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two ways of handling this problem, as I see it. What I suggest, for example, is the comprehensive health-insurance program for the whole country.

Senator PURTELL. What page are you talking about?

Mr. Harris. Page 8. I have a small table there. This is based on the general cost of comprehensive health insurance. Here you would find if we provided $150, which is about a minimum estimate for the cost for a family, of real comprehensive health insurance, that this would involve the expenditure of $6 billion. Then for individuals the total amount would be about $500 million. So you would have a total of $61, billion, which is roughly about 4 to 5 times what is covered under the present prepayment voluntary insurance.

The question is, how do you finance that? We all know there are certain people who can't afford to pay $150 a year for comprehensive health insurance. If you look at the next table, Senator, on page 9, you will see that here is an estimate of what this program would cost.

Senator PURTELL. Let me get this, because you are going pretty fast here and I have not had a chance to digest it. What you want is the employers and trade unions to contribute $1,600 million?

Mr. Harris. Exactly. My assumption is that the employers or trade unions would contribute one-half, and between them they might cover about half of the working population. That is about as good a guess as I would make.

Senator PURTELL. And the insured would contribute the remaining $3 billion ! Mr. Harris. That is right. Within 10 years, which would involve Government in spending about 2 percent of the increase in national income each year for this particular purpose on the average. It would be spending about $2 billion, and this would involve the Federal Government spending anywhere between one-half and two-thirds of this amount of $2 billion after 10 years. Of course, in 10 years if we manage our economy well we will have a national income of much more.

Senator PURTELL. Do you think it would be good management if we added an additional S6 billion to it! I was wondering what you meant by managing it efficiently and well, I am not being funny about it.

Mr. HARRIS. What I meant was having a high level of employment and not having serious unemployment. If, for example, our military expenditures should disappear and if the Russians became reasonable, this would raise a lot of problems as to whether we could buy all of the goods turned out by the economy, and this is one very effective way of spending the money, especially because medicine does not run on the assembly line method, and therefore does not use an awful lot of labor.

May I go on to the table on page 9?
Senator PURTELL. Yes, sir.

Mr. Harris. This speaks in terms of economic capacity as to how much this kind of program ultimately would cost. The top figure, which is a misprint, should have been 77. But the point is

Senator PURTELL. Wait a minute. What do you mean, 77?
Mr. Harris. The first row on the top-71 should be 77 in the first

row.

Senator PURTELL. In the income level?

page).

Mr. Harris. The Government subsidy percent to cost. On

. Senator PURTELL. Instead of 71.

Mr. Harris. It should be 77. What this really suggests, you see, is if it is assumed on the average the employer or trade union would pay one-quarter of the bill, or one-half of any individual covered then if you assume three-quarters of the payment is made by the Government, the individual would have to pay nothing. This is true ... of individuals with incomes of $1,000 or less. And down the scale everybody would be entitled to at least 15 percent of the total cost of it. This would be an incentive to join.

Senator PURTELL. These are arbitrary figures!

Mr. HARRIs. Yes, but they based in part on capacity to pay. They go down from 77 percent to 15 percent.

Senator PURTELL. When you get down to $1,000 and over, have another figure there where you could eliminate the 16 percent!

Mr. Harris. You could do that, of course. I am not sure we wat! to. After all, we still allow tax exemption to a millionaire if he has : child.

Senator PURTELL. You feel we ought to carry that right out!
Mr. HARRIS. I think there is a lot to be said for it.
Senator PURTELL. You subscribe to that principle?

Mr. Harris. I subscribe to that principle. I think there is a lot to be said for it. There are a great many people who consider themelues liberals, as I do, who might object to it, but I don't.

Senator PURTELL. Let me get it right. I am not trying to confis you, but get my thinking straight.

Mr. Harris. No. Senator, I like the way you handle this meeting

Senator PURTELL. You believe there should be some Governos subsidy regardless of income, as far as health goes!

Mr. HARRIS. I think one might say this is a waste. Wir sieti 15 percent to people with a million-dollar income. I would not for this seriously.

Senator PURTELL. We are talking about a principle. You suboutine to the principle that we should get into subsidies even if the mandios not need it!

Mr. HARRIS. We do that in a sense in our income tax todlar.

