Senator MURRAY. You say your order feels now, as it has in the past, that national health insurance should be included in any approach to the solution of our national health program?

Mr. Poss. That is right.

Senator MURRAY. S. 545 only provides $200,000,000, which would be absolutely insufficient to provide any relief for the millions of people who are in need of health care and are not able to have it at this time.

Mr. Poss. I think that is true. I think I have indicated that in my discussion. I said the Fraternal Order of Eagles favors certain provisions, and further on I think I said that these are steps in the right direction, but we are far removed from the ultimate solution.

Senator MURRAY. But you would not recommend the extension of that system provided in S. 545 for the taking care of total needs of the people?

Mr. Poss. Definitely not.

Senator MURRAY. That would be socialized medicine in an extreme way?

Mr. Poss. Yes, I think so.

Senator MURRAY. Because the Government there would be paying the entire cost of the medical care, and it would avoid entirely the program that we are suggesting with reference to an insurance system? Mr. Poss. Yes, sir.

Senator MURRAY. I think that is all.

Senator SMITH. Thank you very much, Mr. Poss. We are very glad to have you with us.

Mr. Poss. Thank you, gentlemen.

Senator SMITH. Next on our list this morning is Mr. Watson B. Miller, Administrator of the Federal Security Agency. We are glad to see you this morning, Mr. Miller.

STATEMENT OF HON. WATSON B. MILLER, FEDERAL SECURITY ADMINISTRATOR, WASHINGTON, D. C.

Mr. MILLER. I am glad to be here, Senator.

Senator SMITH. I think we know who you are, Mr. Miller. I think you are well enough known that we do not need to ask you for a biographical sketch of the witness.

I have here a statement marked, "Statement before the Senate Labor and Public Welfare Committee," and also I have here a letter which is addressed by you, apparently, to Senator Taft, and I am interested to know are they both relative to the same subject?

Mr. MILLER. One, Mr. Chairman, is the customary report upon one of the two measures under examination here, and I have no doubt that the second one constitutes my own statement before the subcommittee, rather than the formal comment upon the bill.

Senator SMITH. You may proceed in your own way, Mr. Miller. Mr. MILLER. Mr. Chairman and gentlemen, we in the Federal Security Agency deeply appreciate your invitation to participate in these hearings on S. 545 and S. 1320. The importance of such hearings cannot be overestimated. They help us all to see the basic issues more clearly. And through indicating the gap between what can be done and what is being done to provide our people with the truly wonderful kind of medical care we have in our country, such hearings stimulate public discussion and study of the problems.

Whether or not any major health legislation be enacted in this session, very substantial progress has been made as a result of these and last year's hearings. I say this quite earnestly, because I feel that these public exchanges have disclosed substantial and important areas of agreement, which I like to think of in the light of the following five considerations.

FUNDAMENTAL AREAS OF AGREEMENT

The people as a whole have:

1. Recognized a Federal interest, to be backed by a Federal financial concern, in the health of each person in our country.

2. Agreed upon the necessity for broadening the availability of medical care and health services through new means and approaches. 3. Accepted the wisdom of overcoming shortages of personnel and facilities as rapidly as may be practicable.

4. Asserted the wisdom and necessity of adopting some prepayment method of meeting the costs of medical care.

5. Agreed upon the wisdom and necessity of decentralizing the administration of any national-health program.

FURTHER FUNDAMENTAL PROPOSITIONS

In addition to these fundamental areas of agreement, certain other propositions are, I believe, equally valid: That large numbers of otherwise self-supporting people are unable to secure all the medical care and health services which they need both to prevent and to alleviate illness; that this inability is in large measure due to the fact. that a great many people cannot afford essential medical care, in terms of their general expenses for just living; that Abraham Lincoln's reflection is applicable:

* the legitimate object of Government [is] the doing for a community of people whatever they need to have done, but cannot do at all or cannot do so well for themselves in their separate and individual capacities

and therefore that the Federal Government must devise a system through which medical and health care may be conveniently and effectively financed.

