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A major weakness of most prepayment plans for physician services is the limited range of benefits provided. However, the important limitations are not of the kind which would be corrected by reinsurance. In fact, the emphasis in the prevailing type of plan is already on surgery and hospitalized illness; their weakness is their exclusion of care of minor illness, diagnostic services for ambulatory patients and health examinations, and other preventive services. These latter services cannot be included by use of a reinsurance system. On the other hand, reinsurance would reinforce existing undesirable features of the prevailing type of physician service plan; namely, the provision of benefits (a) limited to inhospital care, (b) of specified quantities unrelated to medical need, and (c) in the form of cash indemnities.

For these reasons, the Physicians Forum supports the principle of Federal reinsurance only as it applies to the prepayment of hospital services but recog nizes that it would help meet only a small portion of the people's need for prepaid comprehensive personal health services.

In view of this position, we cannot favor either H. R. 6949 or S. 3114 unless considerably modified. In addition, a few other points about these bills are sufficiently important to warrant comment.

H. R. 6949 requires that participating prepayment plans meet a number of conditions such as a sliding scale of premium structure, the provision of specified physician benefits and the contribution by a patient toward his daily hospital charge. We believe these rigid requirements, if accepted, would standardize prepayment plans in many undesirable ways. Moreover, we believe that most plans cannot or would not accept such conditions or participation. Our belief that this proposal is completely unfeasible is supported by the overt or implied opposition to it by spokesmen of all existing types of prepayment plans."

S. 3114 suffers from somewhat the opposite kind of defect-an almost complete lack of definition of what would be done except for the vaguest generalities The formulation of the program would, in all major essentials, be the responsi bility of the Secretary of the Department of Health, Education, and Welfare. We believe it is the responsibility of the Congress to provide the administrator of a Federal program with a clear statement of the objectives and the guiding principles.

This problem is intensified in this bill by the apparent conflict in the generall ties as now stated:

"In the fixing of premium rates (for the reinsurance the participating plans would purchase), regard shall be had to the objective of, on the one hand, making the reinsurance program self-sustaining over a reasonable term and, on the other hand, stimulating and encouraging plans which will promote the purposes and objectives" specified as extending coverage to new "classes of individuals" and to "new communities or areas," and to new "benefits and services."" The deterring factor to extending coverage is not the fear of incurring “abnormal losses and those in excess of anticipations" 1 for which the administration's proposal is designed but the inability of major segments of the population to meet out of their own resources and on a prepaid basis, the known and anticipated costs of comprehensive medical care.

We also wish to record our emphatic opposition to the inclusion of private insurance companies in the program. We believe that the Federal Government should maintain its past policy of providing assistance in the health field to nonprofit organizations only. We believe that the Federal Government shocid not aid organizations where the health needs of the people can come in conflit with profitmaking motives.

Two other pertinent proposals are receiving consideration by the Congress, One would establish a Federal long-term, low-interest loan program for the construction and equipping of facilities for nonprofit consumer-controlled prepayment health plans. This proposal has been introduced into the Congress for a number of years by Senator Humphrey and in this session has also been introduced by Congressmen Hagen and Wolverton: S. 1052, and H. R. 4593 an H. R. 6950. The second proposal would provide Federal mortgage insurance of private loans for the construction and equipping of facilities for group practice prepayment health plans. The most recent version of this proposal, H. R. 7700 is also sponsored by Mr. Wolverton. He has acknowledged the personal assist

17 Washington Report on the Medical Sciences, Nos. 345, 346, and 354; The AMA Wash ington Letter, Nos. 56 and 57.

1 S. 3114, 82d Cong., 2d sess., pp. 26-27.

19 U. S. Department of Health, Education, and Welfare, quoted in AMA Washingt Newsletter, No. 62, March 12, 1954, p. 3.

ance of Henry J. Kaiser in redrafting this legislation, originally 1 of the 4 bills he introduced in January.

The Physicians Forum favors the adoption of both these bills as they would be an important stimulus to prepayment plans which, based on group practice, could provide comprehensive service benefits efficiently and economically. It is clear, however, that these proposals are not designed to meet the economic problem of financing prepaid health care for the large number of people not now covered.

The Physicians Forum recognizes the good intentions and desirable elements in a number of the more recently proposed Federal mechanisms for extending prepaid personal-health services. However, we do not see how any one of them or a combination of them can effectively meet the health needs of the American people. We must, therefore, endorse our previous position that a universal program of prepaid personal health services as outlined in title VII of H. R. 1817 introduced by Mr. Dingell is essential.

Detailed reasons for supporting this Federal mechanism are contained in past policy statements and in testimony to congressional committees over the past decade. As these reasons are still valid, only a brief summary of them will be included here.

