provide needed medical services effectively at the present time.

The Federal Government does not share at all in medical expenses or other aid to recipients of general assistance. It may share in medical expenses of the needy aged, blind, and dependent children only when these costs are included in determining the mount of the monthly cash payment to the needy person or family. The Federal matching is also conditioned on the requirement that these assistance payments, to the recipient or his legal guardian, are without restriction or control by the agency as to the way in which the money is used.

Medical bills are usually in the form of fees for services and are large for the individuals who have long, serious, or frequent illnesses. States cannot receive full Federal reimbursement of large payments because of the ceilings on Federal matching.

Thus the present Social Security Act not only limits the matching of funds for medical expenses but also does not permit a flexible method of paying for medical care.

The bill provides for several ways of financing the costs of medical care for needy persons. The State public assistance agency may provide for medical care of needy persons through (a) money payments; (b) payments to persons or institutions furnishing care; (c) direct provision of care; (d) agreements with State or local agencies, such as health departments to provide services; (e) contracts with the Surgeon General of the Public Health Service to cover the needy under the insurance system through equitable premium payments on their behalf; or a combination of these methods. This flexibility is probably desirable since until the insurance system is fully in operation, it is likely that many public assistance agencies would want to continue the various methods of payment now in effect.

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TITLE II OF S. 1606

The general pattern of the system of medical care insurance which would be established by title II seems to me thoroughly sound and workable. By building upon our existing national social insurance system, the bill assures both important economies in operation and desirable link with the other parts of a comprehensive social security program.

COVERAGE

Title II proposes to cover most workers and their dependents rectly. It would also make eligible for personal health service benefits individuals who are entitled to monthly old-age or survivor's insurance benefits under the Social Security Act. And it provides th:: other groups may be covered if public agencies voluntarily ente into agreements with the social insurance administration to pay pr miums on their behalf.

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Three large groups of workers, and their dependents, are exclud from the direct compulsory coverage of S. 1606. These are employer of railroads, Federal Government and State and local governmentThese workers and their families are as much in need as other workers of the protection against the costs of medical care which S. 1606 woul provide. The Social Security Board recommends that the first two these groups brought under the coverage of title II through delet of the exclusions in paragraphs (3) and (6) of section 217 (b). I view of the questions which might be raised as to the compulsory cor erage of States and local government employees under a national co tributory social insurance system, we would recommend that cover of this group be extended through voluntary agreements.

Your committee may be interested in rough estimates we have my of the number of workers and their dependents who could be expec to qualify for personal health service benefits under title II. Und this title, between 75 and 80 percent of the population, depending employment and earnings levels, would probably qualify for benefitWith our present population, this would mean some 105,000,000 ↑ 112,000,000 persons.

In addition, some 1 or 1.5 million beneficiaries under the Feder old-age and survivor's insurance system not already entitled to hea benefits as workers or as dependents of workers, would be eligible f benefits in the first year of the program, and and increasingly larg number later as the number of beneficiaries grows.

If the Board's recommendations for inclusion of railroad and Fe eral Government workers were accepted, and if all State and lo. employees were covered through voluntary agreements-some 12,0 000 or 13,000,000 persons today-an additional 8 or 9 percent of: population would probably qualify as workers or dependents.

It is, of course, uncertain how many additional persons would come beneficiaries through supplementary agreements, authorized. the bill, to be made between the insurance system and public agenc that pay equitable premiums for special noncovered groups. In t course of time, the supplementary coverage could bring the total erage to 90 or 95 percent of the total population. Thus nearly tots coverage of the population could be achieved under this bill, wh preserving the essential contributory insurance nature of the syste

SCOPE OF THE BENEFITS PROVIDED

The goal of health insurance should be to assure ready access to all essential preventive and curative medical services to insured persons and their families. The scope of the services available as health service benefits should, therefore, be comprehensive and complete, including not only general practitioner services, but also specialist and consultant services, necessary laboratory services, dental care, expensive medicines and appliances, hospitalization, and home nursing.