On the basis of these observations, we believe that health insurance is the most effective means by which our people can meet their health needs.

Senator SMITH. When you say "health insurance" there do you mean compulsory health insurance?

Mr. MILLER. Yes, Senator, so far as it is possible to develop such a plan. That conviction is based upon a growing and increasingly successful experience in the field of social insurance during the last 10 years.

Senator DONNELL. You mean in other countries?

Mr. MILLER. In this country, in the segments of social insurance. I do not have the competence to offer reflections upon the systems involved in other countries.

Senator DONNELL. We do not have any compulsory health insurance in this country, do we, Mr. Miller?

Mr. MILLER. So far as I know, we have not-at least, there may be some in some municipalities, but if there are, I am not aware of them.

Senator DONNELL. There are some statutes up in one of the New England States, Rhode Island, are there not, on a cash sickness benefit basis?

Mr. MILLER. I am not advised of that, Senator. It is quite likely that there may be.

Senator SMITH. Let me just develop that a little further. Your thought of a compulsory health insurance plan would be a compulsory health insurance tax like the social-security tax, added to the present percentage, whatever it may be, for social security?

Mr. MILLER. I think the national lawmaking body should develop the manner in which the money should be raised, but I favor an individual prepayment system which would bring about payment within the capacity of most people against the contingency of illness and necessity for medical care. I have made a good deal of inquiry around in the States as to the difference in the attitude of people toward receiving the monthly benefits under old age and survivors' insurance, and those who receive public assistance benefits because of advancing years, and so on, to which they contribute nothing, and I am told generally that the former group seems to have more self-respect and selfreliance and less feeling of dependency on the community at large.

Senator SMITH. Then whether your sick fund is to be raised by pay-roll deductions or any other scheme that might be devised, however the fund is raised, do you contemplate that that would be distributed in cash to the individuals receiving the benefit, in which instance he would be required to attend to his health needs with that many dollars, so that the obligation of the State would be satisfied by that route? Or would you have some form of organization of your medical profession in order to meet the responsibility assumed by the Government in asking individuals to make that deduction from his pay roll?

Mr. MILLER. I think the most convenient and effective plan would be disclosed by experimentation, Senator Smith. I am myself a member of one of the health groups, and I value my membership in it very highly.

(Discussion off the record.)

Senator SMITH. But you have in mind that possibly we might have to have some regulation to provide that the person rendering the service would be compensated from the funds dedicated to this purpose?

Mr. MILLER. Yes; the system would have to provide for payment for hospitals and doctors and nurses and others. Many millions of American men, women, and children have gone down into the shadow of the valley of death with our fine physicians. We have confidence in them. I myself am very proud of American medicine, and I would not consciously do it any harm. Conversely, confidence ought to flow the other way. Our fine physicians should have some confidence in their people and their Government to protect the fine physicians and the developments, the astonishing developments of medicine and their application, particularly in the last decade.

Senator SMITH. I would like to get more thoroughly just what your position is. As I get it, you start with the compulsory plan rather than the theory of S. 545, which aims to start in a slower way. I have never had any objection to the compulsory plan. I am told that California is interested in that idea, and I say let them try it. I am not prepared to say yet that we should adopt the compulsory

plan before we determine how we are going to have that fund applicable.

Mr. MILLER. No plan can emerge from a cloud on top of the mountain full-fledged and effective to maximum possibilities overnight. Of course, we are going to make a trial run and benefit by experience as we do in our other programs in the Federal Security Agency, and profit. by experiences of success or failure.

Senator SMITH. You think we are ready to put this program under over-all social security and increase the pay roll deductions and say we are going to add to the benefits now given by Social Security a complete health coverage?

Mr. MILLER. I do, Senator, and I believe that as fundamentally and soundly as any conviction that I have can be. A 100 percent try may justify a lack of 100 percent success at the initiation of any program of this kind. That is true of other laws you have passed.

Senator SMITH. You prefer that rather than the slower trial and error method of giving the States the opportunity to work out their problems and give us the benefit of their experience?

