Mr. PRIEST. Mr. Chairman.

The CHAIRMAN. Mr. Priest.

Mr. PRIEST. I want to express my appreciation to Mr. Biemiller, our former colleague on this committee for his statement, and Mr. Cruikshank, both of them jointly, and individually, for the fine continuing efforts they are making in the studies of this very acute national problem, that is, the problem of supplying medical care to the largest number of people at a cost they can afford to pay.

I want to ask Mr. Biemiller one question with reference to his statement at the bottom of page 3.

I gather from your statement, Mr. Biemiller, that you feel that the adoption of this bill, in connection with a suitably drafted reinsurance program would be most helpful.

Mr. BIEMILLER. Yes, sir.

Mr. PRIEST. Let us just assume-and I am not assuming it for the sake of any reason other than to obtain your opinion-assume that this legislation is reported and passed and that there is adverse action by the committee on the reinsurance program. You still believe, even in that event, this would be a helpful piece of legislation, even though the other should not be approved?

Mr. BIEMILLER. Very definitely, Mr. Priest.

We, as you quite correctly are assuming, make this suggestion only as a possibility of expediting a bill; that if the committee does see fit to act on both proposals, we think they probably could go in one bill and would save time and energy of all concerned and possibly develop support for a joint bill that might not be developed for either bill singly. We are trying to be as practical as possible.

Mr. PRIEST. I think that you know how to be practical, I might say, on the basis of your past experience.

That is all, Mr. Chairman. That is all I have to say.

The CHAIRMAN. Any further questions, gentlemen?
Mr. PELLY. Mr. Chairman.

The CHAIRMAN. Mr. Pelly.

Mr. PELLY. Mr. Biemiller, I am sort of thinking out loud in asking this question, but your background I think might be helpful in clearing up a question as to whether or not it might not be more practical to have an administrative agency like the FHA do the insuring rather than give this function to the Surgeon General, to add to his problems. Would you comment on that?

Mr. BIEMILLER. I think I would refer to Mr. Cruikshank to answer that question.

Mr. CRUIKSHANK. Offhand, I should say, Mr. Pelly, that the substantive provisions of meeting certain requirements by the kind of plans as described in the measure, are those which probably fall into the area of the responsibility of the Surgeon General.

If the FHA-which all of you recognize is primarily a fiscal agency and a loan arrangement agency, shall we say should be given that it probably would not hold back the operation of the program materially, but I should imagine that they would have to have a medical adviser added to their staff and someone that was capable of doing the kind of thing that is contemplated by the Surgeon General's Office here, and it seems to us while this is primarily an arrangement for supporting loans from private institutions, that most

of the actual mechanics in connection with the loans, and so forth, would actually be done by the institutions themselves, and the qualitative considerations that involve endorsement or approval of a loan to be guaranteed are those that are more of a medical service nature, which would be the kind of thing that the Surgeon General's Office is prepared to exercise.

Mr. PELLY. Well, I feel your thinking on that is very sound. The thought came to me, however, that if the medical aspect of it were approved by the Surgeon General, there might be in existence throughout the country an organization already set up that is dealing with the private lending institutions, and possibly it would simplify matters and result in economies in the loaning processes.

Mr. CRUIKSHANK. I do not think there would be anything in the bill-I would have to examine it perhaps more closely to see-as drafted that would prevent the Surgeon General making an interagency arrangement with the FHA.

Mr. PELLY. I thank you for that suggestion, because I think that possibly might be worked out.

Mr. BIEMILLER. That seems to me, Mr. Pelly, also to be an answer, because certainly the experience which the Surgeon General's Office has accumulated in dealing with the Hill-Burton Act would be very pertinent to the type of operation that is contemplated by H. R. 7700. If you had an interagency agreement, then you could get the advantage of negotiating loans, which the FHA would have at its command. Mr. PELLY. That is all I have, Mr. Chairman.

Mr. HESELTON. Mr. Chairman.

The CHAIRMAN. Mr. Heselton.

Mr. HESELTON. I want to also commend both of you for the very intelligent and helpful way in which you have analyzed these questions before the committee and for giving us the benefit of suggestions that you thought were worthy of consideration.

Specifically I was interested particularly in your statement:

We are of the opinion that, if enacted, this bill would encourage private lending institutions to provide funds to voluntary associations, including cooperatives and labor unions.

While it is very helpful to have that opinion, I wonder if you could spell it out perhaps a little bit more in terms of actual experienceand I take it that you know of such groups that have been either successful or unsuccessful.

