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Mrs. Hobby answered Mr. Powell's letter by saying she was not able to do this because the history of the law showed it was not the intent of Congress for this to take place.

We then took the matter up and asked that her legal counsel make a ruling on it, and also that it be submitted to the Department of Justice. She turned it over to her legal counsel, who did make a ruling, saying that because of the legislative history, of the way this law was passed, it would not be possible for the Department of Health, Education, and Welfare to do anything about this problem. Now, that is why we are here today.

We don't agree with the Department of Health, Education, and Welfare. We think that administratively they could do something to correct it; but since the law is now under study, since the President has said that he is against this kind of practice, since Mrs. Hobby has made a number of speeches saying how evil discrimination is and how costly it is, this, it seems, is a chance to put all that into some practical form and we sincerely hope that you will sort of be the sponsor of our amendment and try to get it made a part of the law. Senator PURTELL. Now, have you a proposed amendment? Mr. MITCHELL. That is set forth on page 1 of our testimony. As I said, what we did was simply change certain words in the existing law.

Senator PURTELL. You propose section 622 (f) be revised to read as follows, and then down through that whole paragraph is your proposed amendment; is that right?

Mr. MITCHELL. That is right. The underlined part would be the new language.

Senator PURTELL. Yes.

Mr. MITCHELL. There is a provision in the present law which says that an exception shall be made in cases where separate hospitals are provided for separate population groups, if the plan makes equitable provision on the basis of need for facilities and services of like quality for each group.

Now, we do not include that language because we have found no situation where it has been possible to have a separate but equal anything, and it is especially impossible in this hospital field.

Senator PURTELL. Now, I had not read Mr. Banta's letter before, but I have read it since you started to refer to it here. He says:

The provisions of the act requiring assurances as to nondiscrimination relate only to the provision of hospital facilities for patients and not to staffing practices.

That is his reply, isn't it?

Mr. MITCHELL. That is correct.

Senator PURTELL. And what you want is to see that extends to the staffing and everything else?

Mr. MITCHELL. You see, our amendment provides at the end such regulations shall also provide that no qualified physician, nurse, or other medical person shall be denied use of the facilities because of race, color, religion, or national origin.

Senator PURTELL. I can assure, Mr. Mitchell, that your statement and your suggested amendment will be given very, very serious consideration by this committee.

Mr. MITCHELL. We certainly hope so, Mr. Chairman, because it is pretty hard to take discrimination in any form, but it is especially hard when you know that you are helping to pay for it out of your own tax money.

I happen to live in a State, the State of Maryland, where we have a lot of bad things, but some are a little bit better than those I have described.

The people in your State- I had a meeting with them up in New York last week, and we were discussing many legislative matters and I was telling them that you are chairman of this subcommittee, and it just seemis a shame that the people from Connecticut, wbo would not under any circumstances want to be a party to a thing like this, have to contribute to the support of it out of their tax money, and that we certainly hope that something will be done to correct it.

Senator PURTELL. I can assure you it will be given every considera tion by this committee, and by me, and I want to thank you, Mr. Mitchell, for coming here and giving us the advantage of your views on this and calling our attention to this matter. Thank

yoll,

sir. Mr. MITCHELL. Thank you.

Senator PTRTELL. The next witness is Dr. Allan M. Butler, rice chairman of the Physicians Forum.

Dr. Butler.

STATEMENT OF DR. ALLAN M. BUTLER, PROFESSOR OF PEDIATRICS

HARVARD UNIVERSITY, CHIEF OF CHILDRENS MEDICAL SERV-
ICES, MASSACHUSETTS GENERAL HOSPITAL, AND VICE CHAIR-
MAN, PHYSICIANS FORUM, INC.
Dr. Butler. Do you want me to identify myself or not?

Senator PURTELL. Is it your intention to read your whole statement?

Do you wish it included in the record and then summarize it, or whatever way do you wish to present your testimony!

Dr. BUTLER. I don't wish to review the rather lengthy statement that has been submitted to you.

