Eligibility

1. Any person who is regularly employed by Stanford University who is paid for 4 time or more (which in the case of non-faculty members is considered to be at least thirty hours per week) is eligible to coverage for himself and the eligible members of his family, provided however he has been employed by Stanford University continuously for a ninety-day period immediately prior to the effective date of coverage for which he is applying.

2. Any person who has been retired under normal circumstances from employment by Stanford University, and whose position prior to retirement would have made him eligible under paragraph (1) above, is eligible to coverage for himself and eligible members of his family.

3. The widow of a faculty or staff member who was eligible at the time of death is eligible to coverage for herself and the eligible members of her family provided she has not remarried.

Definition of eligible family members

1. The husband or wife of the person signing this agreement shall be an eligible family member, whether or not dependent upon the signator, unless such relationship is terminated by divorce, or legal separation.

2. Children and parents of the person signing this agreement and of the signator's husband or wife shall be eligible family members, regardless of age, but only if they qualify as dependents of the signator, or the husband or wife of the signator, for income tax purposes.

Accepted by Palo Alto Clinic:

Date:

For the Clinic

Mr. HINSHAW. The committee is adjourned until tomorrow morning at 10 o'clock.

(Thereupon at 12:35 p. m., a recess was taken until Thursday, January 14, 1953, at 10 a. m.)

HEALTH INQUIRY (VOLUNTARY HEALTH INSURANCE)

THURSDAY, JANUARY 14, 1954

HOUSE OF REPRESENTATIVES,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D. C.

The committee met at 10 a. m., pursuant to recess, in room 1334, New House Office Building, Hon. Carl Hinshaw presiding. Mr. HINSHAW. The committee will please come to order.

STATEMENT OF DR. GEORGE BAEHR, PRESIDENT AND MEDICAL DIRECTOR, HEALTH INSURANCE PLAN OF GREATER NEW YORK, NEW YORK, N. Y.

Mr. HINSHAW. Our witness this morning is Dr. George Baehr. Dr. Baehr is the president and medical director of the Health Insurance Plan of Greater New York.

Dr. George Beahr for many years was chief of medical service and director of clinical research at Mount Sinai Hospital in New York City. He was chairman of the technical advisory committee, Department of Health, New York City, from 1933 to 1941; and consultant, Department of Hospitals, New York City, from 1933 to 1945. He has been a member of the Public Health Council of the State of New York since 1935.

He was president of the New York Academy of Medicine when it produced its series of studies, Medicine in the Changing Order.

Dr. Baehr has been a leader in the development of the International List of Causes of Death and was a delegate from the United States State Department to the fourth, fifth, and sixth Decennial International Conferences to revise the international list. At present he is chairman of the American Medical Association's advisory board for the fifth edition of the Standard Nomenclature Diseases and Operations as he had been for the previous edition.

Dr. Baehr has held innumerable other advisory posts in the medical field and has been active in civic as well as medical areas. He has published extensively in the health and medical field.

In 1951, H. I. P. received the Lasker group award of merit presented by the American Public Health Association for HIP's courageous pioneering with a combination of group medical practice and prepayment to provide comprehensive health services. Dr. Baehr, we shall be very glad to hear from you.

Dr. BAEHR. Mr. Chairman and members of the committee, I shall ask your indulgence, if I am a bit elementary in the first few minutes of my testimony. I think it is important that a common under

standing be had on definitions so that I can better explain or have you understand the program which I intend to report to you. Also, I would like to state that in preparing this preliminary statement, I did not have at the time before me the four bills which Mr. Wolverton has introduced into the House. I have studied them since preparing this preliminary testimony and am prepared to comment upon them later.

Mr. HINSHAW. Dr. Baehr, I may state that the administration measure has not yet been presented to the committee. No doubt it will accompany the message which will be delivered on the 18th of this month, next Monday. We cannot, of course, hold hearings on a bill until, or on those measures, until we find out what the bill and measures are which are proposed by them, or until we draft a committee bill.

Dr. BAEHR. In all considerations of health insurance there are three basic interrelated issues. I would put first, the method of providing medical services to the insured; second, the scope and quality of the services, and third, the method of payment to physicians.

