for substitutes; the cost of selecting and training new workers to replace the incapacitated; and the cost of paying the wages of sick employees both before and after the period of their disability when their services may be worth only a part of their normal value. On the basis of these considerations, the United States Public Health Service study estimated that 1 day's absence of a sick worker costs the employer at least 12 times the amount of the daily wage. At an average daily wage of $6, the cost to the employer of absenteeism due to nonindustrial sickness and accidents would thus amount to about $4,000,000,000 a year.

But this by no means indicates the total cost to business of low health standards. Selective-service examinations have shown that in the age groups where there is the largest concentration of industrial workers, over half the men examined had physical or mental defects making them unfit for military service. The fact that over 50 percent of the working population suffer from some kind of ailment undoubtedly has a serious effect on productivity. Workers who are in poor physical condition are less efficient and less cooperative, have less initiative, and in general present more personnel problems than healthy workers. Labor turn-over among these groups is also likely to be higher than among workers who are physically fit.

Furthermore, it has been found that there is a correlation between the incidence of industrial accidents and the physical condition of the worker. This has been indicated by a study which showed that those who have the most accidents are, on the whole, those who pay the most visits to the medical department for minor illnesses. Such accidents not only reduce production but also increase workmen's compensation premiums. No accurate estimate can be made of the cost to business of these losses due to poor health, but it is probably considerably higher than the cost of absenteeism due to illness and accidents.

There is every indication that a comprehensive health program would contribute substantially toward improving the health of the American working population and lowering the business cost of illness and poor health. About 11⁄2 million men with physical defects have been rendered fit for military duty as a result of the Army rehabilitation program. In addition, selective-service officials have indicated their belief that at least one-sixth of the defects for which men were rejected could have been remedied quite easily. Authorities agree that early diagnosis and medical treatment could have prevented the development of many of the chronic disabilities for which men were rejected for military service.

Various studies made by Government and business groups have shown the effectiveness of factory health programs in reducing the business costs of illness and low health standards. The United States Public Health Service study referred to above estimated that a competent industrial medical service may be expected to reduce the rate of absenteeism due to nonindustrial illness and accidents by at least two-thirds of a day. This is an appreciable reduction, considering that every worker loses about 9 days per year due to such causes. A recent survey of factory health programs made by the National Association of Manufacturers indicated that such such programs reduced absenteeism due to nonindustrial illness and injury by 29.7 percent, accident frequency by 44.9 percent, occupational disease by 62.8 percent, labor turn-over by 27.3 percent, and workmen's compensation premiums by 28.8 percent. In terms of dollars, it was estimated that, at an average daily wage of $5 and not counting the costs of the program, the reduction in absenteeism, accidents, and industrial disease alone saved a plant employing 500 workers about $12,000 per year, or more than 30 percent of the cost of these factors in the absence of a health program. To this must be added the savings resulting from the reduction in labor turn-over and workmen's compensation premiums and from the increased efficiency of healthier workers, in order to give a full picture of the profitability to the plant of the program. The steady increase in the number of factory health programs in the United States, and in the number of features incorporated in these programs, indicates that American business is fully aware of the advantages of measures designed to raise the health standards of the working population. The cost of these programs, however, tends to place small business at a disadvantage in relation to large firms. In a study made by the American College of Surgeons in 1938, it was found that the per capita cost of industrial health plans increased as the number of employees decreased. In establishments having 1,000 or more employees, the cost was $4.93 per worker, as against $6.97 in plants employing 500 to 1,000 workers, and $8.76 in plants employing fewer than 500 workers. This cost differential is an important reason why small firms find it more difficult to provide their employees with adequate medical services. Yet, before the war businesses

having fewer than 500 workers employed at least two-thirds of all workers. It seems clear that only a compulsory national program such as that provided by S. 1606, therefore, will eiectively provide proper medical care to all workers regardless of the size of the firm in which they happen to be employed, and only such a program will make available to small business the advantages resulting from high health standards among its workers.

Moreover, the health program set forth in S. 1606 would go further than any factory health program can generally go by itself. Only very few firms can afford programs which provide complete medical care and hospitalization to their employees and to their families, and most firms are forced to limit their medical services to the health of their workers while actually on the job. Furthermore, many health services, such as most public health measures, are outside the scope of factory health programs. A Nation-wide program, therefore, able to deal with all aspects of health and medical care, may be expected to afford even greater advantages to business and to provide a larger stimulus to increased national production than factory health programs have brought in the past.

