surgical, and medical expenses has been phenomenal during the past few years. It is our belief that the future also holds real promise for still greater progress in health insurance coverage. This fact, plus the demonstrated ability of the industry to meet the needs and demands of the public, indicates to us that it is unnesessary for the Federal Government to enter the field. Senator PURTELL. When you speak of the industry you are speaking, of course, of the insurance industry? Dr. ALLMAN. Insurance; that is correct, sir. The public interest will be served best and continued progress of health insurance protected by preserving the freedom and competitive features of the present method of operation. It must also be emphasized that there is a limit to the number of insurable people in this country, and a limit to what can be accomplished by insurance. In any effort to solve the economic problems of medical care, it is essential to consider two groups of individuals: (1) Those who are able to pay the normal costs of medical care; and (2) Those who are indigent. Most of the American people fall within the first group and have access to the many forms of health insurance now offered. Some of these have elected to carry their own risk either because of their financial ability to do so or because they are not convinced of the wisdom. or necessity of purchasing protection against medical expenses in advance. As the desirability of insuring against medical expenses is more generally accepted and as the improvement and development of new types of coverage evolve, it is reasonable to expect that the maximum number of insurables will be covered. The other group-the indigent-pose distinctly different problems. These individuals do not have the funds with which to purchase insurance and are dependent, in some measure, on outside assistance for the basic necessities of life. The American Medical Association believes that if the medical-care problems of this group cannot be solved by the individuals or their families, the responsibility should be assumed by the local and State governments. As an association we have been greatly concerned with the individuals in this category and are making efforts to aid in the solution of this very difficult problem. Through our council on medical service. we have undertaken a series of studies of the organization and operation of State and local indigent medical-care plans which are effective in meeting the need. Fifteen such studies have been made to date and five more will be completed this summer. These reports are being published in the Journal of the association and distributed to all State and county medical societies. Through this method and through the establishment of suggested criteria for such plans medical societies have been stimulated to organize an adequate program or to improve an existing one. Recognizing that the medical profession is only one of a number of parties concerned in the total health-care picture of the indigent, a permanent study group comprised of representatives of the Amer ican Medical Association, the American Hospital Association, the American Dental Association, the American Public Health Association, and the American Public Welfare Association has been established. Senator PURTELL. May I interrupt, Doctor? How long has that been established? How long has it been oper ating? Dr. ALLMAN. Do you know the date of its inception? Senator PURTELL. Is it a matter of years? Mr. MARTIN. It has been some time, Mr. Chairman. Senator PURTELL. A couple of years. Dr. ALLMAN. If that is a satisfactory answer Senator PURTELL. Yes. Dr. ALLMAN. It hasn't just been done, but it hasn't been too long. Two immediate projects being undertaken by this study group are: (1) Preparation of a basic statement on the total problem of health care for the indigent. (2) A series of joint field studies by staff personnel of the various agencies represented so as to consider the problem, operations, and services of all groups concerned with providing medical, hospital, and related services to the indigent. Finally, the association is considering the establishment of a field service to assist State and county medical societies in developing indigent medical-care programs. As a pilot project the field staff spent 5 weeks in 1 State during the summer of 1953 to help collect basic data and information which might lead to a formal State organization and to adequate financing for an indigent medical-care program. We hope that expanded efforts by private agencies and an awakening by State and local governments to their responsibilities to the indigent will lead to a solution of the problem. It is not clear, however, how persons in the indigent group will be assisted by the provisions of S. 3114, without some form of Federal subsidization paid through the insurance companies. We believe this would be objectionable. Senator PURTELL. Of course, you know the bill doesn't call for the paving of any subsidies? Dr. ALLMAN. That is correct. Senator PURTELL. You recognize that, Doctor? Dr. ALLMAN. That is correct; yes, sir. As physicians, we have a real interest in this bill; nevertheless, we do not feel qualified to comment authoritatively on its technical insur ance and reinsurance aspects. We have, therefore, met with representatives