Mr. MILLER. I shall make some reference to S. 545 as I go along. Senator SMITH. Proceed, Mr. Miller. I shall not interrupt you

any more.

Mr. MILLER. I do not mind interruption. I think this is wonderful. We learn in this way, and possibly we can give you the benefit of some of our experiences. I am one of those administrators who feel that the national legislature should have the time, as it can afford, to examine the processes of Government, and I would like to say-and it is rather in a vernacular, I think-that none of us in my Agency-and I think that is probably true of the Government generally-none of us desires to come up here and view with alarm all the time. We like to point with pride, and that I hope is what this sort of discussion will lead to.

PRESIDENT'S LONG-RANGE HEALTH PROGRAM

On November 19, 1945, and again on May 19, 1947, the President recommended to the Congress a 5-point health program as necessary to the national welfare and security. His proposals include:

1. Adequate public health services, including an expanded maternal and child-health program.

2. Additional medical research and medical education.

3. More hospitals and more doctors, in all areas of the country where they are needed.

4. Insurance against the costs of medical care.

5. Protection against loss of earnings during illness.

"We are a rich Nation and can afford many things," the President has said. "But ill health which can be prevented or cured is one thing we cannot afford." He has set our goal: "Everyone should have ready access to all necessary medical, hospital, and related services." The principal reason why people do not receive the care they need is that they cannot afford to pay for it when they need it. This is true not only of needy persons but also of a large proportion of normally self-supporting persons. Instead of segregating those who can pay for needed care from those who cannot, the President's program adopts the American formula of saving together, to meet such costs through expanding our existing compulsory social insurance system.

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The two bills: The essential health needs of the Nation are of such scope and character that they can be met with reasonable adequacy only by the development of a broad and comprehensive health program. We feel that our health needs cannot be met adequately through a program of the size contemplated by S. 545, or through any program operated on a means-test basis. While I believe that a program of the dimensions proposed by S. 545 could contribute substantially toward meeting some of the most pressing health needs of the Nation, I am convinced that the bill would have to be modified in several very important respects which I have outlined more fully in my report on S. 545, which the committee has before it now, and which will be discussed at greater length by my colleagues, the Surgeon General, the Acting Commissioner for Social Security, and the Chief of the Children's Bureau.

Senator SMITH. The report to which you refer on S. 545 is the letter dated July 3, 1947, which is addressed to Hon. Robert A. Taft, chairman of this Committee on Labor and Fublic Welfare?

Mr. MILLER. That is correct.

Senator SMITH. That is just to identify it.

Mr. MILLER. No alternative program to the President's health program has yet been advanced which gives comparable promise of achieving, now or in the future, the goal of adequate medical care for all our people. Therefore, the Federal Security Agency endorses the basic approach of S. 1320, as it did last year with respect to S. 1606. The current bill contains a number of new or amended provisions, which in our judgment, are definite improvements. Since our testimony last year on S. 1606 stated our general position, I shall not consume your time in restating it. But I would like to call your attention to some of the major changes between S. 1320 and S. 1606, which, in my belief, make it even more desirable for enactment by the Congress as a foundation health program.

I. DECENTRALIZATION OF ADMINISTRATION

S. 1320 very clearly establishes a system of local administration, under State-wide plans. Since the Federal Government undertakes an obligation to the persons eligible under the bill, and finances the program, it reserves the right to administer the program in States where benefits would not otherwise be available. S. 1320 definitely provides for local administration within local health-service areas, by focal officials or committees appointed under State plans. Many functions, placed by S. 1606 on the Surgeon General, are now placed by S. 1320 on local or State officers.

People living within the local health-service areas required to be set up by the bill are given a direct responsibility in the program's operation, through membership on local area committees and on special professional committees, which advise with the local administrative officers or committees. These committees are entrusted with substantial and important responsibilities.

Gentlemen, it has been said that S. 1320 does not really decentralize administration, since certain rule-making powers still remain by law with Federal authorities. Two observations occur to me:

1. The State health authorities who, it might be expected, would most violently react against such imputed breach of States' rights,