It hardly needs pointing out that, in addition to its direct benefits to business, the measures provided by S. 1606 would also benefit the economy as a whole. The annual loss of about 500,000,000 man-days of work through illness and injury represents a loss not only for business but also for the Nation. It deprives this country every year of billions of dollars worth of goods and services. Billions more are lost because of the low health standards prevailing among a large proportion of the American working population, which reduce the productivity and efficiency of workers. By raising the level of health and well-being and thus cutting down this unnecessary waste, the programs authorized by S. 1606 would contribute toward achieving the higher levels of production required in this country.

Finally, adoption of the measures proposed in S. 1606 would also have a beneficial effect in the direction of increasing employment opportunities and consumer demand. It would expand the demand for doctors, nurses, laboratory techn:cians, and other workers trained in the medical and allied fields and in public health work. In addition, by effecting a considerable reduction in the loss of working time, and hence in loss of earnings due to ordinary illness, it would raise the total income received as wages by employees and as earnings by the selfemployed; this increase in consumer income would raise consumer demand. Moreover, the availability of medical services under a health insurance program should enable people to devote a higher proportion of their current incomes to consumption than in the past. The fear of sudden and large medical and hospital expenses is an important reason at the present time why families and individuais should save. If families are insured against medical costs, and know that they cannot be suddenly confronted by large medical bills, they can afford to spend more of their current income to satisfy current wants. Such a shift toward increased consumption would have a beneficial effect in reducing long-run deflàtionary tendencies in the economy. The whole economy would profit from such an improved combination of collective thrift and higher standard of current living. To the extent that the proposed national health program would thus lead to an increase in job opportunities and in consumer demand, it would help to promote a high level of employment and business activity.

Due to the urgency of this matter we have not as yet been able to secure clearance from the Bureau of the Budget of this report.

Sincerely yours,

H. A. WALLACE, Secretary of Commerce.

The CHAIRMAN. We meet today to initiate public hearings on one of the most important and constructive legislative proposals to come before the Congress.

LEGISLATIVE BACKGROUND

In past years the Committee on Education and Labor has had occasion to consider many important measures dealing with various aspects of the Nation's health. Seven years ago, in April of 1939, this committee had referred to it the first comprehensive bill for a national health program, S. 1620, introduced on February 28, 1939, by the distinguished Senator from New York, Mr. Robert F. Wagner, who is with us here today.

Through a subcommittee, of which I had the honor to be chairman, we held extensive hearings, heard many witnesses, and received many statements on health conditions, needs, and proposals. Early in August of 1939 I made a preliminary report for the committee in which I summarized the results of the hearings on S. 1620. It was already late in the congressional session and there were some unresolved problems concerning the bill. Consequently the committee could only record its intention to report out an amended bill at the next session of the Congress.

We were convinced at the end of 1939 that there were large unmet health needs in this country, that the Federal Government had an obligation to help meet those needs, and that this could and would be done.

Our intention to proceed with national health legislation early in 1940 was, however, frustrated by a catastrophic event. The war in Europe was gathering momentum and its threats to our national security were becoming clearer and clearer. As the clouds of war rolled up and finally engulfed us, comprehensive national health legislation had to be laid aside, to await the end of the war.

We did consider a limited program in 1940. The National Hospital Act of that year, S. 3230, introduced by Senators Wagner and George, providing Federal grants for the construction of some needed hospitals and making limited grants toward their maintenance, was considered. After hearings on the bill, I reported it favorably from this committee and it was passed by the Senate. Unfortunately, it failed to receive active attention in the House of Representatives.

Between 1941 and 1945 we have had many health measures before us dealing with special problems. Other bills containing health programs to be developed as parts of social security and related programs were also pending before other committees of the Senate.

During the war years, our Special Subcommittee on Wartime Health and Education did a magnificent job, studying and reporting on special problems and needs precipitated by the war. The Nation owes a real debt of gratitude to Senator Pepper, chairman of that subcommittee, and to the other members, Senators Thomas, Tunnell, La Follette, and Wherry, for the comprehensive, thorough, and penetrating work they have done. More recently Senator Pepper and other members of the Committee on Education and Labor have also carried forward the work on health problems through our legislative subcommittee on public health.

The hearings held by the subcommittees, and the reports prepared by Senator Pepper and his able committee, will long continue to be invaluable sources of information and helpful guides for constructive health plans. The public health laws of the United States were completely recodified in 1944, making somewhat more ample provisions for various public health programs.

Last year this committee had before it a bill proposing the first step toward a comprehensive national health program, including Federal grants to survey hospitals and public health centers, to plan the construction of additional facilities and to assist in such construction. That bill, S. 191, introduced on January 10, 1945, by Senators Hill and Burton, was considered in public hearings and extensively revised, reported favorably by this committee on October 30, 1945, and passed

by the Senate on December 11, 1945. It is now being considered by the Committee on Interstate and Foreign Commerce in the House.

