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In the past few years there have been developed in many communities, under responsible auspices, both lay and professional, commendable plans for non-profit insurance for hospital care. Many of these are sound and useful and are accumulating valuable administrative experience and actuarial data. The American Hospital Association has officially endorsed voluntary hospital insurance and has established guiding principles for the organization and management of plans. Upwards of forty cities now have such plans established, most of them developed within the past two years, and with over 100,000 subscribers. Originally some of the plans were unnecessarily expensive. Recent developments point towards lower premiums for the subscribers and the organization of the plans under community auspices instead of hospitals alone. The growth of analogous plans in England during the last fifteen years indicates that, if developed in conjunction with other sickness insurance on a compulsory basis and with other social measures, voluntary hospital insurance may aid in serving large numbers of persons. Obviously insurance against hospital bills alone, without inclusion of professional services and other sickness costs, is an incomplete and unsatisfactory provision against the risks and losses of illness.

In certain industries, chiefly railroads, mining. and lumbering, there are numerous sickness insurance plans, providing general medical care and often hospital care also. Some of these have been in operation for many years. But altogether these plans do not reach over 1,500,000 persons. During recent years insurance plans have also been started in a number of communities, often under the auspices of professional associations or agencies, for the periodic prepayment of the costs of professional services and sometimes of hospital costs also. None of these plans has reached more than a very small part of the local population in need of security against the costs of sickness. The test of these and other voluntary plans is not their intentions but their actual accomplishment in achieving adequate coverage. It is noteworthy that in the State where voluntary health insurance plans of all these kinds have developed most extensively, there exists a spontaneous and active demand for State legislation to extend and systematize health insurance on a compulsory basis under public authority and to eliminate abuses which have developed under voluntary practices. The value of local experimentation, of adapting local plans to local conditions, and of strong professional participation in local administration -- all of which are evident in many voluntary plans -- are not open to question. Our decision to retain these values will shortly become clear when our proposals are considered and their flexibility is evident.

Voluntary sickness insurance without subsidy or other encouragement by governments has nowhere shown the possibility of reaching more than a fraction of those who need it, and has everywhere tended to be replaced by a system under which the law requires participation in sickness insurance by at least certain occupational or income groups.

Our only form of compulsory sickness insurance in the United States has been that which is provided against industrial accidents and occupational diseases under the workmen's accident compensation laws. In contrast, other countries of the world have had experience with compulsory health or sickness insurance applied to over a hundred million persons and running over a period of more than 50 years. Nearly every large and industrial country of the world except the United States bas applied the principle of insurance to the costs of medical service.

The Committee's staff has made an extensive review of insurance against the risks of illness, including the experience which has accumulated in the United States and in other countries of the world. Based upon these studies the staff has prepared a tentative plan of insurance believed adequate for the needs of American citizens with small and moderate means and appropriate to existing conditions in the United States. From the very outset, however, our Committee and its staff have recognized that the successful operation of any such plan will depend in large measure upon the provision of sound relations between the insured population and the professional practitioners or institutions furnishing medical services under the insurance plan. Great pains have been taken to assure that the plan is realistic, not only in its financial and administrative, but particularly in its professional implications. While it takes advantage of foreign experience with health or sickness insurance, the plan differs in a number of fundamental particulars from the European systems.

General Outline of the Plan

It is proposed that the risks and costs incurred through the need for medical services shall be provided for on the insurance principle by requiring contributions into a common fund from people of small and moderate means. These contributions are to be designed on the basis of a percentage of earnings, supplemented as they be desirable or necessary by additional contributions from employers or public funds.