Certainly it would have to include some regulation of costs, but certainly it would have to provide for a much more comprehensive coverage than most of these plans now include.

I think I frankly believe that most of the people of our country misunderstand the extent of private health insurance plans. They are not nearly as good as many people believe they are, and they are not nearly as good as their advertisements mislead the people to believe they are.

With your permission, Mr. Chairman, I would like to direct your special attention to one of the documents attached to this statement, which is merely an indication of how these work out in individual

cases.

This is a case involving one of the members of this organization. I believe it is the last page, and the heading is "Statement of Anthony Ballerina, Business Representative of Local Lodge 1327." While I do not desire to read the statement now, I want to brief it in this way.

Here is a man who carried health-insurance policies with two organizations. He has been doctoring since 1947. His two companies have paid off all the claims according to the requirements of the policies. Yet he was forced to spend $8,300 of his own money for doctor bills and medication and various kinds of X-rays and treatments in that period of time.

You can multiply that many, many times, and you will have some idea of what that problem amounts to.

The CHAIRMAN. If there are no further questions, Mr. Hayes, I would feel it appropriate to express to you again, and I wish I could find words that would adequately do it, our appreciation of the interest you have taken in the matter.

As I previously said both before these hearings and during these hearings, we are counting largely upon the experience of groups such as your organization to be helpful to us in drawing legislation.

While it is true that I have introduced some bills, I have never wanted those bills to be considered other than provocative of thought and consideration by those who have had far more experience than I have had. I would not want it to be assumed that the bills which have been introduced are such that they would be necessarily acceptable in their present form, nor adequate in their present form. I have felt that they are signposts pointing the way toward an objective which it is our hope we can attain. While it is necessary for us in matters of legislation at times to be realistic, the same as you have indicated that unions must be realistic, yet that does not deter us from losing sight of our final objective, in the hope that if not immediately, we can within reasonable time reach the conclusions we wish that we could adopt immediately.

In other words, if we are realistic and because of being realistic we find it is necessary to accept something less than what we think it should be, I would not take it that that would end our labors by any means, but merely be an additional encouragement to press on until we could accomplish and have the type of program that we are so anxious to have for the benefit of our people.

The work that is being done by labor unions outside the field of legislation, by collective bargaining, is making a great contribution to this whole subject and undoubtedly will prove helpful through the years to come as we study this whole question.

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You as a representative of labor and the gentleman who is to follow you on behalf of the organization for which he speaks, to both of you I want to say that we want you to feel that we think you have made a great contribution already, and your willingness to persevere is an encouraging sign that something eventually will be done.

Mr. HAYES. Thank you. May I thank you, Mr. Chairman, and the other members of the committee, for the courtesies extended to me. The CHAIRMAN. Our next witness is Mr. Frederick Umhey, executive secretary of the International Ladies Garment Workers Union, AFL. During the war, he was a consultant to the War Department. He was cited by Secretary Patterson "for meritorious service."

He has long been active in many phases of health work. He is secretary-treasurer of the Union Health Center of New York, sponsored by the ILGWU. This is the oldest operating union health plan. He is also secretary of the ILGWU Health and Welfare Foundation, which operates 14 health centers and clinics in various parts of the country, including 2 in New Jersey (Newark and Camden).

He is also chairman of the A. F. of L. committee for the infantile paralysis foundation and a member of the board of directors of the New York Cancer Committee.

He served on the advisory committee on unemployment compensation for the State of New York from 1940 to 1951, being appointed by Governors Lehman and Dewey.

He was also appointed by Governor Dewey as a member of the board of trustees of the Fashion Institute of Technology and also as a trustee of the Institute of Applied Arts and Sciences. Both of these institutes are part of the University of the State of New York.

In 1949, along with other labor leaders, he met with the AMA council on medical service in an effort to work out an agreement on voluntary health insurance plans. This effort failed because of crippling amendments passed by the house of delegates of the AMA. We are pleased indeed to have you as a witness before us today, Mr. Umhey, and we regret the fact that the time of day and the engagements of the members have become such that it is not possible for us to have as full attendance as we would have liked.

As you give your statement, you may be assured as it becomes a part of the record in our hearings, it will have the attention of the full committee.

