ing. To date, over 1,100 scientific articles have been published on the basis of research aided by the fund. It is notable that recent research has provided some findings that might form the basis for the development of a method of disease control. Such, for example, are the discoveries that the blood cholesterol level-considered important in arteriosclerosis-can be reduced by the administration of hormones and other substances. It is also gratifying to note the development of successful surgical operations for relief of patients with certain forms of rheumatic heart disease, and the use of new and more effective drugs in the management of hypertension. The board feels that very satisfactory progress has been made and that members of the fund may take pride in their support of an undertaking of such significance not only for all policyholders, but also for the Nation at large. Annual meeting.-The board held its annual meeting on February 19, 1953. The advisory council presented its recommendations on 262 applications for financial aid in our field a larger number than ever before considered. Fifty-two grants amounting to $664,386 were awarded to institutions for the support of cardiovascular-research programs. Forty fellowships carrying $149,925 were awarded to young men and women desirous of research training in this field. These appropriations total $814,311, as compared with the sum of $782,035 for 1952. Field of interest At the request of the board, a conference was held in the summer of 1952 to review the policies of the fund. The report of this conference, which was attended by distinguished guests as well as present and former members of the advisory council and medical directors' representatives, was presented to the board at its annual meeting. After discussion, the board adopted the recommendation of the conference that the fund should continue to devote its resources to the support of research on diseases of the heart and blood vessels, taking a broad view of the field so named. Both conference and board members gave careful thought to the claims of other fields. Indications that the need is greatest in the cardiovascular field were unanimously felt to be convincing. It was also decided on recommendation of the conference that grants for building programs, endowments, maintenance, or support of fund-raising campaigns should be considered outside the scope of the fund. Membership and contributions.-Early in 1953, 9 companies joined the fund, namely, the American Home Life Insurance Co., Beneficial Life Insurance Co., Boston Mutual Life Insurance Co., Dominion Life Assurance Co., Iowa Life Insurance Co., Midland National Life Insurance Co., Ministers Life & Casualty Union, National Old Line Life Insurance Co., and Wisconsin National Life Insurance Co. The board heartily welcomes these new members. The number of member companies as of June 30, 1953, is 146, 3 companies having withdrawn at the end of 1952. Contributions pledged for 1953 total $852,758, an increase of 4.6 percent over the sum of $815,222 contributed for 1952. Board members and officers.—Mr. Claris Adams retired from the board at the end of his term of service on December 31, 1952. His services to the fund are much appreciated. The 1952 elections provided an increase in board membership from 9 to 12, in accordance with previous board action as permitted by the constitution. The following were elected by member companies to serve on the board for terms beginning January 1, 1953: Term of 3 years: E. C. Gill, president, The Canada Life Assurance Co.; M. Albert Linton, chairman of the board, Provident Mutual Life Insurance Co. of Philadelphia; Carrol M. Shanks, president, Prudential Insurance Co. of America; James Ralph Wood, president, Southwestern Life Insurance Co. Term of 2 years: Cecil Woods, president, Volunteer State Life Insurance Co. Term of 1 year: Leroy A. Lincoln, chairman of the board, Metropolitan Life Insurance Co. At its annual meeting, the board reelected the following officers to serve for a further term of 1 year: M. Albert Linton, chairman; Leroy A. Lincoln, vice chairman; Leigh Cruess, secretary; and Morgan B. Brainard, Jr., treasurer. Messrs. Linton, Lincoln, Shanks, Smith, and Wilde were appointed to serve as the executive committee for 1953-54. Advisory council.-At the end of their terms of office on December 31, 1953, Drs. Alfred Blalock, William S. Middleton, and Maxwell M. Wintrobe will retire from membership in the council. The board is deeply grateful for their invaluable aid in the fund's work. 39087-53-pt. 5———7 Dr. Robert F. Pitts, professor of physiology, Cornell University Medical College, Dr. Dickinson W. Richards, Jr., Lambert professor of medicine, Columbia University College of Physicians and Surgeons, and Dr. Roy H. Turner, professor of medicine, Tulane University School of Medicine, were appointed to serve as members of the council from January 1, 1954, to June 30, 1957. Medical directors' repreesntatives.-Medical directors' representatives have given essential assistance to the board, the advisory council, and the scientific director. The services of Dr. Karl W. Anderson, whose term expired December 31, 1952, were greatly appreciated. To succeed Dr. Anderson, the medical section, American Life Convention, appointed Dr. B. F. Byrd, medical director of the National Life & Accident Co., who will serve from January 1, 1953, to December 31, 1956. Financial statement.