TABLE 4.-Specific health and welfare benefits in collective bargaining agreements, by number of workers covered and method of financing, mid-1950

1 Data on specific benefit coverage were available for 140 unions, including 38 AFL, 17 CIO, and 20 unaffiliated unions. Also includes scattered AFL Federal labor unions and CIO local industrial unions and unaffiliated unions confined to a single plant or establishment.

Figures not additive since many workers are covered by more than 1 type of benefit.

These 140 unions reported slightly more than 4.3 million workers covered by their health and welfare plans.

Source: U. S. Department of Labor, Bureau of Labor Statistics: Employee-Benefit Plans Under Collec tive Bargaining, Mid-1950 (Bulletin No. 1017). Washington, U. S. Government Printing Office, 1951, p. 7.

The CHAIRMAN. The committee will next hear from Mr. Hayes. I have already made a part of the record the background and experience of Mr. Hayes, which is considerable indeed, and qualifies Mr. Hayes as president of the International Association of Machinists. The committee is very glad to hear your testimony. We are pleased to have you here and we are pleased in the interest that you have shown. Preliminary to these hearings, as well as during the hearings, which has prompted you to be here this afternoon, at your personal inconvenience in order to testify before this committee.

You may proceed.

STATEMENT OF A. J. HAYES, INTERNATIONAL PRESIDENT, INTERNATIONAL ASSOCIATION OF MACHINISTS (ACCOMPANIED BY WILLIAM O'CONNELL, DEPARTMENT OF EDUCATION, INTERNATIONAL ASSOCIATION OF MACHINISTS; AND DR. WILLIAM SAWYER, CHIEF, DEPARTMENT OF HEALTH, INTERNATIONAL ASSOCIATION OF MACHINISTS)

Mr. HAYES. Thank you, Mr. Chairman and members of the committee.

As your chairman has stated, I am A. J. Hayes, international president of the International Association of Machinists. To my right is Mr. William O'Connell, a member of our department of edu cation, and in the hearing room also is Dr. William Sawyer, the chief of our department of health.

I greatly appreciate this opportunity to appear before this committee on a matter of such vital importance as the health of our people, actually the health of our Nation.

I appear here as a consumer of medical services and as a representative of nearly 900,000 like consumers who are members of the machinist's organization, which I represent.

I am not a medical expert. Neither am I an expert on health and insurance plans. Therefore, my knowledge and views emanate from the problems of those who need and those who use health services, men and women in my organization, in my family and among my circle of friends.

My knowledge and views are based upon personal experience, and the established experience of others-upon studies of many types of negotiated health and welfare plans, private and group health insurance, group practice plans, and other attempts to meet the health needs of our people-and upon my service on the Advisory Committee to the Division of Occupational Health of the United States Public Health Service; also, as a member of the President's Commission on the Health Needs of the Nation.

I have prepared my views to cover the following four broad categories: 1. Our health problem; 2. Why we must be concerned about it; 3. The inadequacy of present methods, programs, and facilities for solving our health problem; 4. Better methods for solving it.

The views which I will express are not prompted, I assure you, by selfish motives, or in the major interest of the members and families of labor unions. If labor unions were motivated by selfish interests they would perhaps discourage health legislation, devote themselves to the improvement of their own negotiated health and welfare plans, and utilize these plans to exploit the dire health needs of wage earners for organizing purposes. In addition, unions could also use that issue as a demand for more wages.

We believe, however, that our health needs are grave and that we, as well as other public-spirited groups of citizens, must be concerned with the health problem as it affects all of the people, not only the members of trade unions or the members of the medical profession.

In this conviction I am not influenced, misled, or confused by crafty catchwords which are so frequently used to obscure the facts and confuse the uninformed. Loose, definitionless phrases like socialized medicine certainly fall into the category of things which, in Shakespeare's words, are "full of sound and fury, and signifying nothing." Propaganda and philosophy cannot abide together, and certainly a subject as serious as the health of the American people deserves our calm, dispassionate consideration.