I hope that you will not be discouraged from proceeding and giving us just as full a statement as you feel the situation warrants.

STATEMENT OF FREDERICK UMHEY, EXECUTIVE SECRETARY OF THE INTERNATIONAL LADIES GARMENT WORKERS UNION Mr. UMHEY. The International Ladies Garment Workers Union has a long and proud history as a pioneer in the field of health protection. Today, that history is capped by an integrated system of health centers and health benefits which provide at least basic protection to 3 out of every 4 of its 436,000 members. And yet, useful as our achievements have been, we are aware that they have only touched the bare surface of a deep and pressing problem. It is that awareness which brings me here today. For it is clear that if our Nation is to have a really comprehensive program of health protection, that program must be laid down by the type of legislation now before the committee.

Before I go into our position on such legislation, the committee may find a brief description of our own health activities helpful in its consideration of the problem. Basically, they date back to 1913 when our first union health center was established in New York City. It was then, as it is now, designed not to solve the total health problems of our members but to furnish them with at least minimum medical services on an ambulatory basis. Until 1945 the medical services were paid for almost wholly by union members at a nominal charge of $1 a visit and by direct subsidies from the union's general funds. Since then, most of the services furnished by the health center are paid for by contributions from our union-administered employer-financed health and welfare funds.

Our New York center occupies 6 floors of a 27-story building which it owns in the heart of the Manhattan garment area. A staff of 176 physicians services the center. It is directed by a physician, who reports to a board of directors made up of union officials. It carries on the usual diagnostic work common to an ambulatory clinic, with special emphasis on routine screening procedures as a preventive medical measure. A limited amount of therapy is also done. The underlying need for even such minimum medical services was vividly brought home to us when we inaugurated the employer-financed prepaid plan in 1945. Individual services rose from 125,000 in 1944, before the institution of the prepaid plan, to 566,000 in 1952.

The New York health center has served as the pattern for the 14 other centers we operate throughout the country. In addition to these health centers, we operate several mobile units which consist of teams of trained technicians who visit our factories and are equipped to take diagnostic specimens and chest X-rays of our members. Results of such tests are then submitted to our physicians who then consult with the member's private physician. We have been anxious to expand the services we render our members but in some areas have been hampered by the reluctance of local medical societies to permit us to go beyond simple diagnostic work. For example, in one area we were told that we could tell a worker her eyes were bad but could not issue a prescription to correct the defect.

In all cases, the centers and mobile units serve as adjuncts to our health and welfare plans. The benefits under these plans are provided by trust funds which are financed wholly by employers who contribute from 1 to 5 percent of their payrolls to such funds. They include cash payments for disability, hospitalization benefits, surgical and maternity benefits, eye conservation care, and tuberculosis benefits. In almost all cases, because of the large demand for such benefits and the relatively limited funds available to meet such demand, the benefits of our funds may cover only part of the costs incurred by the sick or disabled workers. Even within these limits our funds expended approximately $112 million in 1952 for such benefits.

Proud as we are of the ILGWU's achievements in this area, we recognize that they represent at best only a partial answer to our members' health needs. For it must be remembered that they were designed to fill a vacuum, that they have all the drawbacks of a stopgap approach. They do not take care of really long-term illnesses. For the most part they make provision for only our members, and not for their families. Wide areas of needed assistance, such as

dental care, are completely omitted. In many areas we have been limited by the organized medical aristocracy to diagnostic servicesand have not been permitted to carry through with therapeutic care. Our surgical benefits in many cases cover only a small part of the worker's bill for surgery.

We are proud of our achievements, but we are realistic enough to recognize that they do not represent anywhere near the complete answer to our members' needs, nor do they represent a pattern which would necessarily be feasible for all other organized groups. We recognize that the answer must lie in a national pattern applicable to all persons, whether organized or not, and that such a national pattern can come only in the form of Federal legislation.

