Mr. DOLLIVER. Just quite recently?
Mr. HAYES. Well, several years back.
Mr. DOLLIVER. Relatively recently.

Mr. HAYES. Yes. May I qualify that? We were one of the founders of the American Federation of Labor. We were out for a very short period of a few years, and we are now back.

Mr. DOLLIVER. But you are now affiliated with the American Federation of Labor?

Mr. HAYES. Yes.

Mr. DOLLIVER. Now, your international association has many locals scattered all over the country.

Mr. HAYES. Approximately 2,000, including those in Canada.

Mr. DOLLIVER. Do any of these locals of the International Association of Machinists have health programs in connection with their union contracts?

Mr. HAYES. Approximately 61 percent of our membership are covered by negotiated health and welfare plans.

Mr. DOLLIVER. Are those plans uniform or do they vary in different parts of the country?

Mr. HAYES. They vary. The variation is not great. When we are talking about negotiated health and welfare plans, they have one thing in common. They are all inadequate.

Mr. DOLLIVER. They are all inadequate?

Mr. HAYES. Yes.

Mr. DOLLIVER. Well, now, let us explore that a little. In what respect are they inadequate?

Mr. HAYES. The coverage is inadequate. It does not cover the day to day health necessities of the average worker. The coverage is very similar to the coverage of Blue Cross and Blue Shield and policies of that kind. It is usually accompanied by some sort of life insurance policy.

Mr. DOLLIVER. Well, now, just to see if we can get a picture of these contracts, are those contracts generally between the union and a clinic of some kind, in a place where the local is organized?

Mr. HAYES. In the majority of cases they are not. They are based on the indemnity principle. The employer pays the premium and insurance companies handle the policy. Pacific Mutual handles many of our policies. There are probably 5 or 6 different insurance companies, and perhaps more, that handle our various policies.

Mr. DOLLIVER. Is this difficulty that you alluded to about the cancellability of these contracts, does that apply to your union contracts? Mr. HAYES. No.

Mr. DOLLIVER. You have safeguarded that with your union health contracts, have you not?

Mr. HAYES. Yes.

Mr. DOLLIVER. So a man cannot be canceled out just at the whim or under the contract in any way?

Mr. HAYES. That is correct. However, he is not covered when he loses his job or when he moves from one place to another, in most cases. It does not exclude the aged, either. They are covered as well as the younger people. May I stress again, notwithstanding those features as compared with some of the private insurance policies, they are still wholly inadequate.

Mr. DOLLIVER. There are two aspects of this problem that are of particular interest to me, or rather contrasting aspects, I may say. One is the question you have alluded to in your statement of health examinations and preventive medicine. Is that covered in these contracts to which you have alluded, which your locals have?

Mr. HAYES. No, it is not.

Mr. DOLLIVER. Would you say that that was one of the weaknesses of the contracts?

Mr. HAYES. It is one of the many weaknesses of the contracts. I think the weakness of the contract is that it is not comprehensive, and I think that nothing short of a comprehensive policy will solve the problem of the average person, of the average worker, of the average plain person in the United States.

Mr. DOLLIVER. Then the other aspect is this: On a question of a catastrophic illness, do your local contracts cover such a thing as that! Suppose a man is stricken with muscular dystrophy or some diseases presently incurable. Is there a limitation on the amount of indemnity that he can get under those circumstances?

Mr. HAYES. The amount is so small that you could hardly call it a limitation. There is a token payment and that is just about what it

amounts to.

Mr. DOLLIVER. Do you recall what that would be?

Mr. HAYES. Incidentally, we have copies of our principal plans, and we would be very glad to furnish copies to the committee.

The CHAIRMAN. I think it would be well for you to do so, if you will make that a part of the record.

Mr. HAYES. I will be glad to do so, and the copies which we furnish you will have specific information as to their coverage. (A typical plan follows:)

Program for Automotive Machinists, Lodge No. 289-Schedule of benefits except for life, all other benefits are nonoccupational coverage

Accident and sickness weekly benefits begin on the first day of accident disability and on the eighth day of sickness disability and continue for a maximum of 26 weeks during any one continuous period of disability.

The following medical service benefits for all employees are available to you and your eligible dependents-i. e., your wife and unmarried children between 10 days and 19 years of age.

Hospital bills:

Daily benefit for room and board, up to..

Payable up to a maximum of 70 times the daily benefit for employees
and 35 times the daily benefit for dependents.

Other hospital charges, maximum amount.

Ambulance-per trip to or from a hospital, up to

Maximum per disability, $20.

Surgeon's fees: In accordance with the schedule of operations in this booklet, up to

Maternity: For all expenses (except surgery) of pregnancy, childbirth or miscarriage:

(a) If confined in a hospital, up to..

80

(b) If not confined in a hospital.

40

(c) Payment per week (for 6 weeks) under accident and sickness benefits. Doctor's treatments:

8935

25

None

(a) At a doctor's office, up to..

(b) In the hospital, up to..

(c) At home, up to.

Payment will be made from the 1st day of treatment for accident
or sickness.

Maximum payment in any 6-month period..

Diagnostic X-ray and laboratory examinations: For any one accident or in any 6-month period for sickness.

Every new employee who has worked 75 hours in any one month shall become eligible for benefits as of the first day of the following month.

Eligibility shall continue so long as such employee shall remain employed and works 75 hours or more in the preceding month.

Mr. DOLLIVER. The lack of coverage for catastrophic illness is another weakness of some of these plans, is that right?

if

Mr. HAYES. Without question.

Mr. DOLLIVER. Now, maybe you will express an opinion on this and you do not care to, I am not going to quarrel with you. Which of those weaknesses do you think is the more important? Is it the question of catastrophic illness and the lack of coverage for that, or the question of medical examinations and preventive medicine? Which is the greater weakness, or which is the more important, let us say.

