Library Collections: Document: Full Text

Federal Administration. -- The Federal law should provide that:

(1) The Social Insurance Board shall be charged with the responsibility of administering the Federal health insurance law;

(2) A Federal professional agency (an existing agency such as the United States Public Health Service or an agency to be created) shall be made responsible to certify that a State system meets the requirements expressed in the professional standards of the Federal health insurance law;

(3) A Federal professional advisory board or boards shall be created, representing the medical professions of the United States concerned with furnishing medical services, to serve in an advisory capacity to the Social Insurance Board and its professional certifying agency.

Federal Costs. -- We recommend that Federal aid shall be given to States which choose to create State-wide health insurance systems which meet the requirements of the proposed Federal law. We estimate that the purposes of the law could be effectively carried out at a cost to the Federal Government of $60,000,000 a year. In this total we include not more than $500,000 a year for the purposes of Federal administration and the remainder for Federal aid to the States. The method of allocating these funds may be indicated more explicitly as follows:

(1) An annual appropriation of not more than $500,000 for the Federal administration of the law;

(2) One-half of each annual appropriation to be allotted to the States, having approved health insurance systems on the basis of not more than $3.00 per person eligible to receive benefits furnished by approved State health insurance laws; but not over 15 percent of the total costs of the State health insurance system, exclusive of the expenses of administration; provided that when the sum of such allotments exceeds one-half the annual appropriation each allotment shall be reduced pro rata, unless the Congress makes a supplementary appropriation for this purpose;

(3) One-half of each annual appropriation, less the Federal administrative expenses, to be allotted among States having health insurance systems meeting Federal standards, in such manner as will assist States which by reason of limited resources or severe economic distress are unable otherwise to meet the requirements of the Federal law, provided that the Federal grant under this clause shall not exceed 30 percent of the total expenses of the health insurance system, exclusive of the expenses of administration, in any State.

In the first fiscal year after enactment of the proposed Federal law, a total appropriation of $10,000,000 or $15,000,000 would probably be sufficient. An annual appropriation of $60,000,000 in each year thereafter would probably be in excess of the needs during the next few succeeding years and would be adequate for each succeeding year for some years to come. We recommend that unexpended fractions of such annual appropriations shall remain available for allotments in succeeding years. The cumulating unexpended money should be divided equally between items (2) and (3) above, one-half being used to increase the total sum available for allotment before pro rata reductions are invoked and the other half to increase the total sum available for allotment on the basis of relative State needs.

On this basis, the Federal aid would be larger for the first States which adopted health insurance than for those which followed suit later. This is sound practice, both to encourage the early establishment of State systems and to give relatively larger aid to the experimental areas. The Federal aid would become proportionately smaller as an increasing number of States adopt health insurance and as practices develop and become increasingly prevalent and standardized.

The provision in paragraph (2) above is designed to limit the flat-rate Federal aid to a maximum of $3.00 per person to whom medical benefits are furnished but not to exceed 15 percent of the total costs exclusive of the expenses of Administration. These provisions are based upon our studies which show that an adequate system of insurance medical benefits can be furnished for a total cost (exclusive of the costs of administration) of less than $20 per person in a State as a whole. This figure of $20 per person has been computed with due regard to the expected need for medical services among insured persons and their dependents and with ample allowance for the fair remuneration of practitioners, hospitals, and other medical agencies.

On the basis of paragraphs (2) and (3) above, even without accumulations from the unexpended balances of annual appropriations, the first 10,000,000 people covered by approved State systems of health insurance could be assisted by the Federal Government to the extent of $3.00 per person or 15 percent of their costs, and up to an additional 30 percent of their costs according to their need for Federal aid. The States in greatest need could receive up to a maximum of 45 percent of the cost of benefits.