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The money loss caused by sickness in families with small and moderate incomes -- less than $2500 a year -- in the United States is estimated as nearly two and one-half billion dollars. Of this huge sum about a billion and a half represents the expenses of these families for medical care and about $900,000,000 their loss in wages due to sickness. The cost of care in sickness thus exceeds wage loss due to temporary disability. Either figure, however, represents a serious burden upon the large group of families with incomes less than $2,500 a year. These figures are direct costs. They ignore the much larger costs of sickness represented by the losses in capital values of human life.

These enormous losses are not distributed equally among the people. Some individuals have much more sickness than others in any given year. Actuarial experience shows that among an average million persons there will occur annually between 900,000 and 900,000 -sic- cases of illness. This might seem to mean nearly one case of sickness to each person. Actually, however, the economic burden will fall more heavily on some than on others. For although 470,000 among an average million persons will not be sick during a normal year, 460,000 will be sick once or twice, and 70,000 will suffer three or more illnesses. Of those who become ill, one-fourth will be disabled for periods varying from one week to the entire year. The situation may be visualized from the actual experience in normal times of 1,000 typical families in large cities, with annual incomes ranging from $1,200 to $2,000 as follows: 218 had medical bills in a single year in excess of $100, and 90 in excess of $200; of these 90 families, 16 had medical costs ranging from $400 to $700, or about one-third of the year's income, and 4 families had sickness bill amounting to more than one-half of their incomes. All of these costs were additional to wage losses. The situation in families with less than $1,200 annual income is far worse even in normal times.

The fact must be faced that even if a minimum annual income of $2,000 could be maintained through various ways for American families, this amount would still be insufficient to enable them to budget against the costs of sickness.

Unemployment compensation and old age pensions and annuities will be insufficient to meet the unexpected loss of income due to illness. A substantial proportion of families in cities, towns, and rural areas actually see are no medical care, or receive insufficient care during sickness. The proportion of families receiving inadequate care has been shown to be largest among those with small incomes, and to diminish step by step as family income increases. In normal times, about one-third to one-half of all the families who have to seek public or private charity are compelled to do so because of the economic effects of accident and illness.

Thus the risks to economic security arising out of ill health are of three kinds, namely:

1. Loss of efficiency and health itself, and thereby loss of the capacity to be employed

2. Loss of earnings caused by disabling illness among gainfully employed persons

3. Costs of medical care to gainfully employed persons and their families.

The financial difficulties of the people who need medical service are necessarily reflected in insufficient and unstable incomes among the physicians, dentists, nurses, and others who furnish care, and in the precarious financial conditions of many hospitals. As President Roosevelt, in his address to the Conference on Economic Security, declared, the present situation brings "an unfair burden upon the medical profession" through the charitable services which its members give with willingness and sacrifice. There is a financial problem, to be solved for those who furnish medical care as well as for those who receive it. And, finally, there is a problem of fundamental importance which must also be satisfactorily met -- the promotion of the quality of medical care, of high standards in hospitals and allied institutions, of the professional independence of those who render medical service, and of the personal relationship between the physician and his patient. Adequate remuneration to practitioners in medicine and the allied professions and to medical institutions must be assured, and provision must be made for the responsible participation of the professions in planning and administering plans for medical services if high standards of care and continued incentives to its improvement are to be maintained.

In considering practicable means for reducing these risks and meeting these problems, the Committee, assisted by a technical staff and with the counsel of advisory groups in the fields of medicine, public health, hospital management, nursing, and dentistry, and with the technical collaboration of the Bureau of Medical Economics of the American Medical Association and other agencies, has studied various direct measures that have been developed in the experience of this and other countries. These measures vary widely in content and effectiveness, but they may be grouped under four general heads, namely: