facilities, and decreasing standards of care. So serious, in fact, have these and related defects in the system become that the Government and the medical profession are earnestly attempting to arrive at some practical revision of the program. Meanwhile, the major problem facing Government and people is indicated by the single simple fact that the tax bill for medical services rose from less than $8,000,000 in 1942 to over $20,000,000 in 1947. The cost of drugs rose from $2,000,000 in 1943 to over $4,000,000 in 1947. Thus the medical-care program contributes a growing share of the social-security budget, which is now one-third of the national budget, and therefore of the total tax load.

Moreover, while reports indicate that many doctors, and not by any means the best or the leaders of the profession, were earning fantastic incomes by vigorous exploitation of the system, both the profession as a whole and the public have found it unsatisfactory. A striking omission from it, also, is that even the excessive cost being experienced does not cover the cost of major surgery, the most serious burden to the average citizen, and the one which he is typically most anxious to cover through some form of insurance. Medical care, hospitalization, and drugs are the items covered.

A chief complaint in New Zealand is related to the fact that while all may resort to the doctor at will, with most (but not all) of the cost covered out of the insurance fund, there is no way of making the doctor stay in his office on holidays, week ends and at night. This is attributed in part to the fact that there is no incentive for the doctor to work harder or longer because of his own income taxes, as well as to the amount of work forced upon him during the week. The demand for medical services tripled from 1941, when the system was put in force, to 1945, while many doctors were still with the armed forces, and there were not enough at home to meet the demand. When the war was over, with the demand for care still rising, the costs rose to the serious level referred to. Whether the Government will find a solution satisfactory to its financial advisers as well as to the public and the medical and dental professions remains to be seen. Suggestions from the Government to the doctors, in a semiconfidential vein as contrasted with its promises to the public, of reduced care, were properly rejected by the doctors. Recall Mr. Bevan's peevish comment about excessive use of expensive drugs in Great Britain. These systems seem to work the same way everywhere. That is to say, they produce excessive use, a correspondingly serious and unwarranted drain on contributors and the Government finances, and unsatisfactory service.

The present American system shines brightly by comparison with anything they have or have ever had in medical care in Germany, in Great Britain, or in New Zealand.

THE COST OF A FEDERAL SYSTEM

There is literally no way of finding out what the proposed compulsory Federal system for the care of individual health would cost, especially when the inevitable tendency toward excessive demands on the free services promised is considered. Estimates may be made, however, and these of course should be based upon such facts as are available, and not upon sheer optimism or a desire to make the prospective bill seem less than it will probably be.

Even with the health-insurance plan in mind, or perhaps with it especially in mind, the first necessity confronting the Congress is that of framing the legislation under which the coverage of the existing social-security system will be expanded to take in the groups not now included, among which are the farmers and other self-employed, members of the armed forces, and the employees of nonprofit institutions. This, it is estimated, will produce a total under the system, including dependents, of about 120,000,000 persons, or 85 percent of the population. This is to all intent universal coverage.

At the same time the problem is to be faced, as it must, of making the system meet more nearly, if possible, the broad promise of social security implied in its title by providing benefits which are not so low as to compel the beneficiary, as at present, to apply for old-age assistance in order to avoid starvation. On this there is no argument whatever, as the facts on the OASI payments now made speak for themselves, and the Federal Security Administrator was very recently quoted to the following effect: "Today the average amount of old-age insurance paid to elderly couples is $39.30 per month. The present scale of payments was fixed in 1939, but since then the cost of living has increased nearly 75 percent, and the cost of food, over 100 percent. Today old people who are entirely dependent upon their social-security payments are actually enduring slow starvation."

That estimate of the situation is not exaggerated. It should be added, moreover, that in the case of the elderly couples mentioned, unless both man and wife are over 65, which of course is not always the case, the only payment is to the man, and that its average is now around $25 a month. No such amount would have furnished as much as a bare subsistence in 1939, either, so that even then the promise of security under the system was a delusion. The delusion has merely become more evident with the increased cost of living. The whole situation has been recorded in immense and painstaking detail in Issues in Social Security, the report of the Calhoun social security technical staff to the Committee on Ways and Means, ordered by the Seventy-ninth Congress. None of the facts can be disputed.

