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In the development of voluntary medical care insurance, which in our democ racy is certainly best calculated to help meet the problem of rising medical care costs, the medical profession has for years taken a leading role. In spite of statements made by some, the medical profession has been very seriously concerned with medical-care costs and has done very much to meet the problem. If we look at the record of voluntary medical-care insurance honestly, how can anyone deny its drama, its speed, its success, and its promise for the future? In the 12 years from 1940 to 1952 there has been this phenomenal achievement: The number of people covered by hospitalization insurance has risen from 12 million to 90 million. The number of people with surgical-care insurance has risen from 5 million to 73 million. The number of people insured against medical ills has risen from 3 million to 36 million. The breathtaking pace of developments in these fields in the past 6 years is almost unbelievable. Curiously enough, however, this makes few headlines.

It should be recalled that it is the medical profession that has had the major role in this startling progress. It has been the most important factor. The encouragement, support, and sponsorship of hospital, surgical, and medicalcare plans by doctors through their State and county medical societies has been the keystone of the arch of this success. So much so that since 1950 there has been at least one medical society approved or sponsored prepayment medical-care plan in every State of the Union, the District of Columbia, and the Territory of Hawaii.

In the development of sickness insurance of the so-called service type, with its augmented guaranty of full coverage without extra charges for people in the low- and middle-income groups, the leadership and support of the medical profession has been crucial. Indeed, it has been the willingness of the doctor to accept full payment fee schedules at considerably less than the going rate that has kept the premiums for such service plans within the reach of those with modest incomes. This is certainly practical leadership and cooperation of the highest order.

It is not denied that much remains to be done. But the comprehensiveness and completeness of coverage is increasing rapidly as actuarial experience accumulates. And it is by extension of the benefits obtainable under such voluntary prepayment free-choice plans that the greatest hope for the future lies. Insurance against the less common major costs of prolonged illness, so-called catastrophic coverage, with a deductible feature like collision insurance, is still in the experimental stage. Although of relatively recent vintage there are already probably over a million people who now have some form of this type of insurance. This, too, is making very rapid strides and holds great promise for the very near future. Combinations of presently available medical-surgical coverage, hospitalization insurance, and insurance against the costs of catastrophic illness should provide a satisfactory and acceptable cushion against the costs of most illness.

In the Medical Society of the County of Kings, as in many other county and State medical societies all over the country, we have long had what we believe to be very constructive attitudes toward medical-care insurance. Statements made before this committee that county and State medical societies oppose medical care insurance are completely false. The Medical Society of the County of Kings, for example, has already approved two voluntary prepayment unrestricted freechoice medical care plans which together service several millions of subscribers in the New York metropolitan area. These medical-care plans are the United Medical Service (Blue Shield) and Group Health Insurance, Inc. Both of these plans have service features which guarantee that people in the low- and middle-income groups will not be subject to extra charges for medical and surgical service. In other words, the participating doctors in these plans have agreed to accept as full payment for their services the amounts listed in the service fee schedule. This service fee schedule is very modest indeed and indicates an earnest willingness of the doctors in our community to cooperate in making medical care costs more manageable for the average family and to avoid the necessity for additional charges. Improvements in the extent of coverage under these plans is constantly increasing. In addition to in-hospital medical and surgical coverage, there are now contracts which include home and office care. It is important to bear in mind that all this has been accomplished without resort to panel practice, and without resort to restriction of the patient's right to freely choose his own physician. One of the aspects medical care costs which requires improved insurance coverage involves consultative and diagnostic services. This, of course, includes laboratory and X-ray studies. To a limited extent such services are insured by

appropriate riders added to existing medical care plan contracts. This, however, is as yet admittedly inadequate and we of the Medical Society of the County of Kings are at the present time working on what may prove to be a constructive answer to this problem. I am submitting herewith a proposal which I made before the Medical Society of the County of Kings last October and which is now receiving the careful study of the society's medical care plan committee. I believe there is a voluntary prepayment way to give comprehensive diagnostic and consultative care as an extension to the medical and surgical benefits provided under the service-type plans already mentioned.

My proposal was that the Medical Society of the County of Kings should sponsor the formation of a consultative and diagnostic group. Of course any county medical society could do the same thing. In essence the plan would provide for the creation of a consultant and diagnostic group of physicians, a voluntary partnership of all specialists willing to participate. This group, which in a county the size of ours would of course be gigantic, would contract with various medical care insurance plans to furnish complete diagnostic and consultant services to subscribers in the lower economic brackets. The group would be paid by the insurance company on a per capita basis, so much per patient annually. Payment to the physicians rendering the service however would be on the basis of a fee-for-service schedule.

A simple diagram of the proposed plan outlines its essential structure. There would be an appropriately modified fee schedule, but the services would be rated in units instead of dollars according to their relative worth. The dollar value of each unit would be determined at intervals by dividing the total net income of the group by the total units of service rendered during the interval. Payment would then be made to those who gave the services in accordance with the number of units of service each had rendered. All services of the group would be supplied on a free choice, private practice basis on the request of the patient's personal physician. In other words the group would be paid on a per capita basis by the insurance company. The group in turn would pay the individual specialist rendering the service on a fee-for-service basis.

