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care of the problems before you would impose the tax in that area, is that right?

Mr. LAGUARDIA. I would establish a national system, and I would put it into operation and make the charge wherever there is personnel and facilities to give the service, because it would be manifestly unfair, the charge being uniform, not to provide uniform first-class services for the same cost.

Senator DONNELL. That would necessitate a very different bill from what we have before us here, in order to put into effect your suggestion, would it not?

Mr. LAGUARDIA. Not at all.

Senator DONNELL. There is nothing in title II that undertakes to say that this Nation-wide prepaid personal health service benefit shall only go into effect piecemeal here and there throughout the United States, is there?

Mr. LAGUARDIA. I would put it in.

Senator DONNELL. What would you provide there in substance? Mr. LAGUARDIA. I would provide that the Surgeon General may establish health insurance zones, and as such zones are established, people resident therein shall be entitled to the benefits herein provided, and the Surgeon General shall provide as rapidly as possible proper medical facilities and hospitals, as well as personnel, in all areas, and when such areas have been certified by the Surgeon General, they shall become eligible under the plan.

Senator DONNELL. You would not assess a pay-roll tax then in area No. 7, for illustration, until the benefits of the bill shall have been put into effect with respect to area No. 1?

Mr. LAGUARDIA. That is right.

Senator DONNELL. Now, Mr. LaGuardia, that is a very interesting suggestion, and I am sure our committee is glad to have it, but to my mind it would necessitate a tremendous change in this title II of this bill, because this ia a Nation-wide proposition encompassing and envisaging, as I understand it, an assessment of some kind of a tax, Nation-wide, rather than starting a tax in Missouri and Oklahoma and Kansas 1 week and waiting 6 months before you put the Federal tax into effect in three other States.

Mr. LAGUARDIA. You would not put on the Federal tax unless they were getting the service.

Senator DONNELL. Well, Mr. LaGuardia, do you think it would stand the test of the uniformity of taxation throughout the Nation to impose a Federal tax in two or three States and then wait 6 months before you imposed a Federal tax in two or three other States?

Mr. LAGUARDIA. Certainly, people in my city drink French champagne, and they pay the tax on that; and the people in Iowa do not drink the champagne, and they do not pay any of that tax.

Senator DONNELL. But the tax is uniform throughout the Nation, and the only question that arises in the collection of taxes is whether the champagne has been used. But, as I understand your suggestionand if I am wrong I would like to be corrected-it is that the Surgeon General shall be authorized to establish areas-just to illustrate, suppose he established 15 areas consisting, roughly, of 3 States each. Now, as I understand it, you would say that area No. 1 should not receive the benefits of the bill until it shall have qualified.

Mr. LAGUARDIA. Until he qualifies it.

Senator DONNELL. And that the tax imposed by the Federal Government for the operation of this system should not go into effect in those three States until the Surgeon General shall have qualified that particular area; is that right?

Mr. LAGARDIA. That is right.

Senator DONNELL. I think that that involves an exceedingly interesting legal question, namely, whether the Federal Government can impose a tax, a Federal tax, applicable only to an area, we will say, of three States of the Union; if that can be done, that is something that I have never heard of being done before.

Mr. LAGUARDIA. They get corresponding service and benefits.

Senator DONNELL. Do you know of any instance in the history of of the Union where the Federal Government has imposed a tax, a Nation tax, applicable only within three States or any particul: portion of the area of the United States? Do you know of any su illustration?

Mr. LAGUARDIA. No; because we have had no similar case before. Where the tax does not go into the general fund, it is earmarked; :: goes into a separate tax for certain benefits; and where you cann provide the benefits, I do not want to give this law a black eye by colecting the premiums and not giving the benefits.

Senator DONNELL. Mr. Chairman, may I ask one more questio Has the legality of your suggestion of this area tax to be impos by the Federal Government been examined by you Mr. LaGuard:s Mr. LAGUARDIA. No; but they have not gone out of business across the square.

Senator DONNELL. I understand they would have it presented them in due time, but they could not give advice or opinions in a vance. Has the legality of your suggestion that the Governme:" put into effect taxes applicable only within given specific areas bee looked into, do you know?

Mr. LAGUARDIA. No; but you distort the problem, Senator.

Senator DONNELL. Not intentionally; I though that I had state. your suggestion.