As you know, medical expense indemnity plans, which are the plans that are sold by commercial-insurance companies and by Blue Shield organizations, pay individual physicians on a fee-for-service basis. For that reason they must limit the scope of their benefit coverage for the most part to diseases requiring admission to a hospital, the frequency of which is predictable within reasonable limits. Benefits outside of the hospital are generally excluded because the number of professional and laboratory services which physicians may choose to render outside of a hospital is unpredictable when physicians are paid a fee for each service by a third party.

The California physicians service and the Michigan medical plan attempted to provide comprehensive service outside of hospitals on a fee-for-service basis. Comprehensive coverage was terminated because it could not be continued for the reasons just given.

Even when some medical benefits outside of a hospital are included under medical-expense indemnity contracts, they are sharply limited in amount and leave the insured families widely exposed to additional medical bills. Comprehensive-benefit coverage is impossible under these indemnity, fee-for-service plans because it inevitably results in a rapid increase in medical bills and the progressive pyramiding of costs to the insurance company.

The inadequacy of inhospital medical coverage as a means of protecting the family budget is revealed by the experience of such comprehensive programs of medical care as the Health Insurance Plan of Greater New York, in which we find that only 10.7 percent of all professional services are rendered to such insured persons in hospitals and 89 percent in their homes and doctors' offices. Most doctors' services are rendered in people's homes, in doctors' offices, and in laboratories. With fees for home and office visits and for X-rays, technical laboratory work, and other diagnostic and therapeutic procedures now rising to the point that care even for ambulatory patients may cost a week's wages, there is a growing need for prepayment that covers ambulatory as well as hospital care. Extra-hospital medical care is continually being needed by all families; as revealed by our experience to be reported later in this testimony. On the other hand, hospital care is often not required sometimes for 20 or 30 years.

COMPREHENSIVE MEDICAL CARE THROUGH PREPAID GROUP PRACTICE

During the past 25 years, local plans for providing comprehensive medical care on a prepaid basis have been established in various parts of the country, under the sponsorship of medical groups, industrial organizations, labor unions, farm cooperatives, and other local agencies. These independent plans are able to provide medical care of comprehensive scope in return for the collective per-capita premium income only because the services are rendered to the insured by physicians engaged in organized group practice, who together comprise all the required professional, laboratory, X-ray, and other specialty branches of medicine and surgery.

Under this system of completely prepaid group practice, financial barriers to prompt utilization of the needed medical, laboratory, and X-ray services can be eliminated and the insured families are able to enjoy all the major benefits of modern medicine, including prevention and early disease detection. In our aging population, disease prevention and early disease detection as well as medical care during chronic illness must be included in a medical-insurance program if it is to meet the needs of the public.

The other day I sat down, and without having to think very long, listed 37 specialties of medicine and surgery and I did not include the minor specialties.

In this age of highly specialized professional skills and medical technology, the total medical needs of an insured population can best be met by such balanced teams of physicians, specialists, and technicians trained in the great variety of skills and techniques which today constitute modern medicine. The comprehensive prepayment plans combine these medical skills and techniques in the form of group practice and place them freely at the disposal of people of moderate means in return for the per capita income derived from insurance premiums. Each insured family has a family doctor who has been selected by the subscriber from the family physicians on the staff of a medical group. The clinical laboratory, X-ray diagnosis and therapy services, pathology, physical therapy, and visiting nurse services of the group are freely at the disposal of these family physicians as are all the consulting services of the group's specialists in the various branches of medicine and surgery without financial deterrents to their full use.

An argument commonly advanced by opponents of prepaid group practice is that it does not give subscribers free choice of any licensed physician in the community. From the standpoint of a subscriber, this has absolutely no validity, for he exercises his choice when he decides to join the plan as a member of his enrolled group of insurees-just as he would exercise a choice if he selected the Mayo Clinic for his medical care. On entering the Mayo Clinic a person gives up his free choice in return for other benefits which he may feel he is going to get. Similarly, a subscriber exercises his choice when he joins a prepayment plan as a member of his enrolled group of insurees, and he is at liberty to drop out of the plan at any time.

He is also at liberty to consult any other physician at any time that he wishes and is willing to pay the fee. It is certainly desirable that families of low and moderate income be given the opportunity to enjoy the benefits of comprehensive medical care through prepaid