of the insurance industry and have, in addition, studied carefully their testimony before congressional committees during the past few weeks. We have noted the reluctance and, in some instances, the expressed fear with which these insurance authorities have viewed the proposal. This testimony plus other expressions of opinions Senator PURTELL. May I interrupt a moment, Doctor? Is that fear, since you don't indicate what it is, simply the fear of the Government getting into what ultimately might lead to socialized medicine? Dr. ALLMAN. No; it is the fear the bill will not accomplish its purpose: the fear there is no real need-and that not only may it not accomplish its purpose; it may act as a detriment to the expansion of private health services. Senator PURTELL. Have they indicated in what way that might be the result of the bill? Dr. ALLMAN. Indicate in what way that might Dr. ALLMAN. In the first place, there is no need. They have indicated to us they have ample funds to do their own reinsuring, if neces sary. As far as being a hindrance to the normal, proper growth, they fear they may be, in some cases, tempted to go into uncharted fields, where the results may be catastrophic and may react unfavorably on all in surance. Senator PURTELL. Of course, it couldn't be catastrophic beyond what the funds go, beyond the $25 million, plus the amounts paid in; and in the case of the insurance companies it can only be to the extent of 25 percent of their losses, because the Government guarantees the other 75 percent of those losses, and it would be, of course, by responsible insurance companies, so that I don't believe they intend plunging in blindly. It was hoped the bill might open up new areas of exploration at a faster rate than otherwise might be accomplished. I just wondered, Doctor, when you spoke about the fears, whether the basic fear was perhaps of a camel's nose under the tent, as they talk so much about. Dr. ALLMAN. I don't think that is the basic fear. Senator PURTELL. I am sorry for the interruption. Senator PURTELL. But I thought perhaps you had some other things to say about it. Dr. ALLMAN. This testimony, plus other expressions of opinions from the insurance industry, and our own analysis of the bill, has led us to the conclusion that a Federal reinsurance system such as proposed could not be expected to achieve the objectives set forth in this measure. In addition, the measure as drawn would place extensive regulatory power in the Secretary of the Department of Health, Education, and Welfare. The concentration and delegation of such potential power and control over a vital branch of the American industry in a department of the executive branch of the Government, without clear and convincing evidence of the need, is extremely difficult to justify. Senator PURTELL. May I interrupt there a minute, Doctor. We had data presented to us 2 days ago, I believe, or 3 days ago, which indicated that actually there is only 19 percent of the physician costs that is met by insurance-only 19 percent and in the case of hospitalization I believe it is only 38 percent. Wouldn't you think there was a need, if those figures are accurate? Dr. ALLMAN. Assuming those figures are accurate-I mean I don't think they Senator PURTELL. Let's change it a bit. Let's jump it up to 50 percent, which is certainly jumping it up. Dr. ALLMAN. No; even accepting them, I don't think the figures per se would necessarily be the indication. There are many people, such as those who are here probably, who aren't interested in insurance. We pay our own way. Therefore, we wouldn't enter into that insurance bracket. There are many indigent patients who are receiving care that don't come into that bracket. So, I don't think you can just take the percentages per se, by themselves, to indicate too much. Senator PURTELL. Except, Doctor, if you break down the 160 million people in this country and break them down into income brackets, we will find a very, very substantial, a very, very large percentage of the total population is in that income-tax bracket where perhaps they can't afford to do their self-insuring; and that was the thought behind this legistlation, not the people who have sufficient money so they don't have to worry about medical and hospital bills, but the people who actually need some sort of insurance coverage to meet those obligations. I feel perhaps that is one thing the bill might do. I am not arguing the point. I simply want to call to your attention these figures that we had presented to us indicate a very pressing problem for insurance coverage. Dr. ALLMAN. Might I say if you had taken those figures 3 or 4 years ago you would have found them to be terrifically worse, and in the past few years there have been great strides made in this insurance field. We feel the progress has been very commendable, and we are in hopes it will continue to be. We see no reason why it shouldn't. We are fearful of upsetting that trend. Senator PURTELL. Since we have demonstrated by additional coverage there was a need then, doesn't that perhaps indicate that such areas that are being covered now might have been hastened a bit in their coverage; and isn't it true we would at least insure the insurance companies in exploring these new fields of coverage against excessive loss by this