reserve a sufficient amount during those 20 years to carry his insurance during his retirement years. Certainly it is a major problem, and it can resolve itself upon how much experience can we get to guide us in working out these programs.

Mr. HESELTON. I take it that in Elfun experience you actually approach a solution of that from the standpoint of retired employees? Mr. WILSON. We include the retired employees and the cost for that is very very high.

Mr. HESELTON. Do you know of any other insurance where such protection is offered?

Mr. WILSON. We have in a number of other risks which we have written included retired people.

Mr. HESELTON. I mean are there any other companies, to your knowledge, attempting to experiment in this field?

Mr. WILSON. I think they are experimenting in it. I think all of us go very cautiously because it is a source of major loss.

Mr. HESELTON. Would a combination of the Blue Cross or other such similar insurance and that of the catastrophe insurance furnished by the commercial companies be at all feasible, in your opinion?

Mr. WILSON. Well, it can be worked out. In other words, there are some plans in existence now where the basic coverages are carried by Blue Cross and the catastrophe insurance is carried by a commercial carrier.

I think Mr. Whittaker mentioned the fact that Metropolitan had just written one such piece of business.

Mr. HESELTON. I was interested in your discussion of the formula which you worked out in developing the question of whether fees are reasonable and necessary. You made the further comment that it seemed to you that while insurance carriers could not tell the insured that the fee was unreasonable or that it was out of line with charges made by other reputable physicians, the carrier had a perfect right to take it up with the individual physician and, if necessary, with the local medical association. Did you mean that that was a plan that you established, or have you had any experience in that regard?

Mr. WILSON. We felt that was a proper function of the insurance company in writing catastrophe-medical insurance. If we write catastrophe-medical insurance, then it becomes a mechanism whereby people are able to pay higher medical expenses for the same care, and we have not made any social progress.

Mr. HESELTON. Have you had any actual experience along that line? Mr. WILSON. Yes, we have had experience in that regard.

Mr. HESELTON. With the individual physicians or with the associations?

Mr. WILSON. That is correct. We have had no adverse experience because in the cases that we have referred to we have only in two instances gone beyond the individual physician.

Mr. HESELTON. You have been able to adjust it with the local physicians in a great majority of the cases?

Mr. WILSON. That is right. In two instances we went to the medical association and they backed us up on it.

Mr. HESELTON. I see.

Mr. WILSON. You have, however, this area of medical expense on the very wealthy person who goes to a clinic or goes to a hospital and

who comes out of that hospital with a bill for $5,000 for services which would normally cost $300 or $400.

Mr. HESELTON. We have been hearing testimony this morning actually confined to the employer and the employee groups, and it is my impression that that has been extended very much, as I recall it. My own local bar association has worked out a plan where individual members of the bar could take out some kind of a policy of that kind. Has that been extended very far beyond the employer-employee group?

Mr. WILSON. Quite a few companies are writing what they call association groups. It can be written successfully, provided the association is very well organized.

Mr. HESELTON. I see.

Mr. WILSON. The association which you write must be sufficiently well-knit to form an avenue through which you can administer the risk. So it is a mechanical problem rather than one of hazard.

Mr. HESELTON. I suppose that could be made to apply certainly to doctors and dentists, but could it be extended to operators of stores or filling stations or other independent type businesses?

Mr. WILSON. There are quite a few groups that have bought group insurance on that basis through trusteed associations. For instance, I think in New York State you have the Automobile Dealers Association. All the automobile dealers and their respective employees are all insured in one mass group.

Mr. HESELTON. Are there any further questions, gentlemen?
Mr. CARLYLE. Yes, Mr. Chairman; I have a question.

Mr. Wilson, should the law be amended so as to enable the taxpayer to deduct or be given credit for all of his medical expenses? Do you think that would have a wholesome effect by causing people to go to a doctor and try to find out what their physical condition really is, and in that way perhaps many persons could detect the existence of some serious disease that possibly would not be located for 2 or 3 years? Mr. WILSON. I could only express my own opinion on that, and it may not be worth very much, but my feeling has been that in medicine there is a tremendous area which has just begun to be developed and even recognized within the medical professon itself, and that is industrial medicine-preventive medicine. I think the Chinese had a good idea when they paid a man for keeping him well, and he got fired whenever he let the man die.

