First, the growth of insurance protection;

Second, what is being accomplished at present; and
Third, an outline of areas for improvement.

This first chart (A) shows the increase in insurance protection in three areas.

Senator PURTELL. Doctor, could you move that chart a little more at an angle there?

That is fine. Thank you very much.

Dr. KEEFER. To repeat, this first chart shows the increase of insur ance protection during the past 15 years, and it is divided into 3 parts:

Insurance against some type of hospitalization:

Insurance against some expenses of surgical treatment; and Insurance against some expenses of medical care.

There has been growth since 1939 in the hospitalization field from 8 million covered to 92 million persons; surgical insurance from 3 million to 75 million; medical coverage-that is, nonsurgical corerage, usually in hospital-from practically none to 35 million people covered.

In summary, then, you will note 92 million have some type of hospital insurance; 63 million have no insurance.

For surgical coverage, 75 million people have some surgical coverage; but 80 million people have no surgical coverage.

In the field of medical care, 35 million have coverage but 120 mil lion people have no coverage.

Now, the reasons for this rapid growth are many, but there are three major ones:

First, dependents are now covered whereas in 1939 most of those covered were individuals-it should be noted that dependent children over 18 are not covered in group policies and other dependents, other than the spouse, are not covered in group policies.

Then also there has been an increase in growth because the em ployer has contributed more and more towards the payment of the premiums. In some instances he pays the entire premium; in other instances he contributes a part of the premium.

Third, people have become more health conscious and are interested in purchasing insurance protection against unpredictable medical care costs that may occur in any 1 year.

To illustrate this point, I propose showing the second chart.

This chart (B) is based on a survey by the Health Information Foundation, a survey of 2,809 families or 8,846 persons, and it is an estimate of the percent of family income spent on medical care in fiscal 1953.

You will note that this is an estimate that is based on a study of 2,809 families.

The median amount spent in any one year was 4 percent of the family income.

Twenty-nine million families spent under 5 percent of their income; 17 million spent between 5 and 20 percent, and 4 million incurred costs between 20 and over a hundred percent of the family income in any 1 year.

This wide spread between under 5 percent and between 20 and over a hundred percent illustrates one of the reasons that many people are

anxious to purchase prepayment health insurance in order to protect themselves and their families against the unpredictable costs of medical care.

The next chart (C) illustrates the private expenditure for medical care in the United States in 1952. This represents 9.4 billion dollars of private expenditures in 1952, divided into the following items:

U.S. PRIVATE EXPENDITURE
FOR MEDICAL CARE

$9.4 BILLION

Hospitalization, $2.8 billion;
Physician services, $2.9 billion;

Medicines, appliances, $2.2 billion;
Dentist services, $1 billion;

Nursing and other services, a half billion.

Of this $9.4 billion spent for private expenditure, 17 percent, or $1.6 billion, is paid for by insurance.

I should like to ask you to focus your attention on these two bars of chart D, hospitalization and physican services, because these are the

two items that are most frequently covered by some type of prepayment insurance.

This gray bar illustrates that of the total expenditures for hospitalization, $2.8 billion, 38 percent, or $1.1 billion, was paid by insurance. For physician services $2.9 billion-19 percent, or one-half billion dollars, covered by insurance.

You will note that hospitalization insurance is covering more of the total bill than is being covered by physician services, so that there is a considerable gap between the total expenditures and the amounts covered by insurance.

Let us turn attention now to the persons with no hospitalization insurance.

You will recall that I mentioned a moment ago that there were 63 million people who had no hospitalization insurance; there are million people do do not have any surgical insurance and 120 million people who don't have any medical coverage, but this chart (E) simply illustrates the persons with no hospitalization insurance, to be divided in three segments:

This large blue segment includes farm families, workers in small
firms, self-employed individuals, and those in casual employment.
In general, the group enrollment is difficult in these various seg-
ments and, since group enrollment is difficult, employer contribution
toward the payment of premiums is also lacking.

In this group, where there are no special coverage problems, you have people who do not choose to buy insurance for one reason or another. They are often students or people to use the phrase of the insurance people, "with the purse," who are able to buy insurance but do not choose to do so.

Senator PURTELL. Doctor, may I interrupt?

You have earners there with a star. I can't see all of that. A small
number of aged are-what-in your footnote there?

Dr. KEEPER. A small number of the aged are included in earners.
Senator PURTELL. Thank you.

Dr. KEEFER. I was coming to this block, sir, which shows the aged and the chronically ill and those on public assistance, who are nonearners, but a small number of these people purchase insurance from the limited funds that are available to them. This chart illustrates, in general, the large segments of people who do not have hospitalization

insurance.

One other point that is of considerable interest in this connection, and that is that the distribution of hospitalization insurance is related to family income (chart F).

The percentage of persons covered with some type of hospitalization insurance, with incomes over $5,000 a year-71 percent; those between four and five thousand, 66 percent; those between two and four thousand, 51 percent; and this figure I would like to underscore because it is an important one-of those 24 million persons with annual family income under two thousand, 25 percent have some type of hospitalization insurance.

I believe that you would agree with me that there is room for improvement in all of these segments.

Now, to turn to another chart (G) which shows the kinds of insur ance carried by 59 percent of the population, hospitalization insurance only comprises about 12 percent of those who have some kind of insur ance; another 20 to 25 percent covered by surgical and hospital benefits; another 20 percent by medical, surgical, and hospital benefits, and then there is a small segment, about 3 to 4 percent, in which the cov erage is comprehensive, and that includes hospital, surgical, and medical care expenses in and out of hospital.

There is room for improvement to extend the benefits to include more comprehensive care, more hospital, surgical, and medical care, more surgical and hospital benefits.

Chart H shows the scope of protection among insured families. Once again it is based on the Health Information Foundation Survey of the 2,809 families that I mentioned, and it is divided into three parts: The cost of hosiptalization, surgical expense, and a gross medical care.

Hospitalization includes room and board, laboratory, the charges of drugs and diagnostic X-ray services.

Surgical treatment is obvious.