Title II provides for all of these types of services, but places limitations on the amounts of hospitalization, dental, and home-nursing care and laboratory services that may be furnished as benefits, especially at the outset. Our studies have convinced us that such limitations are probably unavoidable at the start of the program. Health insurance has no magic way of creating facilities and personnel overnight, though it can result in a more effective use of available doctors, dentists, nurses, hospitals, and laboratories. Existing method of paying for services have limited the effective demand for medical care. As a result, we do not now have the personnel or the facilities to provide adequately all the care that is needed and that may be demanded once the financial barriers were removed.

The deficiencies are greater with respect to some types of service than others. They are much greater in some parts of the Nation than in others. A national social insurance system which assures adequate payments for services in all areas, and particularly in the smaller communities and rural areas, can be expected within a relatively short time to result in increased and improved services where these have been lacking or insufficient.

On a national basis, we have today enough or nearly enough doctors. to provide essential services; the number of dentists in practice today is certainly less than half the number needed to provide essential dental services. In spite of large wartime increases in nursing personnel, it would appear that the number of nurses likely to remain in active practice is also fewer than we shall need. I am convinced, therefore, that the provisions of title II which call for a gradual introduction of the dental and home-nursing benefits are wise and necessary. We should plan, however, to move toward a comprehensive program as rapidly as possible.

Your Committee has already recognized the need for additional hospital and clinic facilities by passage of S. 191.

Additional hospitals and public health centers, particularly in rural and low-income areas, are needed to assure throughout the country hospital benefits proposed by title II, and to encourage the location of doctors in such areas. If expanded hospital facilities are to be utilized, once they are built, they must be staffed, and people in the communities must be financially able to pay for the services. A national medical-care insurance program provides the guarantee that needed hospital facilities will be maintained and used.

The limitation, proposed in title II, on the number of days of hospitalization available as benefit, and the exclusion of tuberculosis and mental-disease institutions, are probably necessary at the outset. The provision in the bill for further study of that subject is sound. The bill is also sound, I believe, in providing for a service-benefit which would guarantee to the insured person all essential hospital

services. Nevertheless, it probably it well to leave open the alternative, as is done in the bill, of cash payments to the patients wher a service benefit arrangement is not feasible or not acceptable to: particular hospital.

The benefits do not include ordinary and inexpensive medicine This is wise, since large amounts of money are involved; it is doubt ful whether people need insurance protection for these commodities and experience should first be accumulated with the more limited pro vision of unusually expensive items only.

COSTS AND FINANCING

The precise costs of the several types of health benefits propose by S. 1606 would vary somewhat, of course, depending upon th coverage, specific characteristics of benefits, and upon a number of other specifications finally laid down in the act. The tentative figur I present here are, as much as possible, in terms of the coverage ar benefit structure suggested by the bill. At various points we hav had to make assumptions regarding details that depend on pros pective administrative agreements and decisions. The cost estimates summarized here are based on a wide variety of data regarding nur bers of physicians and other professional personnel who would fur nish services under the program, their customary average incomes average number of days of hospitalization, average rates of pa ment per day of hospitalization, and on assumptions as to how mu could be done in providing dental, home-nursing, and laboratory benefits.

Our studies indicate that if the plan proposed by title II had bee in an early year of operation in 1941-that is, the last prewar yearall of the benefits proposed in S. 1606 would have cost about $19 pe: capita, inclusive of administrative expenses. This figure assures tha hospital benefits under the bill would be provided in part as servi benefits, covering the cost of essential services, and in part as ca benefits of specified (minimum) amounts. If only service benefi"are provided, the per capita costs would be slightly higher, and ̈* only cash hospitalization benefits are provided, the costs would tslightly lower than this average figure.

The 1941 figure needs needs to be adjusted upward to effect a propriate recognition of the general rise in price and income leve which has taken place between 1941 and the present; such adjust ment results in a figure of about $27 per capita. Approximate one-half of this would represent the cost of physician's services around one-fourth the cost of hospital services; about one-tenth th cost of dental care; somewhat more than another tenth the cost laboratory and related benefits; and about 2 percent the cost of hom nursing services. Grants for research and professional educatiewould involve less than 1 percent of the total.

The over-all per capita cost figure cited might be reached wit!. 2 or 3 years after the system is established, costs in the very first second year falling somewhat short of this figure because of la. in the system's becoming fully operative. Later, as the number hospitals and professional persons-particularly dentists and nursesavailable to provide services rises to a more nearly adquate lev further growth in per capita costs is to be anticipated; such grow