In industry today they are developing industrial medicine to determine the things that keep a man well so that his life will be really productive. If that area can be developed, I am much in favor of it. However, how much the income tax would affect that I do not know, because I think we are all inclined to welcome a tax deduction, no matter what the source.

Mr. CARLYLE. We do know that many men and women in this country are honestly afraid to have a physical examination because of the fear that they will find that they have a disease that is serious and perhaps would be difficult to cure. Is that not true?

Mr. WILSON. Well, in industrial relations that does constitute a big problem. My company has done a lot of work in that field of persuading an individual to take an examination and giving him reassurance through his employer if something is found wrong, it will be taken care of and that he will not be fired by reason of the fact that it was discovered. It is a major issue.

Mr. CARLYLE. For what period of time do these group-insurance policies pay for disability?

Mr. WILSON. Well, as Mr. Beers stated, I think the usual plans on disability-the weekly benefits run for 13 weeks. That is the normal amount. There are many of them now that are designed to run for 26 weeks.

Mr. CARLYLE. After the 26 weeks have expired, what happens then? Mr. WILSON. Well, the individual is on his own after the benefits

have run out.

Mr. CARLYLE. You mean by that they will have to rely upon the public to take care of them.

Mr. WILSON. Yes, if that is all that is in the basic plan.

Mr. CARLYLE. What do you think about that?

Mr. WILSON. Well, my own feeling is that if industry in general through group insurance is so inclined or if the economy of our country is such that further benefits need to be extended, those plans are available at the present time to run for a year. We write a plan, for example, on an individual basis now to tie in where group insurance leaves off and to continue the weekly benefits for a period of 1 year or 2 years and, in case of accidents, we even go for life.

Mr. CARLYLE. I am speaking now of health insurance.

Mr. WILSON. That is correct.

Mr. CARLYLE. Are there any companies now that write health insurance that will pay benefits for life where a person is permanently disabled by disease?

Mr. WILSON. Well, I think Mr. Faulkner is more qualified to talk about that than I am. I am not an expert on individual insurance, even though we write some.

Mr. CARLYLE. I understood that such policies have been issued in the past.

Mr. WILSON. There are some available at the present time.

Mr. CARLYLE. That is all, Mr. Chairman.

Mr. HESELTON. Did you refer to Mr. Crawford?

Mr. WILSON. No, Mr. Faulkner, who will testify here tomorrow, I think.

Mr. HESELTON. We thank you very much, Mr. Wilson.

Before I call on the next witness, I would like to state that Mr. Robert L. Hogg is present in the room. He is a former Member of the House of Representatives from the Fourth District of West Virginia and served in the 72d Congress. At the present time he is executive vice president and general counsel of the American Life Convention of Chicago. Mr. Hogg is here as an observer at the hearings. I want to welcome you here, Mr. Hogg.

Mr. HOGG. Thank you very much.

Mr. HESELTON. I am advised, Mr. Hill, that your testimony is rather extensive, consisting of some 19 pages, and I think it would take up to 40 or 45 minutes for you to cover your statement.

What is the pleasure of the committee, and what is the pleasure of Mr. Hill and the other witnesses? Would you prefer to suspend now for a lunch recess and come back and conclude the hearing, or do you want to go on through?

Mr. THORNBERRY. I understand there are others who possibly would want to testify.

Mr. HESELTON. I understand they will testify only briefly and they will be people who can tell us something about life-insurance research. I think the committee, if it is agreeable with the witnesses, would like to take about a 5-minute recess and continue to the conclusion, since we only have one more major witness and the gentlemen who will speak about contributions to research. If that is agreeable with you, we will recess until 20 minutes of 1.

(Thereupon, the committee took a 5-minute recess.)

Mr. HESELTON. The committee will come to order.

Let me say that the members of the committee in informal discussion, or at least some of us, seem to have reached the conclusion that the feeling which was stressed at the outset in Chairman Wolverton's statement is one which is still an unsolved problem. We can appreciate how much progress has been made and the experiments which have been made and the helpful experiments that are going on. However, we have heard so much in the previous hearings about the lengthy illnesses, if not lifetime illnesses, that are occasioned by these major chronic diseases that it does seem as though there has not yet been devised, and perhaps there cannot be devised, a satisfactory means of taking care of those situations.

