sanitation, public health, medical research, education, and medical care for the needy.

The report also expressed dissatisfaction with the prevailing "pay as you go" or fee-for-service method of payment for medical services but withheld judgment with regard to the claims that voluntary health insurance plans offer a satisfactory solution to the problem. This report summarizes the results of our further study of this subject and sets forth the conclusion we have reached.

THE COSTS OF MEDICAL CARE

The burdens of sickness and of medical care fall unevenly on the people. Illness strikes some families hard, while others may not be FIGURE 1. THE COSTS OF MEDICAL CARE ARE UNEVENLY DISTRIBUTED

touched. In any year, 47 percent of the people will have no serious illness at all, 51 percent will be sick one to three times, and 2 percent four or more times. The next year, some new families will be hit, while some of the same families will continue to suffer. The costs of medical care are also subject to wide variation. In any year, a tenth of the population has to bear four-tenths of the total burden of medical expenditures (fig. 1).

When sickness does hit hard, wage losses and medical costs may wipe out a family's entire savings and drive it into debt. Material in our files indicates that people borrow from small loan companies to meet medical expenses more frequently than for any other single reason. Illness is also the most frequent cause leading people to seek

help through charity except in periods of widespread and long-continued unemployment.

Even on the average, medical care has become increasingly costly. The average family reported an expenditure of $100, or 4.6 percent of its income, for medical care in 1944. No later national data are available, but a study conducted by the Bureau of Labor Statistics showed that the average medical care expenditure by urban families in 1944 was $133; rural expenditures are known to be somewhat less. There is an inverse relationship between the amount of sickness and the amount of medical care received by people in various income groups in our country at the present time. People with low incomes. have more sickness and need more medical care, yet they receive less than those in the upper-income groups. (See fig. 2.)

FIGURE 2. THE LOWER THE INCOME, THE MORE SICKNESS AND THE LESS CARE

Index chosen to show amount of sickness is days of disabling illness annually, representing disabilities lasting 7 days or longer in age group 15 to 64. National Health Survey data.

Index chosen to show medical care received is doctor calls per person, including home, office, and clinic calls or visits, health examinations (including immunizations), well baby clinic visits, and eye refractions per person annually. Committee on the Costs of Medical Care data.

Medical care is still, in the main, received in accordance with ability to pay rather than in accordance with need. It is often argued that this is not so that no doctor will turn down a patient because he has no money, and that charity beds are available in hospitals for those who cannot afford to pay.

There is a modicum of truth in this. Most doctors spend part of their time giving care free to patients, and most hospitals have some beds for charity patients. But this tells only part of the story.

1Spending and Saving of the Nation's Families in Wartime. U. S. Department of Labor, Bull. No. 723, October 1942, p. 20.

Charity does not begin to take care of the need. Decent charity care is usually not available in small towns and rural areas, and even in large cities it is far from satisfactory. Table 1 shows that only a small percentage of those in the very lowest income group in rural areas get any free medical care, though many undoubtedly need it.

TABLE 1.-Percentage of families reporting any free medical care received, 1941

NOTE.-Adapted from data collected by Bureau of Human Nutrition and Home Economics and Bureau of Labor Statistics. Represents percentage of families stating that any family member had received free physician, hospital, clinic, dental, nursing, or eye care, drugs, or medical appliances, in the course of the year. For details of study, see U. S. Department of Agriculture, Miscellaneous Publication No. 520, June 1943.

While it is true that many doctors give their services free, no physician can estimate the number of people who do not come to him when they are in need. Except in emergencies, and sometimes even then, most people would rather do without care than "lower themselves" to ask for charity.

That there are actually a good many disabling illnesses for which no medical care is received and that these instances are most frequent in the lower income groups is shown by the following table:

TABLE 2.-Percentage of disabling illnesses lasting a week or longer for which no doctor care was received

It was on the basis of facts such as these that the subcommittee voiced the opinion in its Interim Report No. 3 that the current "pay as you go" or fee-for-service system must be replaced by "some form of group financing which would make it possible to share the risks and distribute the costs more evenly."