and perhaps encourage them to work a little faster in exploring those fields? Dr. ALLMAN. I am not so sure. Senator PURTELL. I wondered if that isn't true. Dr. ALLMAN. I don't see how it would do it, sir. I mean I don't want to be Senator PURTELL. No; I am not arguing. I am simply trying to get your thinking on the matter. Dr. ALLMAN. Well, we really don't think this will hurry the situa tion any. We doubt if it will be used, in the first place, and if it is used we are afraid it may lead some companies into taking actuarially unsound risks, which might not work out to the best. Senator PURTELL. Actually, Doctor, we are many times asked, and I have been asked many times: No. 1, there is a recognized need for additional coverage of some kind. There is a recognized need for meeting this health problem. What are the professions doing to meet this, and how quickly can it be done, and in what fields are they exploring? In the answers to these problems we are trying to find perhaps a path we may follow. We recognize this is experimental. Dr. ALLMAN. The professions are doing very much. We have a very definite, constructive program, a positive program, of which we will be glad to supply you with copies. Senator PURTELL. We would be glad to have such programs as you have. We are simply trying to find out what the answers are; and if you will give us, the committee, the programs that you have that indicate your solution to it, or partial solution or attempted solution, we will appreciate it very much. Dr. ALLMAN. We will attempt to supply that, sir. We have volumes of it. We have this Council on Medical Service, which I spoke of before, a special committee on medical care, and a special council on minor problems. Senator PURTELL. You are not just studying; out of those have come some plans? Dr. ALLMAN. Yes. Senator PURTELL. We would like to have those plans. Dr. ALLMAN. We will see that you get them. Mr. MARTIN. We will supply them for the record, Mr. Chairman. Senator PURTELL. Again I apologize for interrupting, but again it seemed pertinent at that particular point? Incidentally, those plans you do submit will be incorporated in the record. We will hold the record open for you if you will send them to use within a reasonable time. Mr. MARTIN. We appreciate that, sir. Senator PURTELL. Thank you. Dr. ALLMAN. We will have them sent immediately from Chicago. (The information submitted by Dr. Allman is as follows:) Hon. WILLIAM A. PURTELL, AMERICAN MEDICAL ASSOCIATION, Chicago, Ill., April 29, 1954. Chairman, Subcommittee on Health, Committee on Labor and Public Welfare, United States Senate, Washington, D. C. DEAR SENATOR PURTELL: On April 15 representatives of the American Medical Association testified before your subcommittee relative to S. 2758, H. R. 8149, S. 2759, S. 2778, and S. 3114, 83d Congress. At that time our witness, Dr. David B. Allman, of Atlantic City, N. J., was requested to supply certain material for the record. In his testimony, Dr. Allman considered the above-mentioned bills separately and discussed each at length. We find, on reading the transcript, that some of the requested information was covered in the prepared statement. The remaining material which was requested is submitted herewith as attachments, with the following specific comments by way of summary. The American Medical Association, since its organization over 100 years ago, has been vitally and consistently concerned with the health of the Nation. This is our business; our reason for being. As an association we would be the first to admit that, despite the remarkable record of medical achievement, much remains to be accomplished. However, we think it is important to emphasize that in practically every instance of recognized deficiency, the American Medical Association has been the first to undertake a positive, constructive program of action. This is a fact which may be forgotten in the heat of discussion over some particular legislative proposal affecting a segment of the total health field. The association is vitally concerned with the four areas which would be affected by the bills on which our statement was presented on April 15. As Dr. Allman indicated at that time, the association has done a great deal of constructive work with respect to the problems involved and long before they became subjects of proposed legislation by the Federal Government. We will touch briefly upon a few of these matters. First, with respect to health insurance: It appears that it is quite often forgotten that the medical profession was the pioneering group in the health insurance field. When prepaid health insurance is mentioned, most people think at once of Blue Cross and Blue Shield, which is quite understandable, since Blue Cross pioneered in the field of group hospital insurance, and Blue Shield in group surgical coverage; however, the important fact to remember is that the medical profession actually did the underwriting for most of these original plans. The medical profession, for example, underwrote and suffered a large loss in California during World War II while the program for insurance of agricultural agencies was being developed. It is our understanding that Massachusetts will cover catastrophic illness in the near future, and that New Jersey and Oregon are about to announce |