Mr. LAGUARDIA. It is not taxing one section and not taxing anot!-It is providing benefits and taxing where the benefits are provided, a qualifying as quickly as you quality them to provide the benefits.

Senator DONNELL. That is what I understood your suggestion toPardon me just a second. I understood your suggestion to be j as you have stated it, namely, to illustrate, that the Government, Surgeon General, should divide the entire Union into 15 districts. areas, areas 1 and 2, and so on; and as area 1 qualifies, the tax sho be imposed and the benefits granted; that is your suggestion? Mr. LAGUARDIA. That is my suggestion.

Senator DONNELL. Now, the question that I asked you-and I = desist with this question-has the legality of this plan of imposin tax, a Federal tax, only on one portion of the United States examined into, to your knowledge?

M. LAGUARDIA. I do not think So,
Senator DONNELL. Thank you.

sir.

Mr. LAGUARDIA. That should not scare us.

HOSPITAL CONSTRUCTION

Senator ELLENDER. Mr. LaGuardia, as you know, the bill does not provide for the construction of any facilities. Title I, as you have just indicated, provides grants for the purpose of improving health, and the other is for prepaid personal health service benefits.

Mr. LAGUARDIA. That is right.

Senator ELLENDER. Well, now, what method would you advocate in order to provide the facilities you say are necessary and which you say should be erected in communities so as to afford the benefits of this bill to everybody?

Mr. LAGUARDIA. I think that your public health grants and maternity and child health grants and your needy persons, and where you make provisions for venereal and tuberculosis, they are needed.

Senator ELLENDER. That is for preventive medicine, and I understand it, but I am talking about hospitals in order to carry out title II of the bill. As I have indicated, there is no provision in the bill for building facilities.

Mr. LAGUARDIA. You need them; absolutely.

Senator ELLENDER. I know; but how should we provide them?

Mr. LAGUARDIA. The same as you do by grants or otherwise, or out of the fund.

The CHAIRMAN. There is a hospital bill now.

Senator ELLENDER. It is limited in scope, and it does not provide a sum sufficient for more than a modest beginning.

The CHAIRMAN. It can be expanded, of course.

Mr. LAGUARDIA. You see, under the practice of medicine, you must have hospitals to carry out the complete medical service. You have to have operating facilities, and you provide for the maternity cases, so that you take large areas of our country, and-let us be frank about it-they just have no hospital facilities at all, and you will have to send some doctors down there and some nurses down there to operate under your title II. They will have to provide the medical service.

I do not want the opponents of health insurance to have the opportunity to say, "See, you are being taxed, and you are not getting the medical service"; and that is what they are waiting for.

GRADUAL INTRODUCTION OF THE PLAN

Senator DONNELL. May I ask another question? On this matter of dividing the Nation into areas and making this prepaid personal health service benefit plan come into existence in one area before it comes into existence in another, there has been made the suggestion here before the committee a few days ago, that the plan be financed in one of two ways, or rather, perhaps, one of three ways, either through pay-roll taxes, applicable both against employers and employees, or through an earmarked income tax, or possibly through a combination of the two. Now, if we take a situation under your plan as I understand it, where the Surgeon General says, "All right, New York, Pennsylvania, and New Jersey, area No. 1, they are all ready for this personal health service benefit to come into effect," would you under your plan have the taxes that the Federal Government secures, levies, and collects, derived solely from that area in order to pay the expenses within that area, of those three States?

Senator DONNELL. Now, would you advocate a general income tax earmarked as to this purpose for the purpose of paying part of the expenses of the plan?

Mr. LAGUARDIA. Then I would get in trouble.

Senator DONNELL. You would not advocate that?
Mr. LAGUARDIA. Then I would get into trouble.
Senator DONNELL. Would you advocate it?

Mr. LAGUARDIA. If it is universal.

Senator DONNELL. After it becomes universal, would you then advocate it?

Mr. LAGUARDIA. I would not care how the money was raised. Senator DONNELL. You would not care how it was raised, but you would advocate that as area No. 1 is qualified by the Surgeon General, well take for example those three States-New York, Pennsylvania. and New Jersey-that a pay-roll tax authorized and put into effect by the Federal Congress shall come into effect in New York, Pennsylvania, and New Jersey by themselves?

