the work of the committees. It does not do any good, however, for me to express my views here. I have expressed them where I hope it will count, but it seems as if they have plans of their own with respect to the House administration that are not always in accord with the desires of the chairmen of committees.

Dr. BAEHR. I ask, Mr. Chairman, whether the committee will be reconvened this afternoon?

The CHAIRMAN. I am trying to make it plain, Doctor, that the rules of the House do not permit us to do so. I think we had better drive ahead and do the best we can under the circumstances and cross that bridge when we come to it.

Dr. BAEHR. Then I would like to be recorded, Mr. Chairman, in support of H. R. 7700. As I understand it, the bill is designed to encourage the extension of voluntary medical insurance plans which will provide complete and adequate personal health services for insured people.

The CHAIRMAN. Doctor, may I just interpose for a moment to call to your attention, for such recognition as you may feel that it is entitled to have, that there have been some who have testified, and others who have communicated with the committee, an objection to the restriction of the bill to voluntary prepaid plans. It would seem as if there is a feeling among those who conduct clinics, groups of doctors, in group practice, that group practice should likewise be permitted to benefit by the provisions of a bill of this character and that it should not be confined entirely to the voluntary prepayment plan. So if during your remarks you care to make any comment on that, we will be pleased to hear what you have to say. But I did want you to know that there are some who feel that the bill should be broader than it is drawn.

Dr. BAEHR. I am in agreement with that point of view, because I do not believe that the bill should be discriminatory, if its objectives can be achieved on a broader base, as has been indicated, and I will deal with that in the course of my statement.

I believe that H. R. 7700 is one of the most important health measures introduced into this or any recent Congress. It recognizes that an increasing proportion of our population is living to an age when cancer, heart and arterial diseases, and other forms of chronic illness are increasingly common; that the costs of adequate medical care for prolonged as well as for acute illness are today beyond the financial means of most families of low and moderate income unless met by prepayment; and, above all, it recognizes that voluntary prepayment plans should also be concerned with the prevention of sickness and the early detection and treatment of disease.

Disease prevention and early detection are essential features of voluntary health insurance if prepayment for medical care is to be employed as a public health measure to prevent or at least retard the onset of prolonged disabilities which represent an increasing social and economic loss for the nation.

COMPREHENSIVE PERSONAL HEALTH SERVICE PLANS

Preventive services and facilities for the early detection and cure of disease as well as prolonged medical care for chronic illness are included among the benefits of prepayment plans which provide compre

hensive personal health services through prepaid group practice of medicine.

The provision of personal health services of such comprehensive scope is possible only when the services are rendered by family doctors supported by teams of specialists qualified in the basic specialties of medicine and surgery, pathology, roentgenology, and physical therapy.

In return for the per capita annual income derived from the insurance premiums, the medical group or groups provide medical, surgical, X-ray, and diagnostic laboratory services in homes, in doctor's offices, in the medical centers of the group, and in hospitals. Under the Health Insurance Plan of Greater New York, complete maternity care and even visiting nurse services in the homes and private ambulance transportation to the hospital are also provided without any additional cost.

Another advantage of prepaid group practices of medicine is that the quality of medical care may be safeguarded by the adoption of adequate professional standards by a medical control board. The quality of medical care is also promoted by the free availability within the group of specialist consultations and by the unrestricted use of modern X-ray and diagnostic laboratory facilities for early disease detection.

These facilities and services and their prompt availability without any financial barriers determine in large measure the quality and adequacy of personal health services under this system of organized medical group practice.

MEDICAL EXPENSE INDEMNITY PLANS

Medical expense indemnity plans, on the other hand, are not primarily concerned with the quality and adequacy of medical care. In this type of voluntary insurance, comprehensive health services cannot be provided because solo practitioners of medicine must be paid a fee for each service by the insurance carrier. Under this system, the total volume of doctors' bills for comprehensive services is unpredictable.

Insurance carriers are therefore compelled to restrict cash indemnities to a limited number of reasonably predictable medical services, chiefly to services rendered to the subscriber in a hospital. This kind of insurance provides a cushion against some of the costs of certain catastrophic illnesses after they have occurred.

