their own way. Many who are medically indigent in the face of sudden need for costly medical care are not so in terms of insurance.

But there is much more to the story than that, and it is these other phases of the total situation that get badly tangled up in the minds of both doctors and laymen. One of the most confusing of these is the manner in which physicians are reimbursed for their services under an insurance plan, be it under either public or voluntary auspices. This in turn is keyed into the question of whether and how family doctors and medical specialists are teamed up to render the needed services and how disease prevention and health promotion are woven into the plan. These and other phases are so closely interlocking that it is only by first listing a series of obvious desiderata and then examining the means by which each can be attained that it is possible to escape from obfuscation of issues and general confusion about ways and means. We are, therefore, listing a series of seven criteria of a good plan for prepaid medical care. These are the prime things for which to look and to provide in any realinement of medical economics.

CRITERIA FOR PLANS OFFERING PREPAID MEDICAL CARE

1. Since nobody knows in advance the kind of illness that he or his dependents are going to have, preventive services, health education, and treatment applicable to all types of acute and chronic conditions must be covered, with the exceptions clearly stated. The exceptions may properly include the ones for which public responsibility is now fully established, as in the case of workmen's compensation cases, or the long-time care of the mentally ill, or those that involve no health issues, as the correcting of cosmetic defects, or those that still defy planning for adequate care, such as dentistry, the total need for which among adults could not possibly be met by the existing supply of dentists, whatever the amount and method of payment or the organization of service.

2. The plan must be so organized as to offer its benefits to the largest possible proportion of the families living in the community which it is designed to serve. 3. A high quality of care must be guaranteed. Quality has to do with both the competence and the interest of physicians, with the use of special services, hospitals, visiting nurses, and with the coordination between family physicians' specialists, and the auxiliary personnel. In this connection the whole of the organization must be alive to the importance of medical education and research. It must be prepared to cooperate with institutions engaged in education and research if they exist in the area and in any case to cooperate with and aid in advancing educational and research activities among the physicians of its community.

4. The policies of the plan must make possible a real experimentation with methods of payment and operation as experience indicates these should be modified and altered.

5. The amount of the remuneration to physicians and the conditions of participation must be such as to attract and hold men who, though they love the practice of medicine, also want to do right by their own families. The system of remuneration must also be such as will give physicians incentive to prevent disease and to promote health among the persons and families in their care.

6. The charges should be levied and paid in such way as to facilitate family budgeting and low administrative cost. The plan must be set in such a way as to achieve a maximum of working together among physicians in arriving at a diagnosis, in treatment planning, and in carry through and a minimum of waste in medical and technical services and of patients' time and strength. At the same time, each family must have reasonable opportunity to choose the doctor whom it wishes as its family physician, with freedom to change for cause.

7. All questions pertaining to medical competence and the performance of physicians must be left to medical authority which should be organized and equipped to deal adequately with the medical questions brought to the attention of the administrators of the service. Ultimate responsibility for the operation of the economic aspects of the service, however, should rest with a group composed of physicians, direct consumers, and a goodly proportion of representatives of the public interest.

Most of these are self-evidently necessary objectives and safeguards for any plan that purports to bring good medical care within the means of families with limited incomes. Only a few words need to be added to indicate something of the methods of achieving each of them. Points 1, 3, and 6, when taken together, dictate that care must be provided by a team of physicians working closely together and that this team must include representatives of all the recognized medi

cal specialties. This means the group-practice of medicine in a well-equipped and efficiently operated "medical center." Point 3 implies that these self-organized groups must be under the general aegis of a central medical authority constantly on guard to see that all the medical personnel is up to standard on admission to the groups and continues on that level. When there is affiliation with a medical school, that usually helps to lift the quality of service still higher. Moreover, it now helps medical education to have an adjunct service which exemplifies the best medical practice, in its social adaptations as well as in its technical phases. Future physicians should be trained to treat and instruct private patients as well as those who must seek service in public clinics. Fortunately, programs to this end are beginning to appear in medical colleges.

Point 2 is clearly inherent in any program which desires to be of real service to the community.

With regard to point 4 it is apparent that an experimental approach is essential. We are today far from the place where anyone can with certainty state at the outset that one particular method is correct at all times and in all places. Workable solutions to our problem cannot be found unless we are prepared to learn from experience and to act accordingly.

