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Much medical service is now highly specialized. The law must therefore provide that the State medical authority will prepare lists of services which are regarded as specialties, and that local professional authorities, with the approval of the State authority, shall draw up lists of those practitioners who are capable of rendering these various types of specialist services. Flexibility within a State is necessary, since in small communities the same standards cannot be applied for admitting physicians to a list qualified for rendering certain specialist services as would be applied in a large city.

Payment for professional service must be flexible, providing for payment on either a fee basis, salary basis, or on a basis of capitation, i.e., a certain amount to the physician per year for each person who regularly selects him as his family practitioner. Specialist service, because of its nature, can rarely be remunerated under a capitation basis. The medical, dental, and other professional groups should play a responsible part in determining with the State and local administrative authorities the standards and methods of remuneration which they prefer in various localities.

Hospitals, with their associated clinics and laboratories, necessarily play an important part in rendering care in sickness, and the administrative authorities under the law should enter into arrangements with these institutions to furnish the needed services and to pay for them.

Since the cost of ordinary medicines is small, and since careful studies have shown that these costs are distributed comparatively evenly among families, it is not considered necessary to include ordinary drugs and medicines within the scope of a health insurance law. A list of especially expensive medicines and likewise expensive surgical and other appliances should be drawn up by the proper authorities, and articles on this list should be included within the scope of the benefits available under the law.

These matters of professional relations are of fundamental importance to the proper design of a State system. To indicate more explicitly the results of our studies on these features of the general subject we list in an appendix to this report more detailed suggestions. Many of them should be incorporated in the State law; others are more properly matters to be covered by administrative rules of procedure.

State Administration. -- It is essential that the administration of the State law shall be centered within a State upon a single responsible authority for the handling of finances and supervision of administration in subdivisions of the State and in local communities; and that the medical services themselves should be under the immediate supervision of responsible professional bodies. The details of administration will, of course, vary within States, but in general health insurance should be administered within a State by a State board with an administrative officer or by a State officer with an advisory board, having general authority over the system.

Subject to this central authority, the primary control of the professional aspects of medical care should be in a medical board appointed by the Governor or by other appropriate State authority from nominations submitted by the organized medical profession of the State. Similar responsibility for their respective fields, should be vested in analogous boards for hospitals, dentistry, and nursing, depending upon the scope of the benefits.

Agencies organized for profit should be excluded from the administration of the health insurance system either in States as a whole or in local areas. The State and local administration of health insurance should be closely associated with preventive measures through correlation with the State and local departments of public health.

In addition, the State law should provide for the creation of local boards to hear and determine disputes and grievances and of a State board to which appeals may be taken and determined from the local boards.

F. CONCLUSION

In our first report to the President we dealt with general and specific measures for economic security. In respect to risks which arise out of illness, we proposed certain particular measures, for child-care services, for child and maternal health services, and for a Nation-wide preventive public-health program to lessen the occurrence of sickness. We made only a progress report on other measures to protect wage-earners and their families against the costs of illness. These subjects were still being studied by our staff and our professional advisory committees.

In the present report we present our proposals on general measures to furnish economic security against sickness, dealing specifically with the development of public medical services and facilities, with insurance against wages lost through temporary disability, and with health insurance for wage-earners and their dependents. These proposals are:

1. With respect to Federal aid to State and local public medical facilities and services, we make the general recommendation that appropriate administrative action be taken and sufficient funds be made available when necessary, to provide this aid. The surveys necessary to determine when and where Federal aid should be given are already under way in order that, if aid be deemed advisable, the required information will be at hand.