The Physicians Forum favors the prepayment of personal-health services through social-security contributions earmarked for this purpose. This broad base assures that sufficient money will be available to cover the cost of required medical care at all times for covered persons. This also makes it possible for each worker's contribution to be proportionate to his ability to pay. The general plan of administration assures decentralization and flexibility while at the same time maintaining adequate standards and promoting continuous improvement in the quality of care. The provision of comprehensive benefits will remove the economic barriers in doctor-patient relationships and make available for the first time to most people, preventive medical services. The bill makes special provisions for group practice, which where utilized, would offer important advantages to the recipients, more efficient, better integrated, and generally higher quality health services; and to the physicians, increased professional satisfactions, greater financial security, and a more orderly mode of living. A universal program of prepaid personal-health services will be most effective as a part of a comprehensive Federal approach to all major aspects of the country's health problems. The President's Commission on the Health Needs of the Nation has made a number of recommendations in all these areas. The Physicians Forum has advocated similar proposals for many years and again would like to emphasize their importance, in particular, the expansion of the HillBurton hospital construction program, increased Federal support of medical research and public-health activities, and establishment of a Federal-aid program in the field of education of health personnel.

Only legislation embodying all these proposals can make possible an expanded and integrated national health program-one which will mobilize all the Nation's health resources and truly meet the health needs of the American people. The Physicians Forum sincerely urges the Congress to take bold and prompt action in accordance with the principles stated in order to conserve and improve the Nation's most priceless asset-the health of its people.

Dr. BUTLER. I would like to read from some notes that I made to emphasize certain parts about that statement.

Senator PURTELL. You are at liberty to do that.

Dr. BUTLER. The Physicians Forum is composed of physicians whose individuals strive daily to give patients needed medical care and through their forum discuss continually means of more equitably distributing the costs of illness. It, therefore, is particularly sympathetic to the work of this committee in studying how the public, through the Congress, can contribute to these same purposes. Senator PURTELL. Doctor, may I interrupt?

How many members do you have of the forum?

Dr. BUTLER. There are approximately a thousand members who are particularly interested in improving the quality of medical care and a more equitable distribution of the cost. So, it is a rather small

organization of people who are particularly interested in those purposes.

Senator PURTELL. It isn't a growing organization, is it?

The reason I ask, so that you will understand, is that I know your testimony given here in 1947 indicated that at that time you had a thousand members.

Dr. BUTLER. That is right.

Senator PURTELL. So, I wondered

Dr. BUTLER. No; I think it has been a rather stationary group. This group of individuals has chapters that are fairly widespread over the country, in Chicago, New York, Boston. In New York the chapters are in Kings County and Queens County; also groups in Los Angeles, San Francisco, and Washington, D. Č.

Senator PURTELL. Doctor, what is the purpose of your forum? I mean, you are organized for what purpose?

Dr. BUTLER. The purpose of the forum is to try to stimulate thought among physicians by holding discussions, and that is why it is called a forum, concerning how one can improve the quality of medical care and more equitably distribute its costs.

Senator PURTELL. You have local chapters?

Dr. BUTLER. Local chapters.

Senator PURTELL. Do you meet with any degree of frequency? Do your bylaws call for meetings at specified times?

Dr. BUTLER. No; but we hold forums as subjects come up, which we feel should be presented to the public, and when there are competent people to discuss the particular subject.

Senator PURTELL. And the public is invited?

Dr. BUTLER. The public is invited.

Though the group in Boston is a relatively small group, when we hold meetings we may have 250 or 300 people attending the meetings to participate in the discussion.

Senator PURTELL. But your sole purpose for existence is the holding of these forums to disseminate information regarding health; is that correct?

Dr. BUTLER. That is correct.

Senator PURTELL. And regarding the practice of medicine?

Dr. BUTLER. And the practice of medicine, to improve its quality. The Forum has submitted to you a full statement of its opinion on how the Congress can best conserve and improve the Nation's health. This statement reviews the findings of recent studies and survers which have clearly defined the need of Federal action. It also briefly mentions certain bills that have been introduced in the Congress prior to S. 3114, with which your committee is now concerned.

The statement then presents the reasons why the Physicians Forum supports the principle of Federal reinsurance only as it applies to the prepayment of hospital charges, and why it cannot endorse the application of this principle to prepaid personal health and medical services, as set forth in S. 3114.

Senator PURTELL. You say you cannot endorse it?

Dr. BUTLER. We cannot. We endorse it as regards hospital-b payments, but not as regards personal-health and medical-serve reinsurance.

I should like to confine my remarks largely to emphasizing certain points relative to this endorsement and disapproval. So far as hos

pital costs go, some form of reinsurance by the Federal Government could be provided rather simply, and should lessen the unpredictable costs of serious illness. It could not only enable Blue Cross plans, for example, to extend coverage to subscribers both as regards services and time, but it could, as sugested by M. A. Van Steenwyk, provide coverage to the hospital needs of the aged and to subscribers unable to meet the premiums, due to employment.