In Mrs. Hobby's speech, you will recall her discussion of three types of conditions and, of course, in testimony following it we have heard of thousands and thousands of cases where the person of moderate income after 13 weeks or 26 weeks or whatever period they are covered, after the benefits have been exhausted is simply up against a problem and has to rely on something like the infantile paralysis fund, if that disease is involved, or he has to throw himself on charity. It is that type of thing that we would like to have some discussion on or some comment on before the four witnesses who have been good enough to prepare this testimony for these hearings leave. If that is not possible and they care to submit any further comment or any supplementary statement, I can assure you that the committee will welcome it and will place it in the record.

Our next witness is Mr. Charles G. Hill, and at this point in the record we shall insert the following pertinent information in regard to the background and experience of Mr. Hill.

(The matter referred to is as follows:)

BIOGRAPHY OF CHARLES G. HILL

Charles G. Hill is the group secretary of the Massachusetts Mutual Life Insurance Co., and in that position is in charge of the company's group-insurance operation.

Born in Ontario, Canada, he graduated from Queens University in Ontario with a bachelor of arts degree in mathematics and physics He was associated with the Sun Life Assurance Co. of Canada from 1938 to 1942, at which time he joined the Massachusetts Mutual. Originally in the mathematical department of that company, he was assigned to the newly created group department in 1946. Since that time he has successively held various positions in that department until today he is head of the entire group operation.

STATEMENT OF CHARLES G. HILL, GROUP SECRETARY, MASSACHUSETTS MUTUAL LIFE INSURANCE CO., SPRINGFIELD, MASS.

Mr. HILL. My name is Charles G. Hill, of Hampden, Mass., and I am group secretary of the Massachusetts Mutual Life Insurance Co., having charge of the company's group-insurance operation. Through the

facilities of its group department the Massachusetts Mutual handles all types of mass coverages including group life insurance, accidental death and dismemberment insurance, accident and sickness, hospital, surgical, medical insurance, and all forms of insured-pension plans. The Massachusetts Mutual Life Insurance Co. was organized 102 years ago and on January 1 of this year had ordinary life insurance in force of over $3 billion. Since its organization, Massachusetts Mutual has written ordinary life insurance almost exclusively. Seven years ago, it entered the group health and accident insurance field. In expanding its operations to health insurance, the company was influenced by a desire to serve the public's need for this type of insurance coverage. In recent years the life companies have been entering this field in increasing numbers in order to make voluntary health insurance readily available to the public. New York Life Insurance Co., the Home Life of New York, and the State Mutual of Worcester, Mass., are among others which, like Massachusetts Mutual, have recently gone into the group accident and health business.

As a newcomer in this field, we thought that your committee might be interested in some of the experiences we have had in underwriting this insurance. Since 1946, we have issued approximately 1,100 master group accident and health insurance contracts insuring roughly 175,000 persons. Our services in this field are rapidly expanding both as to the number of persons covered and as to types of coverage and extent of benefits being provided. We feel that we are off to a good start in helping to meet the public's desire for voluntary health insurance coverage.

The characteristics and great flexibility of the coverages we are currently writing can best be illustrated by describing some of the actual cases underwritten by the Massachusetts Mutual. This group of cases is presented as a representative cross section of the types of hospital, surgical, and medical expense insurance plans presently underwritten by my company. Each of the plans described was designed to meet a particular situation and, as the committee will observe, there is considerable variation in the benefits provided both as to scope and amount.

If I may at this point, I would like to interject a comment to emphasize one particular thing in the underwriting of group insurance of any type and in particular group health and accident insurance, and that is that usually in practically all instances a plan is designed, originating in discussions between the insurer and the purchaser. In other words, the companies offering group health insurance of any type do not follow a format where you go around with some prepared document or some prepared plan such a plan A, B, C, or D, and the employer can select any one of those. What you do is to sit down and actually tailor make a program within the scope of your groupunderwriting plans to meet the particular need of that employer.

The first case that I have recited here is group policy No. 2496 issued to the Consolidated Engineering Corp. of Pasadena, Calif. Policyholder: The policyholder's business is the design, development, and manufacture of analytical instruments for science and industry.

Affiliated companies whose employees are insured under the above policy are C. E. C. Instruments, Inc., of Pasadena, and the Consolidated Vacuum Corp., of Rochester, N. Y.