This is all emphasized, for the attention which it powerfully demands from Congress, not only because it happens to be true and because the proposed remedial legislation will heavily increase the individual's and the Nation's tax burden, but because it offers an immediately relevant and striking proof of the failure of Government performance to live up to the glowing promise. Here, as elsewhere in the world, the promise is broad, the performance is meager, and while the costs go up and the burden on the economy increases the individual is progressively deprived of any chance to protect his own future. Meanwhile the control of government becomes steadily greater as its provision for its wards becomes more difficult and more expensive.

FIGURING THE TAXES

The present social-security tax of 1 percent each on employer and employee will have to be increased immediately to not less than 12 percent each, on a base of $4,800 instead of the present $3,000, according to the Social Security Board's own figures. The self-employed, including farmers, may be let off with a tax of only 12 times the employee rate, instead of double, as it should be, so that this group would be asked to pay 24 percent of income up to $4,800 for the present system, providing only OASI and related benefits.

These taxes, chiefly for retirement benefits, on a grossly inadequate basis even if the proposed 50 percent rise is approved, are estimated to produce over $4,000,000,000 a year instead of the present $2,750,000,000; and they will add to the present $10,000,000,000 reserves in the system about $2,000,000,000 a year, up to the time when payments will exceed income, with the growth of the number of beneficiaries, and the Government will have to pay about one-third of the total out of general taxes to be levied on all alike. The Board's own estimates, again, point to an annual cost for the OASI system of 5 to 6 billions in 1960, 7 to 9 billions in 1970, and 9 to 12 billions in 1980. It becomes clear, as these figures are considered, that it really makes little difference how the taxes are levied, since all will have to bear them in one way or another, and the so-called reserves are in simple fact only Government obligations, for the payment of which, when cash is needed, the Treasury will have to provide.

Add to this, then, the proposed health-insurance system. The Board estimates its cost in the first year at four billions, with an additional two billions should a disability insurance coverage be provided. These estimates appear to be in line with a conservative view of limited use of medical and hospital-care facilities, but not at all with the generally recorded fact of excessive use, when the Government is compelled to make good on its promises of unlimited care and medicines for everybody. In Great Britain, for example, in spite of the country's experience of 37 years with health insurance, the cost of the Government's operation of all health care was underestimated for the first 3 months alone at the rate of $372,000,000 a year. An equivalent error in similar estimates in this country, on the basis of relative population, would mean over $2,500,000,000 a year, which might matter.

However, taking the estimates as a basis, at least, of the tax which will in the beginning be asked of Congress for health insurance alone, with increased rates later as rising costs force the issue, 12 percent each for employer and employee will be added to the social-security taxes and, presumably, for the self-employed another 24 percent, all applying to pay or self-earned income up to $1,800. Thus for the farmer who can be shown to have netted that amount, and there are a good many of them, there will be a gross income tax, in addition to all other taxes, of $216 a year, at the beginning. At the higher rates which will almost certainly become necessary as time goes on, the tax will be proportionately higher.

Thus as the very least and lowest, and without taking into account the depressing indications in the experience of other countries that health-insurance cost will be double or triple the highly conservative estimates, the Social Security Board itself believes that taxes will have to be levied annually for its operations,

in addition to all other taxes, to the amount of not less than eight billions, with two billions more for disability insurance. That makes 10 billions.

The Congress is to be faced immediately, aside from all this, with the tax and other problems related to a general budget of $45,000,000,000 or thereabouts. The tax bill which will be drawn to meet that enormous sum, without repeating the dangerous resort to deficit financing, will necessarily rely chiefly upon individual and corporate income taxes. These taxes, burdensome as they are when raised to the levels designed to meet such vast budget figures, will receive the most earnest scrutiny from Government experts, including Members of Congress, concerned both for their effect upon the general economy, especially upon industrial productivity and employment, and their impact upon the individual taxpayer.