Mr. LAGUARDIA. That is right.

Senator DONNELL. And that tax would not be in effect anywhere throughout the United States except those three States until other areas shall respectively qualify, is that right?

Mr. LAGUARDIA. That is right.

Senator DONNELL. Mr. LaGuardia, is not there the greatest of doub: in your mind as to the validity of any such scheme of taxation, whereby the Federal Government can impose a Federal tax on a little isolated area in the country by itself and not make it Nation-wide?

Mr. LAGUARDIA. No.

Senator DONNELL. There is no doubt in your mind?

Mr. LAGUARDIA. Because they are getting direct benefits from it. Senator DONNELL. You think there is no doubt about that?

Mr. LAGUARDIA. None whatever. That is what I meant, Senator. when I said that medical science has progressed so far ahead of Government. That is a beautiful illustration. Now here we are quilbling over a technicality, whether a premium is a tax and whether the benefits should correspond with the tax, when medical science: ready to go out and cure people and keep them healthy and happy. Senator DONNELL. But still, Mr. LaGuardia, we still have a Constitution, have we not, that must be followed?

Mr. LAGUARDIA. That is right.

Senator DONNELL. And in order that your plan shall be valid, it must square with the Constitution.

Mr. LAGUARDIA. You must construe the Constitution in the light of the age in which we are living.

Senator DONNELL. Is there any illustration that you know of, M LaGuardia, from the beginning of the Nation down to the preset t minute, both inclusive, in which the Federal Government has ever levied a tax applicable only against a particular segment of the area of the country and not applicable against the others?

Mr. LAGUARDIA. No; there are some State taxes.

Senator DONNELL. There are State taxes imposed by the State but I am talking about the Federal Government, the National Gov

ernment. Is there any case in which the National Government has ever imposed a tax applicable only against two or three States, we will say, of the Union and not applicable against the others? Mr. LAGUARDIA. Is there any tax on oil and mineral?

Senator DONNELL. It is applicable against all oil and mineral wherever it is found.

Mr. LAGUARDIA. This would be applicable wherever the services are rendered.

Senator DONNELL. But this tax would only be applicable in area No. 1 when that qualifies under the regulations of the Surgeon General. Mr. LAGUARDIA. When the services are provided.

Senator DONNELL. So we would find a tax gradually becoming applicable in some sections and maybe in some sections never applicable, if they did not qualify.

Mr. LAGUARDIA. But it is the duty to provide the services.

Senator ELLENDER. Under your proposal, Mr. LaGuardia, or suggestion, what about this proposition, that if area No. 1 through sufficient pay rolls can collect enough money to take care of the people in that area, and in area No. 2 it cannot be done, would you want area No. 1 to come to the rescue of area No. 2?

Mr. LAGUARDIA. That is a benefit of the national plan. Of course, the healthy people come to the benefit of the sick, the same way you and I carry insurance and because we live we are paying the benefits of those who died, to their families.

Senator ELLENDER. The great trouble today is, that is in the HillBurton bill that the Senate passed about 3 weeks ago, as I recall, wherein a certain sum of money was set aside for the purpose of building hospitals and clinics where needed, and, of course, the thing stressed was need.

Now, your plan, as I understand, would mean that if area No. 1 has the facilities, your idea would be to tax immediately all of the residents in that area No. 1?

Mr. LAGUARDIA. That is right.

Senator ELLENDER. For a sum sufficient to pay the expense of operating those facilities, so that all in that area can receive medical

attention.

Mr. LAGUARDIA. I expect to have some left over there.

Senator ELLENDER. Around Mexico and Arizona and places out there where they are not so fortunate in having large pay rolls as you have in Pennsylvania and New York, how would you take care of that area? Mr. LAGUARDIA. The pool, the fund will take care of it.

Senator ELLENDER. So that you would ultimately, then, make the tax Nation-wide?

Mr. LAGUARDIA. Oh, yes.

Senator ELLENDER. And to be used everywhere to give to all of the people, no matter where they are, irrespective of what the amount collected, the same medical treatment.

Mr. LAGUARDIA. Certainly, but I do not want to charge where we cannot give the service until we are able to give the service, and, of course, the bigger and richer States will pay more, because medical services are pretty costly when you have to cover large areas as in Arizona and New Mexico.

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