HEALTH INQUIRY (VOLUNTARY HEALTH INSURANCE)

MONDAY, JANUARY 18, 1954

HOUSE OF REPRESENTATIVES,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D. C.

The committee met, pursuant to adjournment, at 10 a. m., in room 1334, New House Office Building, Hon. Charles A. Wolverton (chairman) presiding.

The CHAIRMAN. The committee will now come to order.

STATEMENT OF JERRY VOORHIS, EXECUTIVE SECRETARY, COOPERATIVE HEALTH FEDERATION OF AMERICA, CHICAGO, ILL.

The CHAIRMAN. It is our privilege to have as the witness this morning our former colleague in the Congress, Jerry Voorhis of California, Low of Chicago, I understand.

Mr. Voorhis was a very distinguished Member of the Congress. He rendered outstanding service during his terms of office, covering the 76th, 77th, 78th, and 79th Congresses.

I have never known anyone in the Congress who was wanted more sincerely, earnestly, and zealously in solving the problems that were presented to Congress than our former colleague, Mr. Voorhis, who is a witness before us today.

Mr. Voorhis is executive secretary of the Cooperative Health Federation of America, which has its principal offices in Chicago.

Mr. Voorhis was born in Ottawa, Kans. He holds degrees from Yale University and from Claremont College, California.

Mr. Voorhis started out as a factory worker, moving on step by step to freight handler, ranch hand, and automobile assembly plant worker. This would indicate his interest in the matter which brings him here as a witness today.

Mr. Voorhis is a former schoolteacher, having taught in both Illinois and Wyoming. From 1928 to 1938, he was headmaster of Voorhis School for Boys, San Dimas, Calif., which school was turned over as a gift to the State of California by the Voorhis family in 1938. The school is now a vocational unit of the State university.

Although the newer members of the committee may not know Mr. Voorhis personally-it is because of that reason that I saw fit to emphasize the splendid and distinguished service that was rendered by Mr. Voorhis when he was a Member of the Congress-during that time he served as a member of the Agricultural Committee, and the Post War Economic Policy and Planning Committee.

Mr. Voorhis, it is a pleasure to welcome you here today as a former colleague to testify before this committee, realizing whatever you say

undoubtedly will be your sincere thought in this important matter. You may proceed.

Mr. VOORHIS. Mr. Chairman, I am very grateful for that kind introduction. I am sure you can appreciate that a fellow who comes back here under these circumstances has some very strong emotional feelings, when he gets here, and it means a great deal to me to be here this morning.

I would like to take occasion, if I may, to compliment this committee on the series of hearings that they are now holding, which I think are exceedingly constructive and very worth while in connection with what is after all at the moment, at least America's No. 1 economic problem, as far as the average family is concerned.

Our method in the United States of problem solving is experimentation. Whenever we do not know exactly what to do about a situation, we try one thing after another until we hit upon a method that works.

In recent years our people have become very health conscious. Discovery by selective service of the tremendous number of young men disabled from preventable causes is one reason for this. And a third one is the increasing skill of the medical profession and the wide publicity given wonder drugs, and the ability of the medical profession to actually save lives, almost without question, if it gets a good chance to do it. The publicity given to wonder drugs probably has something to do with this, too.

On the average, American families now spend 5 percent of their income for medical care. If they have no insurance protection, that 5 percent may leap to 25 percent, or 50 percent, and even more, in a year when serious illness strikes. The very scientific progress of modern medicine, coupled with the rise of specialization, have made the average family-and how much more the low-income one-less and less able to meet the cost of sickness on the old emergency feefor-service basis. No wonder a majority of families list the cost of illness as their No. 1 financial danger.

Much of this sickness could actually be prevented if the families had the advantage of comprehensive care, including preventive care. And much of the economic disaster to the families could be avoided if that care were paid for on a predictable, periodic prepayment basis. More families go broke, I suppose, from sickness than from any other single cause, unless it be mass unemployment-and fortunately we have not had mass unemployment for a number of years. This is bad enough. What is worse is that the American people are actually paying as much for medical care as they would have to pay for comprehensive care, if only the money were spent in the right way. Figures developed by the President's Commission on the Health Needs of the Nation and other reliable authorities show that we spend approximately 4 to 5 percent of our income for medical care. Five percent of the income of a low income-let us take one with $2,500 a year income-and while this is not quite enough, it is sufficient to cover fairly comprehensive care as provided by the best prepayment plans in existence today.