Senator PURTELL. Then we will include that statement in the record and it will become a part of the record, Doctor.

(Dr. Butler's prepared statement is as follows:) STATEMENT OF THE PHYSICIANS FORI'm, INC., RY Allan M. Buture, M. D. Porn

FESSOR OF PEDIATRICS, HARVARD U'NIVERSITY; CHIEF OF CHILDREN'S M SERVICES, MASSACHUSETTS GENERAL HOSPITAL; VICE CHAIRMAN OF THE IN CIANS FORUM

I have been asked to present the views of the Physicians Forum on 8 3114 the health reinsurance bill. We are a national organization of physielane : existence more than 15 years, all of whom are members either of their $4. medical societies or of the American Medical Association.

Ours is a nonprofit, educational body which has, since its founding in concerned itself with the seeking of the extension and improvement of medival care and with the encouragement of new methods and teenniques to arkuese :* end.

An expanded and integrated national health program has been a long-felt trend There are many deficiencies in existing health services which bring great tart ship, indeed at times ruin, to scores of individuals and even large segments of the

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population. A full description of these facts is included in the authoritative report of the President's Commission on the Health Needs of the Nation.' The American people have become increasingly aware that these deficiencies can be remedied-they need not be tolerated indefinitely. Sound corrective measures have been proposed over the years by the Physicians Forum as well as many consumer and labor organizations, and several national committees and conferences whose sole task was to study the health problems of the Nation.

The most recent of these, the President's Commission just mentioned, made a series of important proposals, most of them requiring Federal action. It is difficult to understand why the present Federal administration has chosen to ignore the well-justified and thoughtful proposals of this group of distinguished citizens.

Although Federal participation in all areas of health services is essential for meeting the country's health needs, there is one crucial area which the Federal Government has found most difficult to approach. This is the area of the financing of personal-health services. Most of this statement will therefore be devoted to this problem, and particularly the proposed measures for solving it.

The President's Commission was unanimous in the finding that present prepayment plans "have not yet proven their ability to meet fully the need for prepaid personal-health services." The factual and rational basis for this finding is presented so well in the report that there is no need to mention it here. However, it is of interest to mention a few subsequent items which further strengthen the economic basis of this statement:

1. A recently published survey made by the University of Michigan Survey Center for the Federal Reserve Board, showed that nearly one-third of the 15 million families in which the head of the family is less than 45 years of age and where the children are under 18, owe medical bills.'

2. A survey by the University of Chicago National Opinion Research Center for the Health Information Foundation showed that 8 million families or 10 percent of the country's total, went into debt because of the costs of illness.* Despite the shortcomings of present prepayment plans, the President's Commission, like all preceeding major national studies and conferences, recommended that "The principle of prepaid health services be accepted as the most feasible method of financing the cost of medical care." This is spelled out to mean that prepayment plans should "provide protection to the total gainfully employed population and their dependents." The Physicians Forum has and still strongly endorses this view in concert with all major consumer and union groups.

To many, it might seem unnecessary to stress this principle, but it must be clearly understood in order to interpret the do-nothing approach of the American Medical Association. Despite its protestations, the AMA does not believe in this principle. Although there is much evidence to establish this contention, the recent testimony of the AMA before the House Commerce Committee is sufficiently clear:

First, the AMA states its opposition to the principle of comprehensive service: "The promotion of the benefits that are comprehensive is not sound because it is the need for protection against the financial impact of truly major sickness or injury that must be emphasized." Second, it states its opposition to the principle of prepayment for the low-income groups, the so-called medically indigent: "When illness occurs, they require aid by direct payment of their health costs from local and State funds." In other words, these groups should be covered by an out-and-out charity program.

It is interesting to contrast this stubbornly held view with that of Dr. Chester S. Keefer, special assistant on medical affairs to the Secretary of Health, Education, and Welfare, in a speech last month to the Medical Society of New York County:

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"Private voluntary health-insurance efforts provide another significant means of meeting the costs of medical care. These programs must be extended in

President's Commission on the Health Needs of the Nation : “Building America's Health,” Washington: C. S. Government Printing Office, 1953. In five volumes.