Note that under the proposed plan the insured patient would go to his family. doctor in the normal way to obtain the usual medical and surgical benefits insured against. If the services of a consultant, or if X-ray or laboratory aid is required, even of the so-called preventive or checkup type, the patient could then be referred to any of the specialists in the group for necessary services just as is done in ordinary private practice. The specialist would report his findings to the referring doctor in the usual way, and send notification of services rendered to group headquarters. At intervals payment would be made to the specialists in accordance with the dollar value of the units of service rendered.

The dollar value of each unit of service would fluctuate somewhat depending on the degree of utilization of services. But these fluctuations need not be violent if proper allowance is made for anticipated utilization. Abuses of the plan from unwarranted overuse could, of course, be guarded against to a certain extent by limited exclusions and limited coinsurance features. This plan is not meant to be a bonanza for specialists. Indeed, to begin with, the fee schedule would recognize the economic limitations of the people being serviced. Its primary purpose would be to guarantee a fully paid consultant and diagnostic service for the lower income patient through his own family doctor. Freedom of choice would be assured not only by wide specialist participation, but also by provisions for indemnification of nonparticipating specialists as well.

It seems to me that a plan such as this, appropriately modified in accordance with the needs of the patients of a particular community, could be tried on a limited experimental basis for a period. If found practicable it could then be extended to more people, and possibly, with additional premium increments, to people in higher economic brackets. It thus seems quite possible to extend present plans with their medical and surgical benefits to include even such expensive items as consultative and diagnostic service. It is possible to do this in the voluntary way, and it is possible to do this without sacrificing the patient's right to unrestricted free choice of doctor.

We of the Medical Society of the County of Kings have been seriously concerned not only with ways of making medical care insurance more comprehensive and more inclusive, but have also given considerable thought to the problem of people who are not insured and can afford little or nothing in the way of payment for medical care. Such people are being taken care of for the most part in the free clinics and wards of hospitals all over the country and in the care of these patients physicians of course give their services without charge. It is also true that most

physicians in private practice adjust their fees downward for people who are economically limited and often give part or all of their services entirely without charge. Those people who are on welfare aid are cared for by physicians who receive very modest fees for their services from the community. It may well be that people receiving welfare aid should preferably have the benefit of better medical care through the agency of voluntary prepayment free-choice medical care insurance paid for out of community funds. In this field Government aid may be of definite benefit.

In order to help meet any immediate needs, however, our medical society has taken what I feel to be a most constructive step. It has recently unanimously agreed to form a medical aid committee made up of as many hundreds and thousands of our members as possible. This committee will pledge itself to give medical and surgical care to anyone who needs it whether or not he can pay for it. If the problem is one for a general practitioner, the general practitioner on the list whose turn it is will see the patient, or the surgeon if it is a surgical problem, or any one of the different specialists. Whichever doctor sees the patient will from that point on have the responsibility of his proper care. If the doctor can handle it alone all well and good. If the patient requires something more, consultation with another doctor, or hospital care, or some special kind of clinic care, or some special kind of welfare or social service care, the doctor will take the personal responsibility of arranging for it through our headquarters setup. We intend to do this just as quietly and efficiently and conscientiously as we can and we will do it on an intimate person-to-person basis without any thought whatever of the fact that no fee is involved. Our main purpose will be the satisfaction of knowing that no one in our community is lacking the proper medical attention just because he can't pay for it.

Much has been accomplished in the voluntary way. Much can continue to be accomplished in the voluntary way without the whiplash of compulsion and restrictive control; without infringement of the patient's unrestricted right to choose his own doctor; without compromising the medical profession's ability to render competent, efficient, ethical, personal service; without panel-practice medicine; and without resort to a production-line or department store philosophy of medical care.

President Eisenhower's insistence on a framework of voluntary methods and freedom of choice of physician should have everyone's wholehearted support. We are in complete accord with his desires in this respect. There is merit, too, in the thought that a Government-sponsored reinsurance corporation may have value in covering some of the marginal actuarial risks that privately sponsored medical care plans may have to assume to broaden some types of coverage. It remains only to be certain that in any such program the utmost care be exercised to avoid encouragement and support of medical care plans which negate the essence of our free society.

Such a Federal reinsurance corporation should not be a prop to plans which deny unrestricted free choice of physician, which encourage panel practice, and which create conditions of medical practice that may lead to underserviced, dissatisfied patients and impersonal medical care techniques. It is worthy of note that the right to free choice of doctor is enforced under the compensation rules of the State of New York. The aim should be to make free choice available to everyone. The aim should be to try to see that everyone who needs medical care can go to his personal physician for it and not be forced to go to some big impersonal clinic or center. The economics of medical care is important, but even more important is the quality of medical care. Let us not make the fatal mistake of taking on a shoddy product because it is cheaper or statistically alluring. We must not for one moment forget that patients and doctors are people and not inanimate objects on a production belt.

