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vould probably not exceed one-third, however, and would occur only gradually over a period of 5, 10, or 15 years or more. Future changes n price and income levels in the Nation generally could, of course, esult in further changes in the per capita costs, because of the need o adjust the income of those providing services under the program ind the prices paid for facilities and commodities.

I would like to emphasize that in developing these estimates of per capita cost, we have recognized the importance of adequate inomes for doctors, dentists, nurses, and others who furnish services, and adequate payments to hospitals. The amounts allowed in our estimates would result in average incomes for doctors higher than hey have ever received in peacetime. They also allow for variations from the average; individual doctors, it is assumed, would continue o receive varying incomes, depending on their skill, experience, abilty to attract and hold patients, and perhaps the part of the country in which they lived.

Because all services to insured persons would be paid for, and because the demand for service would increase-particularly among lowincome families-it is probable that no doctors who wanted to practice full time would receive annual incomes as low as many doctors earned before the war. The same applies to dentists and nurses. Similarly, the estimated payments to hospitals are fully adequate in relation to the income customarily available to hospitals in peacetime and in relation to anticipated costs of providing a greatly expanded amount of hospital service.

An indication as to the total dollar costs of the prepayment plan proposed by the bill can be obtained by multiplying the per capita cost by the prospective number of persons who might be eligible for benefits under the provisions of the bill. This number would vary, of course, with the specific coverage and eligibility provisions which may finally be adopted, and it would also be affected by the amount of employment and unemployment. On the basis of my preceding discussion concerning coverage, I use a round figure of 110,000,000 persons to illustrate costs which might eventuate under title II.

This figure is intended to represent an approximation of the number of workers and their dependents who might, on the average, be covered under the compulsory coverage provisions of the bill. It implies a continuing relatively high level of employment and earnings. It does not include those who might come in under the voluntary contractual arrangements with public agencies authorized in section 209, nor does it include persons eligible for benefits as retired or survivor beneficiaries, in accordance with section 202.

The total dollar cost of the system for the compulsory-coverage group, if per capita costs are around $27 and if 110,000,000 persons on the average are eligible, thus would be about $3,000,000,000 annually, in the early years of the system.

Section 212 of the bill authorizes the appropriation to a special account of such sums as may be required to finance the program. It also provides for several types of specific credits to this account. In the first place, the account is to be credited quarterly with amounts equivalent to 3 percent of the earnings of workers in covered employment, as defined in section 217, exclusive of that part of individual earnings in excess of $3,600 per year. In introducing the bill, Senator

Wagner and the chairman of your committee pointed out that no particular method by which the sums authorized to be appropriated wa specified in the bill, since revenue-raising legislation must originate in the House of Representatives. Their reference to another pending bill they have introduced (S. 1050) which provides for the raising of revenue for health service benefits through social insurance contrib tions, together with the President's recommendation for a compulsor social insurance approach to the prepayment of medical costs in message to Congress regarding a national health program on Noveпber 19, suggests that the proposed credit equivalent to 3 percent of earnings should be financed by means of special insurance premiums levied and segregated for health service benefits.

I endorse the use of insurance premiums as a method of financing the cost of the benefits proposed in title II of the bill. The Socia Security Board has recommended on a number of occasions that provision against the costs of medical care should be met through soci insurance as part of a unified and comprehensive social insuranc system. I also endorse the principle of a contribution from genera. revenues to an insurance system of broad or national coverage.

Section 212 of the bill also provides that there should be a specif credit to the account to cover the costs of dental and home-nursi benefits for all recipients. It also provides for a credit with resper: to certain costs incurred for old-age and survivor's beneficiaries under the Social Security Act. Still another source of income to the accou would be the equitable reimbursements paid by public agencies behalf of groups of persons covered under the insurance syste through supplementary agreements with such agencies.

In appraising the cost figures for title II which I have summarize it should be kept in mind that to a very large extent these costs would replace expenditures already being made for the same services witho social insurance. Expenditures for civilian health and medical serv ices, including hospital construction, in the past have totaled abo $4,000,000,000 to $5,000,000,000 in an ordinary year. One-fifth of t total has consisted of public outlays and most of the remaining four fifths, or about $22 to $26 per capita of the entire population, h represented private expenditures. Families ordinarily spend abo 4 percent of their incomes, on the average, in private payments for medical, hospital, and dental care, medicines, and related items. Lowincome families average more than 4 percent and higher income fa ilies less. Thus, the system of health benefits proposed in the h would not represent, in the main, a new cost burden for the populatio as a whole, but a new method of paying medical costs.

ADMINISTERING A HEALTH INSURANCE PROGRAM

Our tentative cost estimates include the costs of administering t system. There has been considerable loose talk to the effect that me ical care insurance would be weighted down by tremendously h administrative costs and by a bureaucratic machinery out of all reas able proportion to the services provided.

The Social Security Board has now had more than 10 years' exper ence in administering a social insurance program which was alquestioned at the beginning on the grounds of administrative exper Today, we are operating the old-age and survivor's insurance syste

at an administrative cost of about 2 percent of contributions collected or about 10 percent of benefit payments. As the benefit rolls increase, the cost of administration will decline to less than 5 percent of benefit payments. The costs of administering a service benefit program are somewhat higher than for a cash benefit program. However, foreign experience and the experience of voluntary prepayment plans in this country suggest that the administrative cost need not be more than 5 to 72 percent of total expenditures. In fact, since part of the costs for collecting contributions and keeping wage records—are already being met under existing social insurance, the additional costs may well be less than 5 percent.

