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The fundamental goals of the plan are:

(1) The provision of adequate health and medical services to the insured persons and their families;

(2) The development of a system whereby people with small and moderate incomes are enabled to budget the costs of medical care for themselves and their dependents;

(3) The assurance of adequate remuneration to practitioners in medicine and the allied professions and to hospitals and other medical institutions;

(4) The maintenance of high standards of care and the development of new incentives for its continued improvement through responsible participation of the medical professions in administration.

All experience the world over testifies that a sound plan of health insurance (as distinguished from a plan of disability insurance) must undertake to furnish for the insured persons and their dependents not cash with which to purchase medical services but the services themselves. It is therefore inherent in any such program that there must be contractual provisions whereby the contributions paid into a central pool are used to remunerate those who furnish service to the beneficiaries. Accordingly, the plan must be adapted to the available resources of a community measured in professional practitioners and agencies. Viewed in this light, it is at once evident that the design of a system of health insurance has limitations which are not inherent in the design pf other systems of social insurance in which the benefits are all paid in cash. Not only must health insurance be concerned with regard to the provisi6n of service, it must also be designed with regard to differences in the availability of the means of furnishing services in different States and in the different areas within States. A Federal plan must therefore be flexible and adaptable to the diverse conditions under which it must operate.

With these and other factors in mind, we conclude that health insurance should for the present be planned on a State-wide and not on a Federal basis, under a Federal law which leaves to the several States the initiative and option of establishing systems of health insurance. In our opinion, the role of the Federal Government is principally to establish minimum standards and safeguards for health insurance practice and to provide subsidies, grants, or other financial aids or incentives to States which undertake to develop and operate health insurance systems which meet the Federal requirements,

We recognize the need for careful experimentation and for the accumulation of experience before the country is committed to any far-reaching or irrevocable program, We therefore propose that the financial aid offered to States should be sufficient to encourage the early establishment of health insurance systems in some States and to assist those which are in need of Federal aid by reason of limited resources. Federal aid should not be so large as in effect to harry States into adopting health insurance merely to qualify for Federal aid. The use of a uniform payroll tax which we have recommended for Federal-State plans of unemployment compensation and of disability insurance is not suitable for health insurance where a more flexible financial implement is needed. Instead, we recommend that Federal aid shall be granted to the States through subsidies which we shall define more specifically on a later page.

The basic Federal standards should be essential parts of the Federal law.

Considerable latitude should be left to the States to determine the populations to be insured and the benefits to be furnished. A State may require contributions from employed persons or from employed persons and their employers and may specify that persons in certain occupations or employed in establishments having less than a specified number of employees are exempted from the scope of the law. A State may admit these excluded and other persons to voluntary participation in the health insurance plan. A State may specify a lower limit of earnings below which employed persons shall not be required to make contributions. Employed persons whose earnings are below this limit and their dependents, together with persons who have no incomes, may be brought into the health insurance system by payment of appropriate amounts in their behalf from public funds of the locality or of the State. In this way medical care for partially and totally dependent persons may be unified with medical care for self-sustaining groups under a single administrative and professional machinery, if such unification is desired by the State. The standards in the Federal law should merely specify an upper income limit for the insured population and the maximum costs per capita (for a State as a whole) of specified medical benefits toward which Federal financial assistance will be offered. Our studies lead to the conclusions that the income limit up to which Federal aid is offered should be $250 per month, that the medical benefits should include at least physicians' services and hospital care, and that the total cost (exclusive of the expenses of administration) of these and other medical benefits would probably not exceed $20 per capita.