However, it has been the experience of the health insurance plan over a period of 7 years that 90 percent of all personal health services are rendered to insured persons by family doctors, specialists, X-ray, laboratory, and other ancillary services outside of a hospital.

These numerous professional services, so important to the preservation of health, are either excluded or only inadequately covered in most of the medical expense indemnity contracts sold by commerical insurance and Blue Shield companies.

H. R. 8356, the reinsurance bill, may possibly encourage some medical expense indemnity companies to cover a few of the existing gaps in benefit coverage. For this reason I testified in its support before this committee a few weeks ago. But H. R. 8356 along will in my opinion be of no value to comprehensive service plans like health in

surance plan which have very few gaps in benefit coverage. Nor should we, I believe, delude ourselves with the hope that the reinsurance bill will ever enable commercial insurance companies and Blue Shield plans to provide comprehensive benefit coverage for personal health services outside of a hospital without large deductible and coinsurance features. Medical expense indemnity companies cannot take cash risks of unpredictable magnitude, nor will the Federal reinsurance fund be able to cover unpredictable risks of this magnitude and uncontrollability.

THE NEED FOR GUARANTEED MORTGAGE LOANS

Of the two bills, H. R. 8356, which I support, and H. R. 7700, the latter is more realistic. It will aid in the establishment and growth of other comprehensive service programs like health insurance plan by guaranteeing loans from private lending institutions to local prepayment plans and to their affiliated medical groups for the acquisition of needed facilities and equipment.

These loans can be repaid in future years out of earned premium income of the prepayment plan or out of the income of the prepaid medical group to which the loan is made. The Permanent Health Plan could not have gotten under way without bank loans for which Mr. Henry Kaiser pledged his credit.

The Health Insurance Plan of Greater New York could not have been established in 1947, in spite of the many employees of the city and of private industry waiting for enrollment, of it had not been able to secure the required working capital. Loans of $855,000 were advanced by several philanthropic foundations to health insurance plan because of the plan's original demonstration value. These loans are being rapidly repaid out of premium income.

Also, health insurance plan has thus far been unable to make loans in any significant amounts to assist its affiliated medical groups in securing the required physical facilities and equipment of group centers. Most of the groups when they began, in 1947 and in later years, had little if any financial resources of their own.

Their participating physicians were at first obliged to see patients in scattered private offices of the individual doctors until the groups had accumulated a building and equipment fund of sufficient size, which took a good many years.

Meanwhile, many of these stalwart pioneers took no salary from their medical groups or, at best, received most inadequate remuneration for their professional services over these years. It usually required several years of personal privation for the physicians of a medical group to accumulate half of the needed capital for a center, upon the strength of which they could then secure the remaining half as a mortgage loan from a private lending institution.

The financial sacrifices made by these physicians during the formative years of prepaid group practice and the medical group centers which they finally build are an enduring tribute to their valor and fortitude. It is more than we have any right to expect physicians to endure in creating so valuable a health service.

After 7 difficult years, 27 of HIP's medical groups are now housed in well-equipped medical group centers and the remainder will occupy

their centers during the next year if they can secure the required financial aid. The physicians in groups which have acquired a medical center and have reached an average enrollment of insured families receive adequate remuneration and are able to amortize the mortgage loans on their central facility.

Most of the physicians in the medical groups are partners, they contribute to a pension plan for retirement at age 65, and they own the physical facilities of their group center collectively. Under our plan, the health insurance plan does not own these centers. They are owned and operated by the members, or doctors, as partners.

As I stated to this committee at a previous hearing on March 24, 1954, "Together, H. R. 8356 and H. R. 7700 constitute a balanced health program for the Nation, a health-service 'package' which is not costly and which may be exceedingly effective in extending modern medical care under several forms of voluntary insurance.

"The people of this country can then ultimately decide in the light of actual experience which method of prepaid medical care they prefer, medical expense indemnity or group practice medical service plans. If only H. R. 8356 is enacted, they will have no choice in most parts of the country." And for that reason I, therefore, urge the enactment of H. R. 7700.