46293-54-pt. 3—18

President's Commission, op. cit., p. 44.

Study of Medical Debt. Public Health Economics, 10: 160 (March) 1953.

Health Information Foundation: Natonal Consumer Survey of Medical Costs and Voluntary Health Insurance, Summary Report No. 4, p. 3, New York: The Foundation, 1954. President's Commission, op. cit. p. 47.

Walter B. Martin, M. D., Statement of the American Medical Association to the Committee on Interstate and Foreign Commerce," special report of the Washington office, AMA, January 29, 1954, pp. 8-9.

coverage and range of services, however, if they are to bring a high quality of medical care within the purchasing power of all families in the United States

"They will also have to provide opportunities for individuals as well as group enrollment. They will have to place greater emphasis on prerentive and diag. nostic services than is typical of most existing programs, and they must provide for inclusion of services by physicians, nurses, and rehabilitation teams in the nome of the patient." ?

It is clear to most informed persons, except for AMA officials, that pristine prepayment plans by themselves cannot fully meet the need for prepaid genom sonal-health services-that is, a Federal program is essential to meet this terd This position, long held by the Physicians Forum, is also enunciated the be President's Commission on the Health Needs of the Nation, as follows:

"If all our people are to receive high quality personal-health services, govern ment must develop a suitable mechanism, at least for those with low incoties It must finance it wholly for some, and probably in part for others. This mertanism should embody the cooperative effort of local, State, and Federal Ger ernment.” 8

The first major proposal establishing a Federal mechanism for extending prepaid personal-health services to the majority of the people, particularly the low-income groups, was made in 1938 by the President's Interdepartinental f'sib mittee to Coordinate Health and Welfare Activities. This was the basis of Senator Wagner's National Health Act of 1939 which included Federal grants. in-aid to the States for general.medical care.

In subsequent years a number of other Federal mechanisms have been proposant The President's Commission considered them all and recommended (wo; Predent Eisenhower recently advocated a third.

In evaluating these various proposals, the Physicians Forum has judget thage, on the basis of the extent to which they contribute to the development of prege... personal-health services which are:

1. Comprehensive in scope, emphasizing health maintenance and early deter tion of disease--not limited to catastrophic illness;

2. Within the economic reach of the total gainfully employed population 81 their dependents, particularly those in the middle and lower income grupo this generally means the employee himself can afford only part of the cost :

3. Responsible to the recipients by affording their representatives adejuste participation in policy making;

4. Part of a pattern of medical care encouraging high quality and maximum efficiency-for physician services this means an orientation toward the group practice of medicine.

Although these yardsticks are based on long-standing policy of the Physbe! ** Forum, it is worth emphasizing that they are neither original nor exclusive : our organization. Similar principles can be found in the report of the pe York Academy of Medicine's committee on medicine and the changing onder"; the report of the National Health Assembly; " and most recently, the report of the l’resident's ('ommission on the Health Needs of the Nation.'

The first Federal mechanism recommended by the President's Commission ias! recommended unanimously) was the addition of personal bealth service besme fits to the old-age and survivors insurance system, the existing Federal security program." The Physicians Forum strongly endorses the prinripie this recommendation. It is also endorsed by the Commission ou Firancing of Hospital Care in their report just published."

Desirable features for legislation to accomplish this recommendathing in contained in a number of existing acts of Congress and bills before this (ne

po Among such features are methods for participation and payment of pissier hospitals and nonprofit prepayment health plans; decentralization of adm.dk tion; protection of professional rights and responsibilities: the tip of " making committees properly representative of both those persons ellgible for the

Chester S. Kepfer. M. D... The Medical Profession and Public Health Problems Bolle"? of the New York Academy of Medicine, to be published.