The existence of our health problem is obvious-in the fact that between July 1950 and June 1951, 15 percent of our draftees were rejected for medical reasons only, despite lowered health standards, in the fact that findings of periodic physical examinations of schoolchildren indicate serious health deficiencies in the health status of our young people, in the fact that white males in the United States have a higher death rate than males in many Western European countries, in the fact that some sections of our Nation show higher death rates from communicable diseases than others, in the fact that the life expectancy of Negroes, although increasing, is still shorter than that for white people, in the relatively high incidence and long duration of disease among people in low income families.

All of these statements are supported in the report of the President's Commission on the Health Needs of the Nation.

The evidence and effects of our health problem can be found in every section and community in our country. The Report of the President's Commission on the Health Needs of the Nation spells out these facts. We are short of health personnel and health facilities, and what we have are poorly organized, compartmentalized and isolated geographically and professionally. Health research, despite vast gains in the past decade, still has neither the funds nor the facilities to compete with other types of research for topnotch personnel. Our traditional fee-at-the-time-of-service system of financing personnel health care has broken down under the increasing complexity and the mounting cost of modern health care. And our attempts to find a substitute for that traditional system have been haphazard and inadequate.

The existence of the health problem reflects seriously on our status as a civilized, cultured Nation, upon our ability to produce and upon our position as a leader in the struggle of the free world against communism.

It is unthinkable that a Nation such as ours, with its high devotion to the dignity of man and the intrinsic value of the individual, can continue to tolerate a situation which permits millions of its citizens to languish in the twilight of ill health or to slip prematurely into the grave.

Beyond its affront to our national ideal of human dignity, the health problem has a serious impact upon the national economy.

Dr. Howard Rusk, chairman of the Health Resources Advisory Committee of the Office of Defense Mobilization, estimated that we lose approximately 500 million man-days a year of production time as a result of nonoccupational illness. And it is my understanding we lose an additional 40 million man-days due to occupational illness and accident. To workers and their families this represents $4.2 billion a year in lost wages. And, of course, there is a corresponding loss in production and profits.

This drain upon the Nation's manpower, income, and production would be serious enough in normal times. But in the face of the harsh realities of the world today, the need for action becomes imperative.

Regardless of temporary lulls in the cold war between the free world and communism, and in spite of the blessed cessation of hostilities in Korea, we should realize, from the very nature of communism and from its past record, that tension between the two worlds will ebb and flow, with the ever-present danger of widespread armed conflict, until the slaves of the Communist taskmasters have thrown off their yokes and achieved the ways of freedom.

This being the case, we must be constantly aware of the effect of what in ordinary times would be purely domestic problems upon our ability to face the Communist world in maximum strength.

It certainly would be conservative to say that insofar as natural resources go, the free world and the Communist nations are on even terms. This may even be underestimating the potential resources of the Communists.

So far as manpower goes, the Communists have the advantage in sheer numbers.

The strength of the free world-and it is largely centered in the United States and Canada-lies in industrial know-how and quality of our manpower, our human resources.

If we are to remain strong, as we must, we have not only to maintain but constantly to improve the effectiveness of our industrial techniques and the skill and general quality of our work force. And health becomes a very important factor when we talk about the quality of our work force.

The development of technical improvements is not a primary concern of a union official. But I am concerned, by the very nature of my union position, with the men and women who carry out the techniques and work the machines of industry. The health of those men and women is a vital factor in how much and how well they produce, now and in the future. And one of the surest ways to assure their presence on the job and to improve their productive capacities is to cut down on the absences and the inefficiency which result from illness.

Now, we of the United States are not usually in the habit of seeing a problem and ignoring it. Traditionally we do something about it. And we have been doing, or attempting to do, in a fashion, something about their health problem.

Let us analyze the effectiveness of what we have done to meet the health needs of the American people in the light of how various segments of the population fare in meeting their health problems.