It is believed that the ends sought under point 5 can best be accomplished by arrangements made with groups of doctors by a central administrative unitthe insurance service. This central body collects the premiums and with those funds purchases the right to comprehensive service as needed by the families. This right is acquired upon the payment of a "capitation" to the medical group for each person for the period specified in the premium-a month, three months, or a year. The capitation has to be large enough to give the group whose physicians are fully occupied with insured persons an income that meets the general accepted beliefs of doctors as to a fair and proper compensation for their services. No plan can succeed for any length of time in holding good doctors if it is paying them appreciably less than they could get elsewhere under similar working conditions.

In this connection it is necessary to compare service with medical indemnity plans. The latter are widely offered by commercial insurance companies and by the highly advertised "doctor-sponsored" schemes. Under these the insured person or family is indemnified to a stated amount for each of a schedule of services for which he has been billed by his physician. The subscriber's indemnity is fixed, but his physician's charges are not. So, although he may receive only $100 toward the surgeon's fee for removing his appendix, the surgeon is entirely free to charge him any amount for the operation. Under many of the physician-sponsored plans the physicians agree not to charge more than the indemnity to persons and families of very low incomes. This is often no favor or concession on the part of the profession because the income for the eligible persons is frequently fixed at little above that of the medically indigent. In effect, this merely transforms people hitherto receiving either free care or none at all into paying patients. They are still not grade A paying patients, however, even though their payment of the premium has meant real sacrifice to them. It is customary for the physicians to charge the people with incomes above this line more than the schedule of indemnities. The schedule is in fact set with the expectation that the physicians will make such charges. In theory as well as in practice the subscriber is regarded as a coinsurer since, if he were fully indemnified, there would be the temptation on the part both of patient and of physician to be medically extravagant at the expense of the insurance company. Since, unlike the insurance company, the subscriber as coinsurer cannot spread the risk, his budget takes a lesser but still a fairly severe beating if the illness is serious or prolonged. And, again, the fees charged are loaded for the care of the remaining medically indigent, so that many people just over the income limits may b unduly taxed for the care of others.

In general, indemnity plans carry no incentive to the physician to keep people well. Sickness, not health, produces his income if he is paid on a fee-for-service basis. But it still does not stabilize his income, because sickness is not predictable among those who may choose to be his clientele. In the service plan which compensates him by means of regular capitation payments the less the sickness among his people, the more time he has to pursue other lines of interest; reading, research, even recreation and time with his family. And his income is more

secure.

With regard to the first part of point 6 it need only be said that the spreading of the annual cost over monthly or quarterly payments throughout the year helps most people on salaries or wages to meet their obligations with more ease than

if they had to make only 1 or 2 payments during the year. With a payrolldeduction technique and part of the cost of the premium borne by the employer the employee's share becomes a burden that can be carried fairly easily and makes into self-supporting families many who would be, intermittently at least, among the medically indigent. It is obvious, too, that economies in the methods of pro-viding service will aid to reduce the total cost of the plan and thus to make it less a financial burden for those who subscribe to it.

Such economies must not be achieved, however, at the expense of the quality of service, the fairness of remuneration to physicians, or the satisfaction of subscribers. For example, a great deal is said about free choice of physician (point 6) by both patients and physicians. Where it has real meaning, it should be respected. But it must also be recognized that comparatively few people in cities have any way of making a discriminating choice of family physician. They usually take a doctor near their home or workplace or go to one who has been recommended by a friend or relative. If that physician comes to the conclusion that the services of a specialist are required either for consultation or for treatment, he may submit more than one name to the patient or his family; but, even so, the choice is really in his hands since he makes the nominations and the patient under ordinary circumstances is even less well equipped to choose a specialist than he is to select a family doctor. Assuming that no fee will be split between the general practitioner and the specialist called in, the patient does well to let his doctor pick out the specialists who should be consulted. When the fees are being split, the referring physician has considerably more incentive to maneuver the patient into the hands of a man whom he, not the patient, chooses. With the group practice of medicine the patient is free, first, to choose the medical group that he prefers, and, if that group is well set up, it will have several doctors who serve as personal physicians. That gives the patient opportunity to have further choice and also an opportunity to change if he is dissatisfied. Some people want an older man as their family doctor, others want a younger man more recently out of medical school. Some prefer a woman physician, some a physician of their own sectarian affiliation. With a little planning and good management a medical group can meet these preferences, thus helping to establish the relation of confidence between physician and patient that is necessary for the best results.