-The accompanying table shows essential figures to the nearest dollar. Payments on grants and fellowships include only minor sums for awards made by the board in 1953. Payments on these awards, which are almost wholly due after June 30, 1953, as well as payments still due on previous years' awards are provided for in the reserve fund. This fund consists solely of amounts thus obligated for future payment on grants and fellowships. The greater part of the balance of the reserve fund is payable in 1953-54 (approximately $825,000). It is not the policy of the board to accumulate an unappropriated reserve. Administrative expenses for 1952-53 amounted to less than 7 percent of contributions received. The active fund includes the sum earmarked for administrative expenses in 1953-54 and a balance available for future appropriation. July 1, 1952, to June 30, 1953 Contributions received from members___ Appropriations for grants and fellowships__ Reserve fund, June 30, 1953 (obligated for future payments on Administrative expenses_ Active fund, June 30, 1953 (available for future use). $855,928 792, 057 716, 407 1, 112, 557 56, 494 82,796 The treasurer's report gives further financial details on pages 67 to 79. The treasurer's accounts for 1952-53 were audited by Messrs. Lybrand, Ross Bros. & Montgomery, whose statement will be found on page 80. New office quarters.-During 1952-53, the board arranged for the removal of the fund's office to the 9th floor of a new building at 345 East 46th Street, New York City. The new quarters, which are in the Mid-Town area, will be much more convenient for the fund's work. They were occupied on August 1, 1953. M. ALBERT LINTON, Chairman. Mr. HESELTON. Does that complete your statement? Mr. HESELTON. Áre there any questions, gentlemen? The committee has been furnished a tabulation which I understand covers the period from 1944 through 1952. There appears to be quite a heavy investment in research in a number of instances and relatively speaking a much more modest investment in the case of certain diseases. I assume the companies probably have those facts in mind in terms of planning their own programs. Mr. THORE. At the outset the companies decided to concentrate on heart disease. Mr. HESELTON. Yes. Mr. THORÉ. They did that on the recommendation of medical authorities who felt that heart disease was receiving smaller financial support than the support being given to some of the other research projects in the field of cancer, polio, and the other major diseases. Mr. HESELTON. Is there a fairly regular review of the situation? Mr. THORÉ. Yes. In fact, a review was made within the last 12 months. That, again, confirmed the need for research grants in the heart-disease area. Mr. HESELTON. I assume that you probably are familiar with the Federal tax laws. It has occurred to me it might be important to establish whatever the facts may be in these hearings as to what the situation is with reference to contributions by life-insurance companies or any other commercial enterprise for the purpose of reseach such as this foundation engages in. Mr. THORE. The present law taxing life-insurance companies does not provide a deduction for contributions of this character. If such deductions were provided I assume it would stimulate activity in this area. Mr. HESELTON. That was going to be my next question. Is that situation true, so far as you know, with respect to other commercial enterprises? Mr. THORÉ. I think the situation is different in the case of the other commercial enterprises. I think they generally get the deduction. Mr. HESELTON. In your opinon there is no reason why there should be any different treatment, in order to gain the objective? Mr. THORÉ. The tax formula for the taxation of life-insurance companies is rather unique. There are so many factors involved in arriving at a sound formula that Congress has not adopted a permanent law. Since 1949 legislation has been enacted on a temporary basis every year. It would take a great deal of study to determine how any new formula should operate and whether deductions for contributions to medical research should be granted. But in general I would say that if such deductions were granted they would naturally stimulate grants. Mr. HESELTON. I wonder if, in connection with your appearance before the prospective hearing of the Ways and Means Committee, the life-insurance companies have any plan for presenting what program they might have in mind in order to accomplish that. Mr. THORE. We are now studying the problem and we presently have recommended a formula which does not include a special deduction for this type of grant. Mr. HESELTON. It does not? Mr. THORÉ. It does not. Mr. HESELTON. Would it be possible to develop that before next year? Mr. THORE. It is something we ought to consider. Mr. HESELTON. If that does develop, may I suggest that you not only inform the Ways and Means Committee but also inform this committee, because I am sure in connection with the overall problen we are studying we might be interested in discussing the matter with members of the Ways and Means Committee. Are there any further questions? If not, thank you very much. Mr. THORE. While I am before you may I take this opportunity to deliver to the members of this committee sitting here today a copy of the Fact Book on Life Insurance. Mr. HESELTON. Yes. Mr. THORE. Which is very complete. On occasions you might want to find out more about us. I hope you can find anything you want in this booklet. Mr. HESELTON. I might add something to what you say on that. I do not know how many copies you have left with the committee, but let me say for the benefit of the students who are here that this, of course, is during the congressional recess. It is certainly impossible for a committee as large as this to have all members attend these hearings. However, the proceedings are all printed and each member of the committee will receive a copy of the hearings. If each member could have a copy of this type of book, then when we get into executive sessions this year they will be fully familiar with everything that has happened during the hearing. Mr. THORE. We will see that that is done. Mr. Wilson, will you come forward, please. Mr. Reporter, in connection with the testimony of the witnesses there are biographical statements I will submit to you. I wish you would put them in at the beginning of each witness' testimony. (The biography of Mr. Wilson is as follows:) BIOGRAPHY OF FRAZIER S. WILSON Frazier S. Wilson, manager of insurance for United Air Lines, is not only a 19-year veteran of the insurance business but a 10-year veteran of the airline industry. Born in Oak Park, Ill., he graduated from the University of Illinois. He has been associated with London and Lancashire Indemnity Co., Chicago; William M. House Agency of John Hancock, and John Hancock Life Insurance Co., Miami Beach. He is a past president of the Miami Association of Life Underwriters and past chairman of the Air Transport Association Insurance Committee. He currently is a director of Midwest Insurance Buyers Association and National Insurance Buyers Association and second-term vice chairman of the IATA Insurance Committee. Also, he is a member of the Insurance planning council of the American Management Association. He joined United Air Lines in 1943. Mr. HESELTON. Will you please introduce yourself and give some biographical information, Mr. Wilson, and please do not be too modest. These hearings have been most interesting. The people who have come here have been very capable people. I know that you qualify in this field and I would like to be sure the record is complete. STATEMENT OF FRAZIER S. WILSON, INSURANCE MANAGER, UNITED AIR LINES Mr. WILSON. Mr. Heselton and members of the Committee on Interstate and Foreign Commerce, my name is Frazier S. Wilson. I am insurance manager of United Air Lines. I have held this position for 10 years. Prior to that time I was in the insurance business in various capacities, including being assistant manager of one of John Hancock's large agencies. I had my own agencies. I was in claims work. I am currently a member of the AMA, or American Management Association, insurance planning council; and am a director of both the Midwest Insurance Buyers' Association and the National Insurance Buyers' Association. So that you may have a better conception of the type of group which my discussion represents, may I sketch for you its historical background. United Air Lines came into existence through its predecessor companies 27 years ago, and first assumed its present corporate name in 1931, about 23 years ago. Mr. William A. Patterson was elected president in 1934, and under his direction United grew to its present position of industry leadership. Its transcontinental routes connect important east coast cities situated between Boston and Washington, D. C., with those west coast cities located between San Diego and Vancouver. Then we fly on to Hawaii. It employs in excess of 15,000 people in 79 cities. Its fleet value exceeds $100 million, and other physical properties are worth more than $40 million. As an indication of United's management interest in employee benefit plans, it is interesting to observe that United was the first airline. to make a retirement income plan available to its employees and is the only airline which provides free life insurance for every employee. This was first offered in 1932. It has consistently improved its group acident-sickness coverage since it was first made available some 19 years ago in 1934. United's total employee-benefit annual cost now exceeds $5 million, of which it contributes about $3 million. United's benefit plan includes: First, a retirement annuity; second, a generous salary continuance during sick leave; third, life-insurance benefits during active employment and following retirement; fourth, accident-sickness benefits during active employment and following retirement; and then, of course, fifth, statutory workmen's compensation benefits. This committee's current interest, however, is centered in health insurance, so I will limit my discussion to United's group accident and sickness plan. Chairman Wolverton through his invitation informed me you particularly are interested in the extent of our coverage. Also, from our experience, how we think volutary protection can be improved and broadened. He then asked that I touch upon catastrophe medical and hospital insurance, as well as the nature of any arrangements we have with physicians and hospitals. With your permission I would like to discuss these points under the following general headings: 1. A description of our benefits and their historical development. 2. How we determine employee needs and decide upon benefits to be offered. 3. Significant problems which have arisen under our plans and how we solved them. 4. Thinking which we are doing about the future of our plans. 5. Comments on the social significance of our plans and their bearing on employee morale. Approximately 15 years ago United's full basic accident-sickness plan came into being. It provided, first, loss-of-time benefits up to $40 per week payable for 26 weeks; second, death and dismemberment benefits up to $4,000-and there has been no subsequent change in either of these two coverages-and, third, hospital, room and board, hospital fees, and surgical benefits both for employees and dependents. These limits have been increased as illustrated in the following charts. The upper half of the chart represents employee benefits, and the lower half of the chart represents dependency benefits. The top line shows hospital room and board benefits. Now, you will notice that in 1943 these were, as they say in the television commercials, a low, low $4. These were increased in 1944 to $6, then to $7, then to |