We have given considerable thought to the procedures which the Board might follow in carrying out the administrative responsibilities which it would be assigned under S. 1606. Title II places on the Board the responsibility for determining eligibility for the personal health service benefits. The basic records of earnings needed for this purpose are already available for employments now covered by old-age and survivors' insurance and would be available for all employments if our recommendations with regard to the extension of coverage of old-age and survivors' insurance are adopted.

The use of an insurance system for payment of medical bills does not involve burdensome or restrictive arrangements for those in need of service or for those furnishing services. Nor would the insurance system interpose a "third party" or "red tape" between the patient and his doctor or hospital. Nor would there be any reason why the insurance system should interfere with the doctor in his professional relations with patients, or with the hospital in the management of its own affairs. On the contrary, an insurance system would relieve doctors and hospital administrators of their onerous duties as bill collectors, in which role they are obliged to assess ability to pay, thus acting in a sense as property appraisers and income tax experts.

I have already indicated my support of the principles followed in title II, of freedom of choice of doctor and patient, and the guaranty to all licensed physicians, dentists and nurses of the right to participate in insurance practice. I would add that it seems to me the bill is sound in requiring the Surgeon General to utilize the services of voluntary agencies. Those which can furnish services as benefits should have the same right to participate as individual practitioners. Those which can be helpful in administration-by representing doctors, dentists, hospitals, nurses, et cetera-should be used if they contribute to economy and efficiency.

A national health insurance system with national benefit provisions can still be highly decentralized in actual operation. People will ordinarily receive care in the communities where they live; doctors will ordinarily find it most convenient to submit their bills to a local health insurance office. Provision should be made-and under the bill, can be made-for the maximum possible adaptation to local practices and methods of obtaining service, within the over-all standards of the national program.

I heartily endorse the provisions of S. 1606 with respect to the use of advisory councils at every level of administration. The National Advisory Medical Policy Council would include representatives of the medical professions and of the public. It is sound to call upon the .

medical profession for advice on policy matters relating to the administration of the program. Representatives of the persons receiving services and representatives of the public also have an essential role in the administration of a public program. The duties and responsi bilities of the National Advisory Council and of the State and local councils, as set forth in the bill, seem to me soundly conceived. The final responsibility for national administrative decisions is left with the Administrator, but there are adequate safeguards to assure that he will consult with the Council on all important problems, and that the advice given by the Council and the opinions and recommendations of the Council will be periodically made known to the Congress The CHAIRMAN. Do some members of the committee desire to ask particular questions?

Senator DONNELL. Mr. Chairman, may I enquire: personally, I have not yet studied this bill, and I am wondering if Mr. Altmeyer would, if the committee requests his attendance, be willing to give us the benefit of his advice at some future time.

Mr. ALTMEYER. Delighted.

The CHAIRMAN. Yes, he certainly will; and I assume that when the hearings are concluded the testimony will be briefed, and then ir executive sessions we could have Mr. Altmeyer sit in with us to answer particular questions that Senators might desire to understand. Senator DONNELL. Very fine.

Mr. ALTMEYER. Thank you very much.

The CHAIRMAN. Thank you very much for your statement. The hearing will now go over until tomorrow morning, at which time Robert Kenny, president of the National Lawyers' Guild, attor ney general of the State of California, will testify; and also William Logan Martin, of the American Bar Association.

Senator DONNELL. Ten o'clock tomorrow morning?
The CHAIRMAN. Ten o'clock tomorrow morning.

(Whereupon, at 11:45 a. m., April 4, 1946, the committee adjourned, to reconvene at 10 a. m., Friday, April 5, 1946.)

NATIONAL HEALTH PROGRAM

FRIDAY, APRIL 5, 1946

UNITED STATES SENATE,

COMMITTEE ON EDUCATION AND LABOR,

Washington, D. C. The committee met at 10 a. m., pursuant to adjournment, the Honorable James E. Murray (chairman) presiding.

Present: Senators Murray, Ellender, Aiken, and Donnell.
The CHAIRMAN. The hearing will come to order.

The first witness this morning is Mr. William Logan Martin, of the American Bar Association. Do you have a prepared statement? Mr. MARTIN. No; I have not, Mr. Chairman.

The CHAIRMAN. You are prepared to discuss the general principles involved?

STATEMENTS OF WILLIAM LOGAN MARTIN, REPRESENTING THE AMERICAN BAR ASSOCIATION; AND WALTER M. BASTIAN, TREASURER OF THE AMERICAN BAR ASSOCIATION

AMERICAN BAR ASSOCIATION REPORT ON S. 1161

Mr. MARTIN. I am in this situation: The invitation was received by the American Bar Association from your committee, but the association has not taken a position with respect to the pending bill. Therefore, I am not authorized to speak for it. But it has taken a position with respect to the predecessor bill, that is, S. 1161, which is quite like this one, and I should like to leave with the committee a copy of the report of the association on S. 1161.

The CHAIRMAN. Very well. Of course, many changes have taken place in the bill.

Senator AIKEN. Are you appearing for the association?

Mr. MARTIN. Yes, sir.

The CHAIRMAN. But you are taking no position on the present bill? Mr. MARTIN. I am not authorized to do so, sir.

The CHAIRMAN. This is the report of the special committee to study and report as to parts of Wagner-Murray bill (S. 1161) relating to Federal control and regulation of medical practice and hospitalization.

Senator AIKEN. This report is on the legal effect of various parts of it. Is the report on the objective of the bill as a whole?

Mr. MARTIN. Yes, sir.

The CHAIRMAN. This report from the American Bar Association will be filed with the committee.

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