Reinsurance applied to health and medical services is, however, a very different matter. The problem is far more complicated, even if commercial plans paying cash indemnity are ruled out-as they should be, and as, I assume, they will be. I will read just a little further, because I do want to make a distinction between our approval of hospital-costs reinsurance, and disapproval of health service.

First, as stated by Dr. George Baehr at hearings of the House Committee on Interstate and Foreign Commerce, on H. R. 8356, reinsurance will be most beneficial to plans that now provide least coverage and, with extended coverage, will assume the greatest dollar riskthat is, plans such as Blue Shield, which indemnify by paying fees for services rendered by individual or solo practitioners. limited coverage of these plans, with the need for more comprehensive coverage, has been described in detail by A. J. Hayes before the House Committee on Interstate and Foreign Commerce, in January of this

year.

The

Now, on the hearings on H. R. 8356, the unfortunate experience due to the inadequacy of such plans to control mounting costs, as coverage has been extended to out-of-hospital benefits, was referred to by Dr. Baehr. As the evidence present to that committee is available to members of this committee, it need not be repeated here.

Second, reinsurance will be of little help to efficiently organized plans utilizing the services of well-organized group practices-such as the Health Insurance Plan of New York City, the Group Health Association, of Washington, D. C., the Permanente of California, and so forth. Hence, S. 3114 would almost certainly involve the people of this country in footing bills based on the unpredictable costs of the more extravagant and ill-controlled of the prepayment medicalservice plans. This hardly seems the best way to meet the public's need of comprehensive health insurance.

Nelson H. Cruikshank has, I believe, commented, in discussing either S. 3114 or H. R. 8356, that Blue Shield plans are weak reeds upon which to lean in attempting to build a sound national health program. In view of this experience, it seems that every encouragement should be given to nonprofit prepayment health- and medical-service plans that utilize well-organized group practices to render service benefits to subscribers. For this reason, the Physicians Forum endorses H. R. 7700, and I do not know whether there is a corresponding Senate bill

or not.

Senator PURTELL. There is no corresponding Senate bill.

Dr. BUTLER. Yes. Well, the Physicians Forum endorses H. R. 7700, the purpose of which is "to encourage the extension of voluntary, prepayment health plans providing comprehensive medical and hospital care of high quality to the people at reasonable costs within their means, and to increase the opportunities and facilities by which doctors may associate themselves together in groups, partnerships, and

other private-initiative arrangements of their own choosing, in order to broaden the distribution of high-quality medical care through general practitioners and specialists working together, making the most efficient use of medical skills, facilities, and equipment, and emphasizing preventive medicines, detection of disease, and early diagnosis."

To consider enactment of S. 3114 in whole before such group prac tices are more widely used in providing health and medical services under prepayment plans would, I believe, be most unwise not only in regard to broadening medical-insurance coverage but also in regard to fulfilling the Government's responsibility in expending public funds.

The Physicians Forum also wishes to emphasis that even if group practices were accepted as the way to provide insured benefits, and were available to do so, a large section of the public could not afford the means to pay the costs of insurance protection. This has already been remarked upon, this morning, by Mr. Edwin J. Faulkner, who has just spoken here.

Since public funds must cover much of the cost of the medical care of such individuals or families; since the Federal Government can most effectively and economically collect the required funds; and since uniform coverage should be provided throughout this countryin which families move beyond State borders so frequently-the Physicians Forum believes your ultimate aim should be directed toward the prepayment of personal health services through socialsecurity contributions earmarked for the purpose. This broad base assures that sufficient money would be available to cover the cost of required medical care at all times for covered persons. This also makes it possible for each worker's contribution to be proportionate to his ability to pay. Such a universal program of prepaid heat. services will be most effective as a part of a comprehensive Feders. approach to all major aspects of the country's health problems.

In the meantime, the Congress should, as mentioned, encourage the establishment of efficiently organized group practices that are capable of economically providing health and medical services to consumer prepayment health plans.

That concludes the remarks that I wish to submit.

Senator PURTELL. Dr. Butler, you agree, of course, that there is need: you simply disagree as to the way in which that need can be met. I think I do not want to argue-and I am sure you do not, either-bat I think it should be indicated for the record that no so-called nationa compulsory health bill-the type of plan to which you referred in your testimony

Dr. BUTLER. Correct.

Senator PURTELL. No such bill has been introduced in the Senate at this session, and, accordingly, no such bill is now before this committee.

Dr. BUTLER. Correct.

Senator PURTELL. The purpose of the hearings is, absolutely, to discuss the bills that are before the committee; so that, while we are happy to get your views, we do not have any bill with plans or fea tures which are in accord with your testimony, insofar as natio compulsory health insurance is concerned. I think I ought to ind cate, too, that, on the question of compulsory health insurance, exter

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