PREPAYING FOR MEDICAL SERVICES

The American people have been trying for over a hundred years to insure themselves against the uneven burden of medical care costs. Medical care prepayment plans started in the lumbering, mining, and railroad industries, usually for workers in isolated places, and spread later to the larger cities, particularly to industrial establishments. Disability benefit plans to compensate for loss of earnings during sickness were started at about the same time by fraternal organizations and have also continued to grow. The number of people protected, FIGURE 3. PRESENT COVerage of VolUNTARY PLANS

Source: Estimates for 1945. They agree substantially with estimates by the Social Security Board and by Dr. Morris Fishbein, editor of the Journal of the American Medical Association.

however, is still comparatively small in proportion to the need, and the benefits offered are usually limited.

In 1945 approximately 75 percent of the population had no medical care insurance whatsoever, while 25 percent had insurance against one or more items of medical care costs. (See fig. 3.) Only about 2.5 percent of the population, however, are known to have had what might be called "comprehensive" coverage, i. e., at least doctor's care in hospital, home, and office, and hospital service for illnesses other than those usually excluded by insurance policies (such as mental disease and tuberculosis).

Another 10 percent of the population had part of their doctor's fees covered, usually the surgeon's or obstetrician's fees in hospitalized illness only. The other 12.5 percent of insured persons had only their

hospital bill covered, i. e., bed, board, nursing, operating room, labc tory fees, etc., while in the hospital. (See table 3 and fig. 4.) R tively few people had any coverage of dental, home nursing, or Į ventive care costs, or regular health examinations. The figures n involve a good deal of overlap.

TABLE 3.-Number of people known to be covered by voluntary health insurance, i

Comprehensive medical care "

Partial physician or surgeon service (most with hospitalization).
Hospital care only..

Any item covered (physician, surgeon, general hospital, or dentist)..
No prepaid medical care...

1 U. 8. Census Bureau estimate, 140,000,000.

3.5

14.0

17.5

35.0

105.0

"Comprehensive" is used to mean at least relatively full physician's and surgeon's care in office, ho and hospital and general hospital care.

Principal sources: United States Chamber of Commerce Health Insurance Conference Proceedi January 1945; Klem, Margaret, Prepayment Medical Care Organizations, Social Security Board Memo dum No. 55, June 1945; the Journal of the American Medical Association, vol. 128, p. 1173, 1945; Blue C Bulletin, vol. 8, No. 5, May 1945; letters to subcommittee from medical care insurance experts.

The 25 percent of the population with some kind of coverage st scribed to three main types of plans: Nonprofit hospitalization (Bl Cross), prepayment medical care organizations (sponsored by indu try, medical societies, consumer organizations, private physician groups, or Government), and commercial health and accident i surance plans. (See fig. 5.)

WHAT THEY GET

More detailed data are available for the approximately 5,000,0 members of various kinds of prepayment medical care organization Table 4 indicates that the type of medical service offered varies co siderably with the different types of organization. In general, t medical-society-sponsored plans, excluding those in the States Washington and Oregon,2 tend to offer more restricted service Government-sponsored, industrial, private group, and consume sponsored plans tend to be more comprehensive.

SERVICE AND CASH

Medical care insurance is of two types-service and indemnity The service type assures stipulated kinds of medical care, such physician's, surgeon's, or hospital service, to the patient. The in demnity type pays the subscriber specified amounts of cash towar expenses incurred during illness or accident-so much for a particula operation, hospital stay, or day of disabling illness. In the case of th indemnity type the practitioner or hospital may or may not charg more than the amount of the cash benefit, and the patient may may not use the money to pay his medical bills. Although th

'These plans differ from other medical society plans in their historical origins and relationships with th American Medical Association. They are listed separately by both the Social Security Board and th American Medical Association.