With the country's now extensive experience in meeting enormous Federal governmental costs at least in part by taxes-the debt of $250,000,000,000 has accumulated in addition to taxes and remains as a continuous threat-realization has become general that there are no new sources of revenue. The only source of revenue is the American citizen. He pays and will continue to pay the entire bill, in his daily expenses, in his production, in the effect upon his and his family's standards of living and their arrangements for the future, as well as in direct taxes.

He has been paying in direct taxes for social-security purposes his half of the current take of $2,750,000,000. Under the new plans for the expansion of the system, not including health insurance, he will be asked to pay half of the increased levy of $4,000,000,000; and yet the payments to the OASI beneficiaries, it must be remembered, will remain so small (50 percent over the present average would be $37.50 a month) as still to force the lucky recipients to accept old-age assistance or stop eating.

Then ask him to pay half of an assessment of another four billions for health insurance, whether he wants it or not, and whether he needs it or not, and still another two billions for disability insurance. Ask him.

There is no need to doubt that many of the proponents of the idea of the Federal Government assuming full charge of individual health care, as of individual security in old age, mean well. But to mean well is not enough, if the results should be disastrous in terms of promises not kept, of the encouragement of abuse of medical facilities, the degeneration and discouragement of the profession of healing, and rising taxes and Government debt. Even the supporters of the Federal plan estimate an eventual cost for the program of somewhere between 15 and 20 percent of pay rolls (Readings in Social Security, Cohen & Haber). The Congress will have to bear all this in mind in attempting to decide wisely whether to embark upon a course so radical, so costly in both money and in the human factors involved, and so unlikely to accomplish the desired results, if experience both in this country and elsewhere means anything at all.

SUMMARY

The reasons advanced in favor of expanding the social security system, admittedly a failure in its operation up to now, to cover individual health care are not sufficient to warrant the serious risks involved.

Government plans for individual health care in other countries have produced uncontrollably excessive demands upon doctors, hospitals, and auxiliary services, without any possibility of reasonable check once the deterrent of individual cost has been removed, and with resulting excessive cost to the insurance fund and to Government.

Medical, hospital, and related individual health services in this country are now the best in the world, under a system which has developed according to the best traditions of the American character; and these services are available to the vast majority of the people, at charges they can pay with or without the increasing scope of voluntary prepayment plans, or without charge. Government may assist, but should not be permitted to destroy, this magnificent system.

Something must be said, in addition to all of the above, of the destruction of traditional liberty which is directly and unavoidably involved in the plan to bring individual health care under Government control by compulsory legislation. There is a point at which the right and the duty of government to legis. late, even for the general welfare, conflicts with the right of the citizen to be let alone. Stop signs are necessary on the public highways; but no citizen would permit them to be placed by government on his private road.

The parallel alleged between compulsory health insurance and compulsory school attendance is not accurate. School attendance is required of children, not

adults; and it exists only under State law, not under Federal law. When every citizen is required not merely to submit to heavy deductions from his pay for Federal health insurance but to call upon his doctor and his dentist on such dates as may be fixed by the Federal authority, the parallel will be complete, and the compulsory system will have developed to its logical conclusion. Such compulsion as to visits for medical and dental examinations is in fact the only possible way in which the results promised may even hope to be achieved. Will Congress go this far?

Under the still free American system, education of the individual to the desirability of proper professional advice on health matters, so that he may himself voluntarily take advantage of the available facilities, including prepayment for health care, is the only sound and practical and acceptable method. Liberty is still the dearest possession of the American. Liberty always implies responsibility; and the exercise of responsibility develops ability to meet it, in every aspect of existence, including the care of one's health. The alternative of destroying personal and professional liberty is the alternative of the paternalistic and collectivist state. It is unacceptable to the traditions and the spirit of a free people. It should not be imposed for the purpose of taking over the control of individual health care or for any other purpose.

Mr. OLSEN. Also from the Life Insurance Association of America, New York, N. Y., issued January 6, 1949, a report of a survey of voluntary protection built up against the economic hazards of sickness and accident in the United States.