It is for this reason that our membership, at its last convention in May 1953, urged the adoption of a national health insurance program which would, in their words, "assure every person in the country ready access to high quality, personal health service." Our convention unanimously stated that "We believe that national health insurance is one of the most important matters of unfinished business facing the Nation. We strongly urge that it be made a reality quickly." Toward that end, our convention strongly supported the enactment of the recommendations outlined by the President's Commission on the Health Needs of the Nation. We believe that only by such a comprehensive program, involving a broad program of taxation which will directly aid individuals seeking health services rather than subsidizing groups which provide such services, will a truly comprehensive program of health insurance be really effectuated.

I take it, however, that whatever the ideal proposal may be, the two types of bills for health legislation which are most likely to engage the attention of this Congress are those which would give income-tax exemption for medical expenses and those which would in one way or another subsidize voluntary prepaid health-insurance plans.

As to the tax exemption proposals, their attractive features should not blind us to their limitations. Some bills, such as Representative Keating's proposal, would permit the deduction of all contributions made to any kind of health-insurance plan. Others, such as Senator Ecton's bill, would eliminate limitations on the amount of medical expenses which may be deducted. While these proposals recognize that something must be done to ease the burden of medical costs, their value is extremely limited.

First, they would help only those persons who pay on income tax. And out of every 7 income-tax returns, about 2 do not entail any taxpayment at all because the taxable income is too low. Families with over three children would not gain substantially because their income tax is likely less than the $60 to $125 they are already paying for private health-insurance programs. Couples over 65 who do pay taxes unless their income exceeds $2,400, would gain little since most of them have incomes less than this. Those who would benefit most are the 1 out of 5 whose incomes are over $5,000. Even the benefit to these would be of little value under the proposals which would permit the deduction of contributions to voluntary health-insurance plans if such persons do not live in areas which provide plans covering most medical expenses.

In short, income-tax deductions for medical expenses or contributions to health-insurance plans would be of real benefit to very few— and then to those who need it the least. The benefit would be at the direct expense of the United States Treasury and therefore at the expense of every United States taxpayer. Moreover the enactment of such proposals might, from a purely political point of view, undermine the drive for a really comprehensive national health-insurance program.

I take it that at the moment the two proposals for such a national health-insurance program which have any realistic chance at this session are those embodied in the proposed National Health Act of 1953, sponsored by Senators Ives and Flanders and Representatives Hale, Javits, and Scott, and Representative Wolverton's reinsurance program. I believe that both are basically sound in their intent and are worthy of the serious attention of the Congress and the support of all who are interested in a truly effective national health-insurance program. I feel that their approach is right because both proposals offer a plan of insurance which is nationwide in application; both exclude the outmoded means test, and both require comprehensive medical and hospitalization service.

However, both the Ives-Flanders and Wolverton proposals suffer from one basic drawback, which I believe this committee should seriously consider. Both programs are designed to subsidize not individuals but voluntary health-insurance programs. And yet it has been our experience that the vast majority of those who are in most need of such health insurance have, in fact, not found it easy or feasible to join such programs, without a direct and immediate incentive. Thus, despite the tremendous increase in private insurance plans, only about 3 in every 100 Americans are protected by really comprehensive insurance plans. When a serious illness strikes, 4 out of 5 Americans still need some form of financial help to get adequate medical care. Therefore, unless some form of direct incentive is given to the individual-not just to the health plan-it may well be that the worthy aims of the Ives-Flanders and Wolverton plans will largely be dissipated.

Moreover, it will do very little good for Congress to provide funds to voluntary health-insurance programs if such programs are not permitted to exist by organized medical groups. The present roadblocks set up by medical groups in the path of independent health plans will make circumstances, whatever legislation is passed by Congress, a dead letter as far as millions of Americans are concerned. Therefore, as I shall detail later in my statement, I suggest that as part of any plan to subsidize voluntary health-insurance programs the Congress must make certain that its intent is not thwarted by the organized medical aristocracy.

Turning to the bills themselves, I believe there are specific areas in which the proposals can be improved. The Ives-Flanders bill, for example, requires that all approved prepayment health plans be administered by corporations. In point of fact, many such plans, particularly those which have been set up under collective-bargaining agreements, have taken the form of trusts rather than of corporations. Such plans would be excluded under the terms of the bill. I suggest, therefore, that this section be amended to permit the inclusion of nonprofit prepayment plans which are not corporate in form.