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It is recognized that the Federal Government also has responsibility substantially like that of a State for its own employees, its wards and perhaps for other special groups in the population.

The general design of health insurance in a State should be such that medical benefits furnished through health insurance are financed for substantially the same aggregate sums of money as are customarily spent without insurance by the employed population with earnings up to $250 per month.

In a State which adopts both health insurance and disability insurance, certain cooperative arrangements will be desirable between the practitioners who undertake to furnish medical service and the salaried physicians charged with the responsibility of certifying as to the existence of disability. Individual physicians should not be permitted to exercise both functions.

The purpose of our proposals should be attained while sustaining the private practice of medicine and the intimate personal relationship between physician and patient.

Nothing in the Federal law should impair the power of a State to license and determine the qualifications of practitioners of medicine and of the allied professions.

Nothing in the Federal law should impair the power of a State to provide that employed persons, who for religious or conscientious reasons declare themselves opposed to receiving the services of practitioners of medicine licensed under State law, may thus exclude themselves from required contributions to the health insurance law and from its benefits.

Financial Basis. -- From a financial point of view, social insurance against the costs of medical care is quite different from insurance against unemployment or old age. Unemployment and old-age insurance, on the one hand, require the accumulation over a period of years of large reserves which will be drawn upon as the occurrence of unemployment or old age requires. The risks in these forms of social insurance must be capitalized. In health insurance, on the other hand, the finances are substantially on a pay-as-you-go basis, no reserve being required except a reasonable working capital.

Medical Benefits. -- It has frequently been proposed that the medical benefits furnished through health insurance should be restricted to those which are required in serious or financially "catastrophic" sickness and that the insured persons should pay some portion of the cost of the service at the time it is rendered or should pay the costs up to some specified maximum sum. These proposals were given careful consideration by our staff, were submitted for the consideration of all our professional advisory groups, and -- with the exception of one member of the Medical Advisory Committee -- were unanimously disapproved. Such proposals are not unsound in principle, but we find that they are impractical and unwise from administrative, professional and financial points of view. They would require: the creation of unnecessarily complicated and expensive administrative machinery; the adoption of arbitrary criteria to distinguish serious from trivial sickness; and the establishment of undesirable delays and unnecessary financial barriers in bringing the patient under the care of his physician. A plan patterned after these proposals would expose both insured persons and insurance practitioners to -undesirable practices which may become associated with the certification of private expenditures.

We recommend that a sound system of health insurance should furnish medical benefits to insured persons and their dependents, in health and in sickness, without waiting period and without payment except through their previous contributions.

Professional Relations. -- The Federal law should provide that an approved State system of health insurance shall safeguard professional relations and the quality of medical services furnished to insured persons and their dependents. Specifically, in the administration of the services the medical professions should be accorded responsibility for the control of professional personnel and procedures and for the maintenance and improvement of the quality of service, legally qualified practitioners should have broad freedom to engage in insurance practice, to accept or reject patients, and to choose the procedure of remuneration for their services; insured persons should have freedom to choose their physicians and institutions; and the insurance plan shall recognize the continuance of the private practice of medicine and of the allied professions.

State Administration. The Federal law should further specify that an approved State system shall provide for the efficient use of funds towards which Federal aid is given through: (1) the creation of a single State authority responsible for the administration of the law throughout the State and of necessary authorities within subdivisions of the State for the local administration of the law; (2) the proper care and safeguarding by the State of health insurance funds and full and complete periodic reports to the Social Insurance Board in accordance with rules and regulations which may be prescribed by the Board; (3) such representation of the professions and professional agencies in the State administration as will conduce to the maintenance of high standards of service and to the advancement of the sciences and arts concerned with the study. care and prevention of disease; (4) the correlation or integration of the health insurance system with the State and local public health administration; and (5) the exclusion of agencies organized for profit from the administration of the system, either in States as a whole or in local areas, and the exclusion of other intermediary agencies between the insured population and the professional practitioners and institutions which serve them. If a State system combines or correlates health insurance with disability insurance, the State should make separate accounting of sums paid in and paid out for medical and for cash benefits.