President's Commission, op. cit. p. 45. * Interdepartmental Committee To Coordinate flealth and Wellare Actfettipe. The te for National Health Program. Report of the Technical Committee on Medies) *** Washington : United States Government Printing Office, 1938

1. New York Academy of Medicine, committee on medicine and the changing onto V cine and the Changing Order. New York: The Commonwealth Fund, 1947, 15

11 National Health Assembly: America's Health ; A Report to the Natjop"Ne Harper & Bros, 1949, pp. 221-23.

1* President's Commission, op. cit. p. 48

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health benefits and of those providing them; and the encouragement of preventive medicine and the coordination of physicians with each other and with other health services. (See particularly S. 1153 and H. R. 1817.)

The only legislation before Congress along the lines of this recommendation is H. R. 8, introduced by Representative Dingell, of Michigan. This provides hospitalization benefits for beneficiaries of the national system of old-age and survivors insurance. We believe that the provision of hospitalization benefits by themselves is inadequate from both professional and economic points of view. However, we recognize that H. R. 8 would be relatively easy to carry out and would meet a major need of an important group of the low-income population-a group which otherwise could not obtain prepaid hospitalization. For these reasons we favor H. R. 8, but only as an interim measure.

The second Federal mechanism recommended by the President's Commission, although not unanimously, was a program of Federal grants-in-aid to the States." These would be for assisting the States to make personal-health services available to the general population, including the indigent, through prepayment plans established for this purpose. The dissent of the labor and consumer representatives on the Commission was based on their objection to allowing participation in the program to the option of each State.

The only legislation before Congress along these lines, although antedating the President's Commission, is the Flanders-Ives bill, S. 1153 (and its companion bills H. R. 3582 and H. R. 3586). The Physicians Forum is in full sympathy with many important features of this bill, among them the limitation of Federal aid to prepayment plans which are nonprofit and consumer controlled, which have premiums scaled to the subscribers income and which function as part of a coordinated district health service system. However, these and other stipulations are such that only a few existing plans could possibly meet them and many of the other plans would not be able or inclined to reorganize themselves so as to qualify for Federal assistance. We, therefore, favor S. 1153 for the support it would provide to desirable types of prepayment plans but seriously doubt that it could accomplish its objective of making such plans generally available.

President Eisenhower and Mr. Wolverton, chairman of the House Commerce Committee, have advocated the establishment of a Federal reinsurance corporation. Mr. Wolverton's proposals are contained in H. R. 6949, which he introduced on January 8, 1954; this is similar to a bill he introduced in June 1950 which received little attention at that time. The President proposed a reinsurance program in his health message to Congress on January 18." Its legislative embodiment, S. 3114, is sponsored by a group of Republican Senators including Smith, Ives, Flanders, Ferguson, and Saltonstall.

A major weakness of even the best hospital prepayment plans is that they frequently cut off benefits for illnesses requiring prolonged periods of hospitalization. Reinsurance would help remove this weakness of hospital prepayment plans. However, the relation of this deficiency to the country's health needs should be kept clearly in focus:

1. Hospital costs comprise only about 20 percent of money people pay for medical care.15

2. Hospitalization plans, particularly Blue Cross plans, already cover a sizable portion of the hospital costs of insured families and their deficiencies in coverage are principally due to limited allowances for covered periods of hospitalization not to the expiration of benefits."

3. Despite the expressed objectives to the contrary, we cannot see how any self-sustaining reinsurance fund can extend prepaid health services to people who are not covered now because they cannot afford to pay the actual cost of the insurance premiums. Reinsurance would, in general, apply only to those already covered by prepaid hospital care.

Commission on the Financing of Hospital Care: Financing Hospital Care in the United States: Recommendations, pp. 31-32.

President Eisenhower's health message to Congress, New York Times, January 19, 1954,

P. 16.

"Health Information Foundation, op. cit., Summary Report No. 2, p. 3: U. S. Senate Committee on Labor and Public Welfare Health Insurance Plans in the United States. Washington: U. S. Government Printing Office, 1951, pp. 79-81 ·

Health Information Foundation, op. cit., Summary Report No. 2, p. 11; U. S. Senate Committee on Labor and Public Welfare, op. cit., pp. 71-75.

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