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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.



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.

The Kaiser Foundation health plan has grown rapidly. Comprehensive prepaid medical and hospital care is now provided to approximately 450,000 Kaiser Foundation health plan members, primarily made

up of the general public, since less than 5 percent of the members are Kaiser employees. They are served by hundreds of doctors and 35 medical centers, hospitals, and rehabilitation centers on the Pacific Coast.

A service of this magnitude that has met such tremendous response on the part of people naturally gives importance to the counsel we seek from Mr. Kaiser today on H. Ř. 7700.

I would like the committee to know that Mr. Kaiser is present today, although it necessitated a return from Honolulu. So that when he made that trip from Honolulu to be present at his committee, to give it the benefit of his testimony, he certainly was evidencing, in a very substantial


his very great interest in the work of the committee and in this legislaion which is now before us.

Mr. Kaiser.

Mr. KAISER. Mr. Chairman and gentlemen of the committee, I will read this statement rather rapidly, because there are some important questions that have been up that I would like to discuss with you.

First, I want to express my hearfelt conviction that the American people can be exceedingly grateful to your committee. You have worked tirelessly and earnestly endeavoring to find solutions to the health needs of our people.

You are grappling with the problems of health that directly affect American families and individual citizens in more intimate human terms than almost any question confronting the country.

You have not been dismayed by the defeatists—those whom your chairman has aptly called "the advocates of do-nothing” who fail to recognize the needs of the people. Nor have you succumbed to the temptation of insisting upon nothing less than a cure-all solution to, the Nation's medical care problems-a temptation that also leads to inaction. You have been seeking effective, step-by-step solutions to these problems, rather than demanding immediate panaceas.

In this search, your hearings have developed a wealth of significant information which, in your capable hands, will, I believe, lead to substantial constructive action in stimulating the forces of free enterprise to bring more and better medical care to far greater numbers of our people at costs they can afford to pay.

It has been a great privilege for us to come across the country to testify again at your committee's invitation, because we desire to be of any and all possible assistance to your important work. We are particularly happy to be invited to express our views on H. R. 7700— the bill you are now considering.


We wholeheartedly endorse H. R. 7700, the medical facilities insurance bill introduced by Chairman Wolverton.

Of course, this legislation has not been advanced as the answer to all the manifold health problems of the Nation, such as the shortages of medical and allied personnel, inadequate public health programs in many parts of the country, or the problems involved in increasing the opportunities for more intensive research in the prevention and cure of the chronic diseases. Also H. R. 7700 undoubtedly will be improved upon as to its details through suggestions for revisions being received and reviewed by your committee.

Enactment of H. R. 7700, in my judgment, will prove to be one of the most constructive steps that this Congress could take toward stimulating private initiative answers to health needs of the American people.

H. R. 7700 can open the way for many millions of our people to obtain voluntary, comprehensive, prepayment health plan protection that they can afford.

It will enable thousands of doctors throughout the country to obtain necessary modern facilities and to provide their patients the highest form of teamwork medicine.

H. R. 7700 can stimulate the investment of enormous sums of private capital in the building of entirely self-supporting medical centers, hospitals, diagnostic and treatment clinics, and other medical facilities-without subsidies, without Government control, and without lay interference in the practice of medicine.


Spokesmen for millions upon millions of our people have testified before your committee concerning the overwhelming need and desire of the people to cover a much larger portion of their doctor and hospital bills by the prepayment method.

Chairman Wolverton's H. R. 7700 is specifically designed to broaden and extend voluntary health coverage. The importance of this objective can be pointed up by the 1952 statement of the thenpresident of the American Medical Åssociation:

Voluntary prepayment plans are the medical profession's greatest bulwark against socialization of medicine.

The fact that literally an avalanche of people are turning to one or another form of health insurance has been well demonstrated by statistics presented to your committee on the phenomenal growth of membership in prepayment plans. The country is now approaching the 100-million mark in the number of people who have some prepaid protection against hospital costs.

Yet, Mrs. Hobby and her staff of the Department of Health, Education, and Welfare have told you:

Despite the progress, it is evident that many of the needs are not being met. Major long-term illness can become a financial catastrophe for many American families. * * * In many cases, the coverage now offered through voluntary insurance is extremely limited. * * * Only about 17 percent of the total amount of private expenditures for medical care was paid for by some form of insurance in 1952.

The most startling fact presented by Mrs. Hobby's staff is that onlyabout 3 percent of the populationonly about 3 percent of the populationis covered for comprehensive medical care.

The ground swell of public demand throughout the land today is for comprehensive coverage that provides people both preventive medical attention and protection against the staggering costs of prolonged illnesses.