Mr. HAYES. I am not a medical man, of course, but it is my judgment that it is much more important that we have health education and an opportunity for preventive-health care, because I think that much of our so-called catastrophic and long-term illness is caused by early neglect. If we have got to choose between one or the other and I sincerely hope we do not, I think we can take care of all of thoseMr. DOLLIVER. I did not mean to put it that way.

Mr. HAYES. If we must chose between one and the other, and I am sure we do not need to, I would much prefer to let catastrophic illness go for a while and concentrate on giving our people an opportunity to become educated as to the advantages of good health and give them an opportunity for prevention of disease and early diagnosis and

treatment.

If we do that in time as our generations change and the old generation dies off, and so on, we will not have nearly as much catastrophic illness.

Mr. DOLLIVER. Thank you, Mr. Chairman.

The CHAIRMAN. Are there any further questions?

Mr. PELLY. Mr. Hayes, I have been particularly interested in listening to your testimony because I represent a great many of your members of the Boeing Airplane Co., and the Puget Sound Naval Shipyard, and I tried, in listening to the various witnesses, to put myself in the place of the people I represent. I was tremendously interested in the Permanente Plan and Mr. Kaiser's testimony, and I thought to myself if I could pay $3.25 a month and protect myself, and have preventivemedical care, it would be reasonable to me under what I am earning, and provide me with both hospital and medical care. That appealed

to me.

But on the other hand what would happen after the 111 days of hospitalization which that plan covered; what would happen after that if I had a permanent long illness? It seemed to me that that is where I needed insurance. I could protect myself to a point, but beyond that I could not. That is why I am interested in your answer or attempt to answer the question of my colleague, Mr. Dolliver, when he asked you as to the relative need of medical care or protection against catastrophic illness.

It has always seemed to me that if you take out insurance, you take it for the things that you yourself cannot protect yourself against. We insure our automobiles, and maybe we take $50 deductible, because we can pay that much, but we cannot afford to pay beyond that.

I thought as far as Federal legislation is concerned, getting into this field at this time, we should try to augment the coverage that people cannot afford.

Mr. HAYES. Unfortunately, Congressman, the type of health insurance and policies that would cover catastrophic or long-term illness are so far beyond the financial reach of the plain people in the United States that there is no need to talk about them, as far as the ordinary workers are concerned, because very few can afford to buy them. Mr. PELLY. That is why I was wondering whether maybe the Federal Government should not enter into this because people could not afford to buy them.

Mr. HAYES. I certainly agree that the Federal Government must. I think it is the obligation of not only the Federal Government, but of the State governments, as well, to provide adequate care for the victims of catastrophic and long-term illness.

Mr. YOUNGER. Throughout your presentation you keep talking about insurance. The other presentations that have been made here draw rather a distinct line between insurance in the way of indemnifying somebody for health treatment by a physician, as against belonging to an organization such as Permanente. Permanente em

phasized that fact, and Mr. Kaiser emphasized that theirs is not insurance, and yet you emphasize insurance all the time. That is against their program, yet you advocate their program which they say is not insurance, and they do not want it called insurance, as I understand their presentation.

Mr. HAYES. Well Congressman, I think in the first instance it is insurance against illness, and then when illness strikes, it is insurance understood their presentation.

I would like to make a point with your committee here. I have sat here for several days and listened to many witnesses, and, inci

dentally, I want to compliment the committee on the objective manner in which they have asked questions. I certainly think it indicates a sincere interest on the part of the committee. However, there is one thing that struck me, and that is that almost everyone talked as though most people in the United States have an opporunity to at some time or other either by health insurance or to affiliate with a group, either through a union or in some other way. That is not a fact. I think that the majority of the workers in the United States do not have access to group plans at all. They are not in a position where they can take advantage of group plans like HIP or Permanente, or the plan of St. Louis or Washington, because they are not members of labor unions, and they are not members of any other type of organization that has a special interest in the health field.

Their lack of education and their lack of knowledge with regard to what is available to them, even through the United States Public Health Service in the field of health, it is really appalling. These millions of people, by far I think the majority of our working population, really do not have access to the things that are even available to them today.

I do not believe that even the encouragement of group practice is the answer to our problem. We must do much more than that. Mr. YOUNGER. For instance?

Mr. HAYES. I think we through the Public Health Service or through the new Department of Health, Education and Welfare, must put on an educational program to educate the people of our country as to the advantages of good health. Then we must make those advantages available to them through some other way. But I think that the Federal Government must take the lead.

Mr. YOUNGER. That is all, Mr. Chairman.

Mr. HESELTON. I think I have only one question, Mr. Chairman, unless it has already been asked. Have you commented on the four bills the chairman introduced, Mr. Hayes?

Mr. HAYES. I have not commented in detail. I said that I believe that that was a proper approach because we had to attack all of the phases at the same time.

Mr. HESELTON. That is, you feel that the objectives and main points of the bill are useful approaches?

Mr. HAYES. I think that they are a step in the right direction. I would prefer that this committee went further in their recommendations and that the Congress would go further also in their action.

Mr. HESELTON. I noted that you mentioned the fact that you are realistic, and we of course have to be somewhat realistic on our part. I cannot speak for the administration but assuming that the administration does make recommendations along this line, would you believe then that a good deal had been accomplished if this committee could work out recommendations to the Congress and have bills like these passed at this session?

Mr. HAYES. Yes, provided that any plan to reinsure the risks, and I think that that is what it is, of the private insurance companies, or to subsidize them in any way, certainly would have to include some very rigid minimum standards of the Federal Government.

39087-54-pt. 626