We come last to point 7. The first part, namely, that all professional matters must be managed by competent medical authority in any plan which pretends to emphasize a high quality of care, seems so self-evident that further discussion is unnecessary. But the second part, i. e., that direct consumers and the general public should have a major voice in governing economic aspects, is perhaps not so widely accepted. We referred earlier to the medical economics committees of county medical societies. These groups do focus opinion among physicians, but they are usually not prepared to examine critically bodies of subject matter outside their own field or to make pronouncements that greatly illuminate economic questions. Until about 2 years ago, when the matter was called to its attention by the Raymond Rich Associates, the American Medical Association had no professionally trained economist on its staff to make authentic studies of the economics of medicine in the United States 5 and to guide the local medical societies in their work in this field. Any operating organization attempting to realine economic relationships in medical care requires direction by a group of mature persons who bring a wide range in points of view to the consideration of plans propounded, particularly on matters pertaining to consumer ability to pay and to questions of the public interest. It is a situation in which conflicts must be resolved on a genuinely sound and equitable basis, and the best interests of the medical profession as well as of the public must be protected and cultivated. This brings us to the question sometimes asked as to the prospects in the future for a doctor to get rich out of private practice. It is likely that such opportunity will continue to exist, but it will depend upon the continuance of rich people in the community able and willing to pay the fees out of which the doctor's wealth would come. With the advent of prepayment plans for the middle class he will be able to become rich only at the expense of the rich. On the other hand, the doctors who serve the poor and the middle classes stand a good chance, not of becoming rich, but on the average of being somewhat better off than they have been. This follows from the facts pointed out earlier, namely, that more people will be paying for their medical care and paying in such a way as to stabilize

A voluntary service, the Committee on Medical Economics, operates under the leadership of Michael M. Davis, 1790 Broadway, New York City.

and to make more secure the doctor's income. And, if good medical care becomes more widely available through prepayment and other devices and if the relations between the medical profession and the public improve, there will be few to begrudge physicians that justly acquired increase in their share of the community income.

It may be enlightening to review a few broad facts as to the extent of prepayment plans in the United States and to append a brief description of the Health Insurance Plan of Greater New York.

INSURANCE PLANS FOR MEDICAL CARE

Aside from the estimated 60 million now insured for hospital charges but not for physician's services, about 26 million of the 140 million people in the United States had at the end of 1947 at least some insurance against the cost of illness, 17 million for surgery and 9 million for medical and surgical care. Approximately 22 million had indemnity policies, 15 million of them in commercial companies and 7 million in the plans sponsored by organized medicine. Only about 4 million persons had coverage under other auspices. It is now thought that the 26 million has advanced to 35 million. Four types of organizations serve as the insurance carriers or providers of the service: (1) Commercial insurance companies, usually covering by indemnity only catastrophic illness, with the company concerned merely to know that the service was performed by a legally licensed physician; (2) the doctors' plans, which provide some reimbursement toward the fees charged by physicians and which are also largely limited to catastrophic illness; (3) the medical services provided in connection with industry, such as those affiliated with or operated by the Endicott-Johnson Co., the American Cast Iron Pipe Co., the Northern Pacific Railroad, and the Consolidated Edison Co. of New York, and by certain trade unions such as the International Ladies Garment Workers Union, and, in prospect, by the United Mine Workers of America, the United Automobile Workers, and the Amalgamated Clothing Workers of America; (4) prepayment service plans available to the general public. Some of these latter are operated directly by medical groups such as the Ross-Loos Clinic in Los Angeles and Trinity Hospital in Little Rock, Ark.; others by nonprofit organizations such as the group health cooperatives and the Health Insurance Plan of Greater New York. All these four kinds of attempts have made valuable contributions to our knowledge of medical economics, and all have thrown at least some protection around the family budget; but relatively few meet the criteria listed above for a first-class plan. We do not neeed to elaborate further on the limitations of the indemnity plans, whether operated by commercial companies or by organized medicine. While a few of the medical services operated by industries or trade unions have been able to extend services to families, most have confined themselves to the employee only and so cannot get into "family health maintenance" as that ideal has come to be termed. Moreover, by their very nature, these plans are open only to persons associated with a particular industrial concern or union.