At the top of the list comes that relatively small group of our people who have a knowledge of the assets of good health, and the economic resources to take full advantage of existing health care services covering prevention, early diagnosis and treatment, physical therapy, and rehabilitation.

In the second category go the veterans, merchant seamen, and wards of the Federal Government for whom the Nation makes available health services of a high quality at no cost to the individuals concerned. This is a commendable function of Government on behalf of deserving groups in our country. It demonstrates beyond any doubt that we, through our Government, do understand the fundamentals and advantages of good health care. In my judgment it is a blot on our Nation's conscience when we are not willing to apply this knowledge and experience in one way or another to the millions of our people who need health care most.

Third are the fortunate citizens who have available the comprehensive service of such prepayment, group practice plans as the Health Insurance Plan of Greater New York, HIP, which you heard about this morning, Permanente, the Labor Health Institute of St. Louis, and Group Health here in Washington.

According to a recent survey of accident health coverage in the United States by the Health Insurance Council, this group numbers a little over 5 million of our people.

Fourth are those workers and their families who are covered by negotiated health and welfare plans, usually underwritten by commercial carriers or the Blue Cross, Blue Shield type of organization, on the indemnity principle.

Fifth come workers and their families covered by other types of group insurance provided without union participation.

Under the fourth and fifth groups there are about 73 million people, according to the Health Insurance Council's recent survey, covered by commercially underwritten group insurance plans under Blue Cross and other plans sponsored by medical societies.

39087-54 pt. 6-25

Next in the order mentioned come persons with individual healthinsurance policies, some 2214 million, according to the survey; then those people who take advantage of existing health service only in cases of extreme injury or serious illness; and, next to them, the indigent, who have access to free clinical care of some sort; and, following them, those who depend upon quacks and patent medicine; and, finally, those who, because of ignorance of the value of health and financial inability to pay for health care, neglect their health almost entirely.

Health problems exist in varying degrees in every 1 of the 10 categories mentioned except the first. The fortunate people in that category combine knowledge of the essential ingredients of good health and the ability to pay for the services which made good health possible. In none of the other nine categories do we find this combination in such complete form, and in some there is little trace of either factor. Our existing plans designed to make health services more generally available through the prepayment of medical care costs are, with few exceptions, notably inadequate.

In the first place, despite the startling growth of prepayment plans over the past decade, and in spite of the fact that more than 50 percent of all Americans are covered by some sort of health insurance, the President's Commission on the Health Needs of the Nation reported that "such plans cover only 15 percent of private expenditures for medical care" (vol. 1, p. 43).

The so-called health insurance issued by both commercial insurance companies, and the Blue Cross, Blue Shield type of organization, is written of course on the indemnity basis. This means that it pays limited benefits for limited items of health care, and that, in so doing, it neglects completely the fundamental need for preventive medicine and early diagnosis and treatment. It does nothing to minimize the development of illness to more serious stages, and thus it fails to get at one of the basic causes of the high cost of medical care. To the contrary, there is evidence to indicate that the development of indemnity-type health insurance has actually played a part in increasing health cost.

In addition, indemnity-type insurance plans issued on an individual, rather than a group basis, has another-practically a fatal-shortcoming from the viewpoint of providing adequate health services to those who need such services.

As reported in the latest issue of our weekly newspaper, The Machinist, our union has recently had complaints from a number of members concerning a fine print feature of individual health-insurance policies which permits insurance companies to refuse to renew such policies at their option. All of the complaints boil down to 1 simple, and I believe, tragic experience, that inevitably when a holder of an individually issued health policy submits a claim for other than minor illness he is told either 1 of 3 things: that the company will refuse to renew his policy at the next renewal date; that coverage will be continued only if he agrees to waive future benefits for claims resulting from the illness which caused his claim; or that full coverage will be continued in the future upon the payment of increased premiums.

The net effect of this practice, and it is so common that it is actually a policy, is to deprive people of their protection against the cost of medical care at the very time when the need for such care is imminent.