I think it would be particularly useful to have in the record some instances at least. I do not ask you to do that now, if your prefer to submit for the record instances so we can use them in the consideration of the bills.

Mr. CRUIKSHANK. I could cite one just off the top of my mind, Mr. Heselton.

In Chicago we have been in consultation for a period now of 18 months with a group there, with the Building Service employees. It is a group, the old name of which was the Flat Janitors' Group, which is a group representative of some twenty or thirty thousand in that area of the people who could properly be described as characteristic of the most needy groups in the area-charwomen, janitors, watchmen-generally low paid unskilled people. Many of them are older people that are working maybe part time as watchmen and so forth.

Now, they employed some 2 years ago the services of a full-time doctor; they were so interested in meeting the medical needs of their people.

It is not a rich union. It is not one that its dues are high, because of the nature of their employment.

This doctor has been exploring various possibilities in the city of Chicago, but he is up against a kind of a vicious circle, in a way. He can make arrangements with other members of the medical profession to join a group service clinic, but until he has a place for them to operate from, he cannot go very well to his membership and ask for this additional cost or initiate a bargaining with the employers, where they share the cost of it; and yet he cannot get his plan going until he gets a place to operate, and he cannot get a place to operate until he gets his program going.

And, something like this, where he has a membership and would be able to get financial help, would help him.

Now, I cannot be precise about the probable critical question here as to what approach if any he has made to private lending institutions, but I am sure that the whole experience of private lending institutions with respect to loans to hospitals, is that they are very reluctant-in terms, of course, of protecting their investments for their depositors, which naturally is their first responsibility—they have been very reluctant to underwrite an enterprise of this kind.

I know that they have looked at a number of facilities in the city of Chicago that they could purchase, but they are up against a considerable capital outlay. It has to be downtown where all of these flat janitors and charwomen and all, can be convenient to them, and yet downtown facilities in the city of Chicago are at a price which you can well imagine.

So, they have been for a year or more up against that situation, and I think that if they had an underwriting of the risk of a loan of this kind, that they could get over this hump, and once they got over that, they would be a going concern.

Mr. HESELTON. I think that is very helpful, and if either of you feel that it would be useful to give us additional statements, coming out of your experience, it would be very beneficial to the committee.

Mr. BIEMILLER. Mr. Chairman, may I add something?

The CHAIRMAN. Yes.

Mr. BIEMILLER. I would like to add one more plan, and then we will attempt to give you some more information.

So that some one might not jocularly say that I want to be a showman, before I make this statement I want to add that I am now a registered voter in the State of Maryland.

But, there is a plan underway in the city of Milwaukee, that is running up against exactly the same problem that the Chicago group which Mr. Cruikshank has described is experiencing. It is a plan that has now been approved by the State of Wisconsin Department of Insurance. They are up against exactly the same problem, that they have got to get a big medical clinic established in downtown Milwaukee. I will leave with the reporter a piece of literature describing that group, and then we will get some other information of like nature. Mr. HESELTON. Thank you very much.

(The matter referred to is as follows:)

ANNOUNCING THE COOPERATIVE HEALTH INSURANCE PLAN (CHIP)

OF MILWAUKEE, INC.

Chartered and incorporated under the laws of the State of Wisconsin, approved by the State of Wisconsin Department of Insurance-a nonprofit corporation organized pursuant to section 185.25 to 185.35 of the Wisconsin Statutes. Date of incorporation: February 1, 1954.

Compare CHIP coverage with any other medical plan. CHIP'S comprehensive medical care combined with hospitalization insurance, gives you and your family true medical security-the most complete protection available.

CHIP PAYS FOR EVERY MEDICAL NEED

CHIP pays all the doctor bills, not just part of them.

Existing medical and surgical plans provide too little for most people and are too late for many. CHIP, however, gives you every medical attentionwhenever you need it. You need never worry about doctor's bills again.

How is this possible? CHIP is prepaid all-inclusive care under private physicians, paid for in advance, provided by two medical groups. You choose a personal family physician from one of these groups. Specialists in 12 different fields of medicine and surgery work with him.