So it is all a question of how we spend the money. At present we spend it something like this: We hope that there will be enough rich people among those who get sick so that there will be income

enough to support the doctors and the hospitals and keep our facilities going. The only trouble is that there are not enough rich people, and they don't get sick often enough, and when they really get sick, even they are not well enough to do to pay the bill. This is not to the discredit of the medical profession. Far from it. In a way it is a compliment, because of the fact that through specialization, modern medicine is able to do so much more for the people than it ever could do before; but only the people who can afford to pay for modern medical service on the present basis of fragmented service and fragmented bills. They are the only people who can afford to pay in addition to the family doctor the fees of the 5 or 6 specialists who might be brought into a difficult case. Yet modern medicine means having available the specialized knowledge and specialized skills of these men. Modern medicine means a body of knowledge and science and skill that can be provided only on a teamwork basis. Modern medicine means a science that saves lives-that can effectively treat almost any condition, if you get to the right doctors, and in time.

Mr. Chairman, I would like to say if the members of the committee want to interrupt me at any point it is quite all right with me.

The CHAIRMAN. Mr. Voorhis, it has been the practice of this committee, and one that we think works to the best advantage, from the standpoint of the witness and the committee, and likewise conservation of time, is to permit a witness to make his statement in full before there are any questions.

Mr. VOORHIS. Thank you, Mr. Chairman.

So that is the problem.

And in good American fashion we have started out to solve it in a dozen different ways. Each of these ways-and I want to emphasize this each of these ways of attacking the problem of how to pay for medical care has helped toward solving it. This is true of publichealth service, commercial insurance, Blue Cross, Blue Shield, industry plans, labor plans, doctor-owned group practice clinics, and all of the rest.

Some of these programs include many people but cover only a fraction of the need of those people. Nearly half the population has some form of hospitalization insurance and about a quarter of us have insurance against costs of some medical or surgical care. But hardly more than 15 percent of the total cost of medical care to the people is paid through insurance, broadly defined.

Most of the insurance plans-using the term "insurance" in its broader sense, to include service benefits as well as cash benefits-most of the insurance plans are limited to care in the hospital after the sickness has become acute. But two-thirds-and in some cases we find more than two-thirds of what families spend for medical care goes for the day-to-day nonacute illnesses-for basic doctors' care and medicine in the early chronic stages of disease. The real catastrophe thus far is that we have done so comparatively little about preventing the catastrophies of illness from occurring in the first place.

But it is hard to do this with commercial insurance or with any type of plan which fails to give both doctor and patient a positive and financial incentive to keep the patient well. It is the first calls upon the doctor which are the most risky field of health insurance from a commercial point of view. Yet they are the most important calls of all from the standpoint of the Nation's health.

What we need most of all is a method whereby we can pay our doctors for keeping the people well. At present the problem is that doctors generally receive their income only when people get sick, and the sicker the people are the bigger the doctor's income. This is really backwards. It is not the way the doctors want it. It certainly is not the way the people want it. I am sure it is not the way the members of this committee want it. Corporations pay very good salaries to corporation lawyers who are able to keep the corporations from being involved in lawsuits. Wise corporations would much rather pay salaries to their corporation attorneys for keeping them out of trouble rather than for fighting lawsuits after they are in trouble. We want to treat our doctors in the same way and thus enable them to practice the kind of preventive medicine and health maintenance which they really want to practice.

As to about 3 percent of the Nation's population this has been done. As to the 3 percent of the Nation's population, the first calls upon the doctor and the regular examinations and the early detection of the disease are already paid for. This 3 percent of the people are members or subscribers to comprehensive health plans. Most of these plans are owned and were started into action by the people themselves. This is the method of providing the protection against the cost of illness about which this testimony is given.

My testimony will be confined to those voluntary medical plans in which the people themselves as consumers of medical care assume initiative and take the responsibility for attacking their own problem. I want to assure the committee that the limitation of my testimony is done out of no disrespect whatsoever for plans which are sponsored, controlled, and initiated by the medical profession, the hospitals or any other agencies. Even aside from the important contribution being made by Blue Cross and the activities of Blue Shield, there are many examples throughout the country of group practice clinics and prepayment health plans sponsored by forward-looking doctors which are proving valuable to the people in their communities. Indeed some such doctor-owned clinics are associate members of the organization for which I have the honor to speak today. But my testimony will, as I say, be confined to a discussion of plans which resulted from action of groups of the people themselves or action of organizations in response to their members' needs. Such plans are certainly in the best interest and of best American tradition and their very variety is proof that what is happening here is an application of the American principle of experimentation to one of the outstanding problems of our time. And certainly all of us desire to see the people in groups attack their problems voluntarily and seek their solution through the application of the sound and tested principle of risksharing and mutual aid.

These voluntary plans for the protection of the people against the high cost of illness arise directly out of the keenly-felt need of the people for such protection. This need becomes more clearly recognized as the skills of the modern medical science become more refined, most costly, and more specialized.

For the most logical of reasons, these voluntary plans are built upon the 5 principles outline here. These are: (1) Group practice. That means organization of medical care. (2) Prepayment. (3) Com