Only the prepaid comprehensive service plans carry the possibility of anchoring medical expense firmly into the family budget. Of these there are not yet a great number in the United States, but interest in them is mounting; and, as understanding grows among medical men and laymen, there is good prospect that this type of insurance will be preferred and will spread rapidly. Since the Health Insurance Plan of Greater New York is a recent recruit to this category and has the largest enrollment of any plan of this type, a brief description of it follows.

THE HEALTH INSURANCE PLAN OF GREATER NEW YORK

The writers of this report have been intimately associated with this organization for some time and therefore hasten to plead guilty of bias in its favor. But they also wish to make clear that such virtues as it has derive from the fact that its founders took several years to formulate it and in the course of that process made full use of all the ideas and experiences of its forerunners and naturally tried to combine the best features of them all. The plan was not really

The Bureau of Research and Statistics, Social Security Board, periodically issues a pamphlet, Prepayment Medical Care Organizations, which lists and describes all the plans except those which are purely of an indemnity character. The Bureau of Public Health Economics, University of Michigan, issues a current digest of events and opinions in this field.

a novel invention, because there has been a great deal of precedent in this country for a comprehensive plan, for prepayment, for group practice, for salaried physicians, for some recognition of the illusory character of free choice in a good many aspects of medical care. So that the HIP, as it has come to be known, is made up of elements each of which has a wealth of valid experience behind it. Only their association in a single system is unique.

We shall not describe the organization and program in detail because full descriptions have been published and copies of those reports can be had for the asking,'

The monthly rates charged are as listed in the accompanying tabulation.

1 Available now only to persons who convert from group enrollment and payable only on a quarterly, semiannual, or annual basis.

Under the present underwriting rules the employer must pay at least half the premium, but he may choose between covering only his employees or them and their families.

With regard to enrollment all we shall do here is report the latest news. As of January 1, 1949, HIP had under coverage approximately 132,000 persons and expects to see this number advance to 200,000 by July 1, 1949. Its principal clients are the city of New York, including the Board of Transportation, and the United Nations, which cover both employees and their families, several large labor unions which can cover only their members, and a number of small businesses and nonprofit organizations, some of which cover employees only and others which cover families as well. HIP is only now beginning to seek large enrollment from private business.

The present enrollment is, with a few notable exceptions, a microcosm of the population of New York City-in family size, in sex and age distribution, in geographical spread. Among the deviations is the omission of families resident in Staten Island, where the medical profession has not yet been able to organize a group to serve the insured. It has only 2.3 percent of the population of New York. In the age distribution there is a deficit of young persons between 18 and 24 years and of persons in the more advanced years. The young people are not eligible as family members and have not been characteristically represented among those enrolled as employees. It is possible that to some extent they have not enrolled when they had the opportunity, but have preferred to take a chance that they would not be sick. Because of the contracts covering employees only, males somewhat outnumber females.

Contracts for health and medical service to these families have been made with 26 medical groups scattered throughout the 4 large boroughs of the city. These medical groups include, among others, 1 at New York University College of Medicine and 1 at the internationally famous Montefiore Hospital. Other groups, while not formally attached to hospitals, are composed of physicians on the staffs of many of New York City's best public and voluntary medical institutions. A good fraction of the 711 physicians in these groups are veterans who returned from the war with a determinatin not to return to old-line medical practice but to resume their efforts to fight disease on a different sector. Here, too, courage, toughness of fiber, and the capacity to heave obstacles out of the way are not without their uses. There is faith among these doctors that the principles on which HIP is founded will win wide public support. The distinguished physicians who are on the board of directors and in the membership of the corporation, Dr. Willard Rappleye, dean of the College of Physicians and Surgeons; Dr. George Baehr, recently president of the Academy of Medicine; Dr. Jean A. Curran, dean of the Long Island College of Medicine; Dr. Philip Wilson, a leading orthopedic surgeon; and others of the same stature concur in this be

7 Report of the Mayor's Advisory Committee on Health Insurance Plans, August 15, 1946, and The Health Insurance Plan of Greater New York Begins Service, Social Service Review, XXI (June 1947), 157–170.

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