Thus it is clear that extensive studies and deliberations have been devoted to national health legislation over a period of 7 years. Many important bills have been considered and some have been or are in the process of being enacted. While this is true, it is also true that most of the main health problems, the basic problems that clamored for attention and action in 1939, are still unsolved. The principal unmet health needs of the last years before the war are still unmet and the war has made some of them more serious and acute.

The bill which is now before us transcends all of the earlier bills in importance. It represents a logical culmination of the vast amount of work already done in planning for the Nation's health. It offer a constructive program for assuring to all of the population the medical care that we all look forward to having in the future.

On November 19 President Truman submitted to the Congress his recommendation for a comprehensive and modern health program for the Nation, consisting of five major parts, each of which contributes to all of the others.

The five parts are (1) Federal grants for construction of hospitals and related facilities; (2) expansion of public-health, maternity. and child-health services; (3) Federal grants for medical education. and research; (4) establishment of a national social-insurance system: for the prepayment of medical costs; and (5) expansion of our present social-insurance systems to furnish protection against loss of wages from sickness and disability.

On the same day, the national health bill, S. 1606, was introduced in the Senate by Senator Wagner and myself, and in the House of Representatives by Representative John D. Dingell, of Michigan. This bill provides for three of the five points of the President's program, namely, expansion of public health, maternity, and child-health. services; more adequate funds for medical education and research. and a system of prepaid medical costs. Federal aid for the construction of hospitals and related facilities, the first of the President's five points, had already been provided for in the Hospital Survey and Construction Act which passed the Senate in December of 1945, and is now before the House. Insurance benefits to compensate for loss of wages during periods of sickness and disability, the President's fifth point, is provided for in the general social-security bill now pending before the Finance Committee of the Senate and the Wars and Means Committee of the House.

PLANS FOR HEARINGS

Intense public interest in the national health bill that we are considering today is evidenced by the hundreds of letters and telegrams that have been coming to this committee from organizations and individuals who asked for an opportunity to testify to this legislation. If all who have already requested an opportunity to present oral testimony were to be heard, the committee's hearings would have to extend for many months.

Thus far hearings have been scheduled only for the month of April. The witnesses who will appear during the course of these hearings are representatives of national organizations, both for and against

the bill, and spokesmen of the Federal agencies most directly concerned with the health program.

The schedule of the first week's hearings has already been made public. Next week we shall hear from various national organizations, religious groups, women's organizations, business and professional groups, consumers, and organized labor. Then we shall start to receive testimony from the medical and health professions, doctors, dentists, hospitals, nurses, public health officers, and voluntary insurance organizations. During the final part of the presently scheduled hearings, we shall hear from farm and veteran organizations.

Those who have requested time for oral testimony and who have not been scheduled have been asked to submit written statements which can be printed in the record of the hearings. Arrangements have already been made with the Legislative Reference Service of the Library of Congress to have a research analyst prepare a weekly summary of all testimony and written statements. These summaries will be available to the public and will also facilitate committee consideration of the views and recommendations presented to us.

I have appointed a subcommittee to weigh the requests of all who may still think that they should have an opportunity to present oral testimony. If the subcommittee so recommends, I am sure that the committee will extend the hearings in order to provide time for additional witnesses. This subcommittee is composed of the Senator from Florida, Mr. Pepper; the Senator from Arkansas, Mr. Fulbright; the Senator from New Jersey, Mr. Smith; the Senator from Oregon, Mr. Morse; and myself.

During recent years there has been extensive, and sometimes intensive, controversy over the question of whether we should have compulsory health insurance. These hearings will provide a new occasion-perhaps the best opportunity yet afforded-for all the issues in this controversy to be thoroughly examined. These hearings offer a challenge to all who participate, a challenge that can be successfully met only by a sincere determination on the part of everyone to try to understand the other man's point of view and to examine the problems in the light of facts rather than slogans or prejudices.

POST EDITORIAL

I would like at this time to call attention to an editorial which appeared in the Post this morning, which discusses this situation in the country, where instead of discussing these problems intelligently and dealing with facts, people sometimes go outside the facts and charge that some of these progressive measures that are being advocated in the Senate are communistic or socialistic. I would recommend that everyone read that editorial in the Post this morning.

I am confident that

Senator TAFT. I think it is very socialistic, so I disagree entirely with the editorial. I think that you might have that to start with; if you are going to make a partisan statement, I am going to make

one.

The CHAIRMAN. I did not make a partisan statement.

Senator TAFT. But if you are going to give a rebuke to people who consider it socialistic, I consider it socialism. It is to my mind the most socialistic measure that this Congress has ever had before it, seriously.