I want to assure the members of this committee that the Medical Society of the County of Kings, along with other county and State medical societies has been and will continue to be earnestly cooperative in the solution of medical care problems. In this respect we are ready and willing to work in every way possible with any interested group, whether it be management or labor or Government to effectuate constructive solutions by voluntary methods.

Up to this point I have avoided mention of certain erroneous statements made before this committee by a spokesman for the Health Insurance Plan of New York, Inc. I will refer to these statements now with the brevity that they merit. This HIP spokesman implied that county and State medical societies oppose medical care insurance. How ridiculously false this is should be readily evident from what I have already said. The statement was also made that county

medical societies oppose group practice. This, too, is a complete untruth. The medical profession and county medical societies do not oppose group practice. There are many medical groups all over the country practicing perfectly ethical medicine and rendering fine service. Indeed, in a sense every doctor practices group medicine, for every doctor avails himself of the specialized knowledge of his colleagues in his community for consultation when required for diagnosis and treatment. The essential element in medical teamwork is the cooperation among competent men, not the construction of fancy clinic buildings or centers. An important thing about group practice among doctors is that any group or partnership of physicians is expected to abide by the medical code of ethics just as an individual physician does. The fact that a physician is practicing in a group does not release him from his ethical obligations which after all, are primarily intended to protect the rights and interests of patients.

Other reported statements of this spokesman of the Health Insurance Plan of New York, Inc., should be accepted with extreme reserve. It is not true that the AMA has approved this plan. Nor has the plan been approved by the Medical Society of the State of New York or by any of the county medical societies in its area of operation. Indeed HIP has not even been approved by any significant numbers of subscribers in the New York metropolitan area. Out of a population of about 10 million people HIP has only 400,000 subscribers of whom, in a sense, about half are captive New York City employees. Compare this with the 3 million subscribers of United Medical Service, for example, which has the approval of both the State and county medical societies.

The major reason why the vast majority of doctors and of potential subscribers oppose HIP is because HIP does not allow unrestricted free choice of doctor. When a subscriber joints HIP be must go to one of the groups of physicians chosen by this insurance plan to service its subscribers. This is in direct contrast to United Medical Service and Group Health Insurance, Inc., the subscribers to which may go to any doctor of their choice to obtain their insurance benefits. It is this HIP denial of unrestricted free choice of doctor in direct contravention of a clearly stated principle of the medical code of ethics, and in direct contravention of the fundamental rights of patients that has made it unacceptable.

In essence, HIP is a privately controlled insurance corporation with a governing board of which only one-third are physicians and none of those practicing physicians, which directs that its doctors must practice group medicine, passes upon their qualifications, solicits patients for them, channels patients to them, limits the subscriber's choice to its restricted panel of physicians, and assigns a per capita remuneration to medical groups for service, the groups in turn having physicians in partnership or on salary. This is a far cry from medicalcare insurance but is rather a system of medical-care practice which carries in it objectionable compulsory features.

A serious ethical question has also arisen with respect to HIP advertising, which as you know, is prohibited to physicians by the medical code of ethics. Through inspired publicity, group publications sent to patients, advertisements, throwaways, door-to-door solicitation, and so forth, HIP advertising has benefited the relatively few physicians on its panel. All this is ethically denied to solo practitioners and independent groups of doctors.

HIP has also manifested curiously monopolistic and restraining tendencies. It has a virtual monopoly on medical care insurance of city employees. The fact of the matter is that the city of New York will pay half the premium of employees who subscribe to HIP, but not of employees who subscribe to any other medical care plan. If a group of employees wants to join, let us say, United Medical Service, they have to pay the whole premium themselves. But if the group joins HIP the city pays half the premium. What is still worse, the city will not even pay half the employee's hospitalization insurance unless he joins HIP. The result of this unfortunate and anomalous situation is that there is severe economic pressure on the city employees to join HIP. HIP has frantically opposed any attempts to liberalize the city's attitude in these matters. It is reasonable to hope, however, that Mayor Wagner's support of the free-choice principle will be a potent influence toward the correction of present inequities. We have made constructive suggestions to HIP which would enable it to carry on its prepayment group practice insurance scheme and at the same time allow the subscriber the right to unrestricted free choice of doctor, and which would permit groups of New York City employees to democratically choose the medical care plan they prefer, the city to pay half the premium of any medical

care plan chosen. All of our conciliatory efforts have been brusquely rejected by HIP.

These facts are mentioned to emphasize that there is no opposition to prepayment group practice as a concept as has been repeatedly and falsely alleged. The opposition has been to specific and correctable deficiencies involving restriction of free choice of doctor and other questionable practices and procedures. Every medical care plan should be evaluated on the basis of what it does, not what it claims it does. We should be mindful not only of what a medical care plan gives but also of what it takes away.

I can only conclude with one general observation. The Medical Society of the County of Kings has supported and will continue to support any and all worthy medical-care plans. In justice to our patients and in justice to the obligations of our professions it cannot be expected to give approval to medical plans which deny unrestricted free choice of doctor and which nurture the seed of compulsion. Mr. HINSHAW. We will recess until 10 o'clock in the morning. (Whereupon, at 12:45 p. m. the committee recessed, to reconvene at 10 a. m. Friday, January 15, 1954.)

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