May I make that part of the record?

Senator MURRAY. Yes.

(The report above referred to is as follows:)

A SURVEY OF ACCIDENT AND HEALTH COVERAGE IN THE UNITED STATES AS OF DECEMBER 31, 1947

(Prepared for American Life Convention, Chicago, Ill.; American Mutual Alliance, Chicago, Ill.; Association of Casualty and Surety Companies, New York, N. Y.; Bureau of Accident and Health Underwriters, New York, N. Y.; Health and Accident Underwriters Conference, Chicago, Ill.; Life Insurance Association of America, New York, N. Y.; Life Insurers Conference, Richmond, Va.; National Fraternal Congress of America, Chicago, Ill.)

HIGH LIGHTS OF THE SURVEY

On December 31, 1947, an estimated total of 31,224,000 workers were insured under some form of voluntary protection against loss of income due to sickness or accident. This represents more than half the 58,000,000 employed civilians in the United States. Also, 52,584,000 individuals were protected by some form of hospital expense coverage; 26,247,000 individuals had surgical expense coverage; and 8,898,000 individuals had medical expense coverage. These latter figures include dependents of workers as well as the workers themselves. The figures in the survey were obtained by a study of all types of accident and health insurance plans, embracing not only those protected by insurance companies but also those covered by the Blue Cross and all the other types of organizations providing this protection.

Even more impressive than the number of individuals covered by the programs included in the survey is the rapid growth that has occurred during the past decade. Because of the many types of organizations writing these coverages and the lack of aggregate statistics for past years, no long-term comparison is possible for the over-all figures. Certain segments of the business, however, indicate how rapid the growth has been. For instance, persons insured for hospital-expense benefits under either group insurance or Blue Cross plans at the end of 1947 numbered 56 percent more than at the end of 1945 and 241 percent more than at the end of 1941. Surgical-expense insurance is a more recent development and has been growing even faster, while medical-expense insurance is the newest and fastest-growing type of all.

INTRODUCTION

In order to secure as accurate a picture as possible of the scope and extent of voluntary protection against the economic hazards of sickness and accident in the United States, several of the insurance trade associations have joined together to make this survey of the country's facilities and accomplishments to date.

91626-49-pt. 1——32

Because of the number and variety of the organizations providing such protection, many of which are local in character, the task has been difficult. While the committee has attempted to tap every source of information and secure data on all accident and health insurance plans in operation in the country, it is still probable that some organizations providing benefits for sickness and accidents have not been included and that the survey understates the full extent of accident and health protection in the United States. Many of the figures are necessarily estimates, but every effort has been made to base such estimates upon the best data obtainable.

TYPES OF ACCIDENT AND HEALTH COVERAGE

The principal types of accident and health benefits are:

1. Benefits for loss of income due to sickness or accident, often referred to as cash sickness or disability benefits.

2. Hospital expense-benefits on account of hospital room and board charges and, in most cases, miscellaneous additional expenses.

3. Surgical expense-benefits on account of surgical operation fees.

4. Medical expense-benefits on account of doctors' fees other than for surgery, as well as the cost of special laboratory, X-ray and other examinations. Medical expense benefits range from the coverage of doctors' calls within the hospital to the coverage of home, hospital, and office treatments and examinations.

The last three types of benefits listed above may be provided either through payments to the individual receiving the service or payment made directly to the person or institution providing the service.

SUMMARY OF SURVEY

The following table gives the estimated number of individuals covered by the various voluntary forms of accident and health protection in the United States on December 31, 1947. Details of the sources of the data and methods of compilation will be found in the appendix.

I. Insurance against loss of income due to sickness or accident

(a) Insurance companies and fraternal societies.

(b) Paid sick leave-in private industry.

In civilian government service_.

(c) Employee mutual benefit associations__

(d) Union plans and other employer-employee methods_

18, 714, 000

4, 560, 000

4, 490, 000

1, 460, 000

2, 000, 000

31, 224, 000

1 This does not include individuals covered solely by Government insurance under compulsory plans.

II. Hospital, surgical, and medical expense coverage