You get diagnosis and treatment in your home, in doctors' offices, in the medical center of your choice, in hospitals. From a common cold to the most complicated and delicate surgery, CHIP gives you comprehensive coverage. Here's what CHIP does for you:

1. Keeps sickness form wiping out your lifetime savings.

2. Catches disease in early stages, actually prevents medical disaster.

3. Gives you a family doctor of your own choice to visit at any time.

4. Provides a staff of specialists, latest equipment, and highest quality service to keep you well.

5. Look at the services pictured around this page. Where could you get all this anywhere else?

There is no small print in the CHIP plan. The only medical conditions that CHIP doctors are not responsible for are drug addiction and acute alcoholism. Nor does CHIP duplicate protection that is already provided by the Veterans' Administration, workmen's compensation and care that is given free of charge by State and county institutions, such as tuberculosis care at Muirdale Sanitorium. In addition, CHIP does not provide such things as artificial limbs, eyeglasses, etc., although the doctor's services in prescribing and fitting such appliances are included.

Furthermore, some hospitals supply certain services, such as anesthesia, which are usually covered by hospital insurance, and are therefore not duplicated by CHIP.

CHIP will provide drugs and prescriptions at cost.

Figured on a 40-hour-week basis, the cost of CHIP is approximately 2 cents an hour for single person; 4 cents an hour for married couple; 6 cents an hour for the family.

Shared with your employer, the price of a package of cigarettes per day means you will never have to worry about doctor bills again.

Approximately what does it cost per month? Single person, regardless of age, $3.56; married couple, regardless of age, $7.12; family, including all children under 18, $10.68. Plus the cost of good hospital insurance to pay hospital room and board, nursing and other services while in a hospital, etc.

The cost of medical help is predictable-the price of sickness is not. Probably 50,000 Milwaukee families had to pay from 10 percent to over 100 percent of their income on hospital and doctor bills last year. Average cost $252 or $21 per month.

When a plan like CHIP comes along, you want to learn everything possible about it; in fact, you want to be prepared to fight for it. Here are some basic facts.

Who owns CHIP? You, the subscriber; CHIP is a cooperative.

Who controls CHIP? Your annually elected representatives serving as its board of directors.

Who operates CHIP? The board of directors on business policy and a medical control board on medical policy.

Who selects the doctors? You select your family doctor from doctors carefully screened by the medical control board.

When do I join? At any time. Can I quit? Yes, at any time.

How do I join up? As a member of a group of 10 or more-see your group leader-discuss it at membership meetings.

Is there a membership fee? Yes, $3 lifetime membership fee per individual or family.

Is there a surgical fee schedule? No, the entire cost is paid out of CHIP premiums.

Are there life insurance, disability payments, etc? No.

May I select outside doctors? Yes, at their regular private rates which you must pay.

Is CHIP supervised? Yes, by the Wisconsin State Department of Insurance. No limitations on age or amount of service.

All preexisting conditions are cared for.

No waiting periods.

The CHAIRMAN. Are there any further questions, gentlemen?

Mr. HESELTON. Let me ask for the record, if they have had difficulty in raising capital in this instance, this group that you speak of; have they had difficulty in raising capital?

Mr. BIEMILLER. Yes, sir; precisely the same trouble; they have the same problems.

The CHAIRMAN. Are there any further questions, gentlemen? If not, we thank you, Mr. Biemiller and Mr. Cruikshank, for your continued interest and assistance in this health legislation.

Mr. CRUIKSHANK. Thank you, Mr. Chairman. We will cooperate to the best of our ability.

STATEMENT OF HENRY J. KAISER, ACCOMPANIED BY DR. SIDNEY R. GARFIELD, EXECUTIVE DIRECTOR, KAISER FOUNDATION, OAKLAND, CALIF.

The CHAIRMAN. Our next witness will be Mr. Henry J. Kaiser, industrialist, builder and-not least-founder of medical center programs. He has been invited by our committee to testify today on H. R. 7700.

We apreciate the willingness of Mr. Kaiser to take the time out of a very busy life to be present and testify.

It is worthy to note that there is now being observed the 40th anniversary of the founding of the Henry J. Kaiser "family" of industries-that just 40 years ago Mr. Kaiser established his first company. It is a saga of American enterprise how Henry Kaiser has rallied the energy and intelligence of tens of thousands of Americans on a teamwork basis and, time and time again, has accomplished what had been called impossible.

Our of all the achievements which have caused Mr. Kaiser's career frequently to be called one of America's greatest success stories, none of his activities has been as close to his heart as the nonprofit Kaiser Foundation's services in the field of people's health. Members of this committee learned this when he responded to our request and generously came across the country in January to give us the benefit of his long experiences in the economics of medical care.

We were particularly impressed with Mr. Kaiser's testimony, because it was not based on mere theories, but on facts, facts developed from the operation of a voluntary health program that has been thoroughly tested out over a period of more than 20 years and has proved to be an outstanding success.