Senator PURTELL. But I am talking about this particular pritura of yours.

Nr. ILARRIS. Senator, this is what the British do. They are subsidy irrespective of income.

Senator PURTELL. Do you think we should follow the British is not only in health, but in our whole economy!

Mr. İleris. I will not fall for that one.
Senator PURTELL. I am not asking it to try to trick you,

Mr. II.RRIS. No, Senator. There are an awful lot of thing-lo" like about the British economy, and a lot I do. I think the fire health program is a good one. Their medical assaiation appripa it. That suggests their doctors see it entirely differently ilan ! doctors do. They don't like some of the terms, but if you talk to the average Britisher or British doctor he says the program is good. ! that does not mean I would take many other things. For exara's I don't see any need for nationalization of industry at this time 21. Es country.

Senator PURTELL. You think it might be something to shoot for! Mr. HARRIS. No, Senator. I would not accept that either.

Senator PURTELL. I don't know what you meant. I am trying to find out. You make these statements and I want to find out.

Mr. Harris. You asked me if I approved of the British economy. There are a lot of things I approve of in the British economy.

Senator PURTELL. I am sorry. I do not want to be misunderstood. I got the impression you brought in the British economy. I did not. I asked you if you believed, since you apparently follow it—and I want to get the philosophy behind your thinking-if you beliered Government should subsidize those who are completely able to pay these health bills. Is that correct?

Mr. Harris. Let me say I would not insist upon it, but certainly I see no objection to it. This would interest a great many people. If you want to cut off the line at say $1 million, that is all right with me. Congressman Curtis raised exactly the same issue on old-age insurance, and said why subsidize people with $1 million? If this will kill the old-age insurance, let's not subsidize people with $1 million.

Senator PURTELL. As a principle you subscribe to it?

Mr. HARRIS. It is the idea of making everybody feel they are getting something out of the bill, and that you are not only giving it to a limited number of people. But if you add up the total cost of the program it comes to roughly $2 billion after 10 years. Ten years is a rough guess because as you know better than I do, there is a great shortage of hospitals, and a great shortage of doctors, and a great shortage of dentists. Your program and bill 3114 does not deal with this problem of the shortage of doctors. This is the most serious bottleneck of all. There is no use in having a more comprehensive health insurance program and having the same number of doctors, because all you do is increase the income of the doctors who now get an average of $13,000 a year, which is 3 times as much as the average college professor, and without very much more training. So that although doctors probably earn everything they get, I would not like to see their incomes go up to $25,000 a year because we introduce a comprehensive health insurance program.

Senator PURTELL. Do you feel there should be a limit on their income?

Mr. Harris. Yo, sir. I don't feel there should be a limit. I think we have a very heavy system of taxation which pretty well deals with the problem of excessive income. As a matter of fact, I don't think taxes are too heavy. It may seem heretical to you, but if

you our national income in the last 20 years I think it is evidence that our heavy rate of taxation has not had a serious effect. So I would not say a man should not earn more than $25,000. I would like to see people earn $1 million and be taxed quite heavily. It is something to shoot at. But I would not like to see too many of them, particularly if it is a result of not giving the lower income a sufficient amount.

Senator PURTELL. Then you do not have any objection to doctors earning more than $13,000?

Mr. HARRIS. No. Some of my best friends are doctors who earn $25,000. I say it is a great mistake to double that income by introducing a health-insurance program which puts a great deal of burden on the facilities available and perhaps will greatly increase the cost of

look at

hospital services, which up to 1950 had increased twice as much as the cost of living.

In other words, if you are going to have a comprehensive program you have to deal with the problem of resources, both personal and nonpersonal, and I think the Ives-Flanders bill, which deals with these e two problems, especially the personal problem-because as you know Senator, it costs more than $3,000 to put a medical student through the medical school in a year, and he pays on the average of $300, and the medical schools cannot handle this problem. We would have had a medical school subsidy if it had not been for the AMA. I think it is generally well known, and that is the trouble, because it makes it more difficult to get all of these programs through.

I want to make one more specific criticism of your program, if I may, Senator. I am being frank, and I hope you don't mind. Te whole idea of reinsurance-and I think the CIÒ in a sense made this point, but I make it in a different way-the whole idea of reincuran is in a sense that it tends to confuse the issue. For example, we do have reinsurance in banking, in the guaranty of bank (lepo-its. W have reinsurance of housing. But I think the analogy is a bad ope, because reinsurance in banking is important, as it is in housing, because there is always danger of a depression, where you might have a withdrawal of money or defaults on mortgages, and where your pro gram is very helpful. But where does it enter into this particiler program? You do not have that kind of problem in the reinsurans of medicine.

What this program really intends to do is to encourage prepayment plans that take some additional risks and perhaps extend their cour age, and so on. This may do a lot of good, but it does not presidio the kind of protection, and it does not occupy the important play that reinsurance does in housing and on the guarantee of lub deposits.

What is needed, as the CIO said, are really subsidies. This is the problem, that a large part of the population can't afford comppelire sive health insurance. This idea of reinsurance, which I would rat say is a complete waste, does some good, but only a very limited amount compared to the kind of problems that are involveri

, Now, Senator, I will take 2 minutes to summarize my position asl then I am through. I want to point out one of the serious problemes is the problem of hospital facilities. For example, despite this wet derful Hill-Burton program which I am sorry to say in the la-t few years has been cut to some extent-despite this program we have just about as many, or as large a shortage of hospital beds today as we did when we started, because of the large increase in obsolesetan facilities, and because of the increase in population, particular:) population which puts such a strain on these facilities.

I want to point out that the greatest deficiencies are in mental pitals, where the deficiener, relatively speaking, was about that! They should have had 40 percent of the new beils provided under: bill, and only got actually 11 percent. In the last 7 years they use increased the number of berts by only 3 percent. You will rema they should have had 10 percent and only got 3 of the new beds lt increased 1 percent.

1

I might say the Administration is doing some work in providing these facilities, and it is all to the good. I wish they would do a little more.

In conclusion, I suggest we use a program of subsidies through State governments for comprehensive

Senator PURTELL. Pardon me. I think we ought to make it clear. You speak of your conclusions.

Mr. Harris. These are the conclusions of the ADA and myself, arrived at jointly.

Senator PURTELL. And they are for the record. The conclusions of the ADA and your own, which happen to concur with them.

Mr. HARRIs. We talked these matters over and this is a joint recommendation. If you would like I would be very glad to ask the ADA to put in any reservation it may choose.

Senator PURTELL. No. You see, you are here giving this testimony, and I would like to make sure as to just whom you are representing. You are free to come in here and represent your own self.

Mr. HARRIS. No. If you had invited me I would have been glad to, but you didn't and the House committee did not. I suppose the reason for that is I am writing a book on health insurance and no one knows anything about it or I would have been invited to the committee before. But I am delighted to talk for the ADA because my views, as on many others, are in agreement with the ADA policy.

Senator PURTELL. You said you are writing a book and no one knows about it. I did not know you were writing it.

Mr. Harris. As a matter of fact, Senator, I was an expert before the Magnuson committee and I have written articles on this subject, and gave papers before the American Medical Association. So I feel as an economist, and one who has been active in the field, most modestly, I am one of the people who knows something about this problem,

Senator PURTELL. You have certainly given a great deal of time to it.
Mr. Harris. I accept the correction.

Senator PURTELL. I did not mean it as a correction. I am serious about this, Mr. Harris. Certainly it is quite evident as to your intense interest in this problem, and I am not trying to belittle that at all. Your testimony indicates you have given a great deal of study to it. I do not want you to mistinderstand my remarks at all.

Mr. Harris. Senator, I think you conduct these investigations with complete fairness, from what I have seen today. It makes me think back to the days when Senator Donnell was on this committee, and he was not quite as nice as you have been here.

Senator PURTELL. We are servants of the people. We are here to help solve these problems, and we need the help of everybody with different views to determine where the answers are.

Mr. Harris. I do not make it a partisan issue at all. I think there are some differences which might suggest I am closer to the Democrats than the Republicans, but all our interest is to improve medical care service and not to make it a partisan issue.

The major point I really make is we ought to make a real effort to provide enough incentives in this program and not give subsidies too fast until we have facilities. If we can get a good, comprehensive insurance program such as recommended by the Magnuson Commission, this may ward off national health insurance. This does not please

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