One last observation concerning H. R. 7700. If Federal guaranty of mortgage loans is made available to encourage the establishment of prepaid group practice, it should also in all fairness be available to medical groups which engage in practice on a fee-for-service basis, provided they are good financial risks and there is reasonable assurance that the loans will be paid.

American medicine and the American people could profit from a better organization of medical practice, whether it be on a fee-forservice basis or under a prepayment plan. I favor prepaid group practice because it enables families of low and moderate income to purchase comprehensive medical care of good quality at lower cost. But I would strongly recommend that H. R. 7700 be amended to encourage the establishment of both kinds of group practice because of their advantages to the American people.

I have taken the liberty of asking Mr. Wolverton to allow two of the directors of HIP medical groups to give you their experiences with prepaid group practice of medicine. They will describe to you the organization, financing, and operation of typical medical groups engaged in providing comprehensive medical services to insured families under a prepayment plan and the favorable effect which mortgage guaranties would have had if they had been available.

Dr. Robert Rothenberg is the medical director of the Central Medical Group of Brooklyn and Dr. Richard M. Carey is medical director of the Upper Manhattan Medical Group. Dr. Rothenberg is also chairman of the Medical Group Council, a representative agency. which coordinates the activities of all the medical groups in HIP.

Now, Mr. Chairman, I am pleased to have an opportunity to present to this committee several of my associates who are actively engaged in the conduct of the prepaid group plan, so that they may give you their experiences. They can describe to you the organization, the detail of financing and all operations of typical medical groups engaged to provide medical services to insure families under a prepaid plan and

the effect which a mortgage guarantee would have had if it had been available to them.

The representatives of the medical groups that are here today to testify do not need this assistance. They have weathered the years of storm and stress with great difficulties and the difficulties they are prepared to recount to you.

I think it is quite inspiring, if you had time to listen to their story. Mr. HESELTON. Mr. Chairman, before the doctor leaves the stand may I ask 1 or 2 questions?

The CHAIRMAN. Well, yes, you may. I have in mind that with the brevity of our session, I was hopeful to get as much into the record as I could, before we left. Now, what Dr. Baehr has just made reference to, the trials and tribulations of those who have struggled through the years without assistance, to my way of thinking, is striking the nail right on the head, so far as these hearings are concerned and I was turning over in my mind the thought that it might be better if we held the questioning of any witnesses until we got their reports.

Mr. HESELTON. May I make this one statement? I think that Dr. Baehr has made one of the most significant contributions to the problem that this committee is struggling with that anybody has made. I certainly want to congratulate you, Doctor.

Dr. BAEHR. Thank you.

Mr. HESELTON. I think your statement is magnificent. It is concise, right to the point, and more particularly, I think that as the chairman has said, and you have pointed out, we have the type of fine work by the medical profession that you represent, that I hope will be extended and can be extended throughout the country.

I think it would be very appropriate in the permanent records of this committee, if you not only would present your associates here to speak to us, but would give us a list of every one of those doctors who have contributed so wonderfully to the success of your efforts, may I suggest that those doctors' names be included in the hearings at this point Mr. Chairman.

The CHAIRMAN. We will be glad to have the doctor make reference to the others, to the fullest possible extent.

I concur in all that my colleague from Massachusetts, Mr. Heselton, has said with reference to the splendid statement that has been made by Dr. Baehr. To me it is more than encouraging. It has an inspirational effect, because I realize that what is being said is the result of actual experience in the fulfillment of a supreme desire to bring the best of health methods and facilities to the people generally, and I cannot help but agree with, and emphasize what my friend from Massachusetts, Mr. Heselton, has said in appreciation of the splendid statement that you have made, Dr. Baehr.

Dr. BAEHR. Thank you.

Mr. HESELTON. Mr. Chairman, may I suggest-I am aware of the limitation of time, and I regret as much as you do, the fact that we cannot ask questions, that we would like to ask, but I would like to have the privilege-this may not necessarily go into the record-of getting in touch with you, Dr. Baehr, because I think some of the things you have said to us might very well develop to be tremendously useful to us on this particular subject.

Dr. BAEHR. Mr. Chairman, could I make one more short statement?