As yet the doctors, hospitals, and prepayment health plans of this country have barely scratched the surface of providing, on a prepayment basis, the full extent of the medical care which can be supplied through the voluntary, self-supporting health plans.

The vision of the gigantic opportunities for the free enterprise of the medical profession, hospitals and health plans to meet the people's needs is seen by President Eisenhower, who said in his special January 18 message to Congress that voluntary health insurance planscan reach many more people and provide better and broader benefits. They should be encouraged and helped to do so.

H. R. 7700 would materially assist in accomplishing these objectives of “better and broader benefits” for more people.

To illustrate these points, where voluntary, group practice prepayment plans have been started—plans which provide comprehensive medical care services at reasonable cost-popular demand for such services has exceeded the capacity of existing facilities to meet the demand. For example, the Kaiser Foundation health plan in northern and southern California has had to close down its enrollment of new applicants for membership from time to time until additional facilities could be financed and built.

A great contribution of H. R. 7700 is that it will accelerate the creation, growth, and development of comprehensive health service plans throughout the country by stimulating the provision of necessary hospital and related facilities.



In trying to be as helpful as possible to your committee's work for improving the Nation's health, my associates and I in the Kaiser Foundation health program have studied the challenging facts you have assembled concerning the enormous shortages of hospital beds and unfilled needs for new diagnostic and treatment centers, as well as allied facilities.

We personally went also to the offices of the Health, Education, and Welfare Department and its Division of Hospital Facilities of the Public Health Service and we have been deeply impressed by the reports they have presented to you. H. R. 7700 is aimed directly at helping fill part of the critical needs for facilities shown by these official facts and figures, and I refer specifically to the following:

The Nation is short 848,678 hospital beds of all categories, according to the surveys conducted by all the State hospital authorities. (Hearings before Committee on Interstate and Foreign Commerce on H. R. 7341, February 4 and 5, 1954, table p. 61.)

In general hospital beds alone, the Nation as a whole is reported short by 31 percent, with substantial variations among different areas.

The expenditure of more than $100 million a year is declared required merely to replace general hospitals that have been classed as firetraps and as hazards to health and safety.

The construction of more than $180 million a year of general hospitals is reported needed just to keep up with the growth in population. President Eisenhower (President Eisenhower's health message to Congress, January 18, 1954) and Mrs. Hobby have told the Congress that conservatively the Nation needs more than a half million additional hospital beds.

The cost of needed additional hospital beds is placed even under these most conservative estimates at more than $8 billion.

I just want to say in passing that this information we received was received from the Department. We went there and I spent nearly a whole day there with the men going through their plans and their records and their statistics as to the cost of needed and additional hospital beds.

As you have been confronted by the magnitude of the deficits in the country's health facilities and existing services, you no doubt have been deeply concerned over the problems at every turn. Now I see our health problems as opportunities. In fact, it has always been my philosophy that problems are opportunities in work clothes.

I see no reason why the billions that must be raised for needed hospitals have to come solely from taxes and charitable contributions. The Wolverton bill, H. R. 7700, opens up some stirring opportunities for additional effective solutions to this problem.

There are the opportunities for private capital, under the stimulus of Federal insurance of loans, to be generated in steadily increasing millions to build medical facilities on a completely self-liquidating basis.

There are the opportunities open up for medical centers and other facilities to be financed on a fully self-supporting basis.

There are the opportunities for doctors, who desire, but up to now have been unable to do so, to avail themselves of the advantages of the highest form of teamwork practice and, at the same time, to provide their patients more high quality medical care within the patients' means.

Against the Nation's current estimated need for construction of $8 billion worth of hospitals, it should be emphasized that H. R. 7700 is directly designed to encourage the flow of private financing into facilities that meet the tests of soundness and of ability to repay the insured loans. It would not and should not provide insurance of loans for facilities which must of necessity depend upon taxes or subsidies.

Up to now private financing for hospitals has been extremely limited by the understandable reluctance of banks and insurance companies to loan on them. And you have ample evidence before this committee as of this morning that that is true.

H. R. 7700 recognizes that there is an important, though almost untouched field for the sound extension of private capital for medical facilities which can stand on their own feet financially. To the extent that the Government insurance of loans stimulates private investment in medical facilities, it will take a burden off the taxpayers and part of the drain off hard-pressed charities and philanthropy. We believe that an increasing portion of needed medical facilities can be privately financed on a self-sustaining basis, under the stimulus of the Wolverton bill.

A major need for which H. R. 7700 proposes to stimulate investment of private moneys is for diagnostic and treatment facilities.

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