Americans, whether or not they have consciously formulated a philosophy about the matter, have wisely rejected this course, and have consistently stuck to the wage-loss principle.

For

But there is one more question that must be answered: How do you fit payments for health services within the American principle of simply restoring a portion of lost wages? The answer is: The American principle contains one important exception to the normal rule confining its benefits to wage replacement: If the same event which produces wage loss also produces an accompanying kind of special expense, the system may also pay that special expense. example, industrial injury typically produces medical and hospital expense as well as wage loss. Therefore every Workmen's Compensation Act pays medical and hospital benefitfis as well as wage-loss benefits. For if the system did not pay the typical accompanying expense, the wage-loss benefits would be eaten up by that accompanying expense. The wage-loss benefits would therefore not perform the function they were designed to perform, which is to give the man and his family a modest but dignified source of regular income to keep them from becoming a social problem or a community burden. The principle of the entire system would be defeated if, because of a predictable special accompanying expense, the very event that set the wage-loss payments in motion simultaneously snatched them away.

To apply this principle to health benefits for retired persons under social security, it is necessary to adduce only one well-documented and undisputed fact: The event that produces retirement benefits, old age, also produces sharply increased hospital and medical expenses. Of course, the increase does not come about instantaneously. But that is not of the essence of the question. The important operative fact is that this special category of expense is typically several times as great in old age as in earlier years.

When this is recognized as the key principle, we discover that there is already ample precedent within the Social Security Act itself. In death cases, social security pays a substantial cash allowance for funeral expenses. Curiously, this feature has never produced any conspicuous controversy-no charges of socialized undertaking, or of interference with the delicate relation between morticians and bereaved families. Yet this payment is presumably made in the great majority of deaths right now, since practically everyone is now under social security.

The principle here formulated sets clear boundaries on how far the provision of health benefits under social security should go. In the direction of inclusiveness, these benefits should plainly be paid also to social security beneficiaries receiving total permanent disability payments, since both elements are present: wage loss, and typical accompanying special medical and hospital expense. But in the direction of limitation, let us be faithful in following our principle where it leads us, even though the result may not be politically or emotionally appealing. Specifically, this would mean that these health benefits should not be paid to young widows and others drawing survivors' benefits, since unlike the disabled or overage, they cannot show the element of persumed special expense. On the other hand, it may be necessary for administrative reasons to provide health benefits to persons who are eligible for retirement benefits but who have not claimed them, since otherwise illness would precipitate retirement claims that might not otherwise be made.

The answer, then, to the question posed at the outset is plain: Social security health benefits are not an entering wedge for socialized medicine; they definitely are the American way of handling the financial problem of hospital and health care for the aged. Let me say again that there are, in addition to this philosophical argument, a number of other important issues embedded in the social security health benefits controversy, some of them of real gravity and difficulty. A program of these dimensions cannot be undertaken without troublesome administrative complications, touching, for example, the problem of combining maximum professional freedom with some minimum of standard setting to avoid abuses. But these various administrative, financial, and practical difficulties are not impossible of solution. There could be no happier turn in this stormy story than a decision by organized medicine to accept the kind of philosophical rationale here advanced and then get on with the job-which is largely the doctors' job of attacking these remaining technical problems with ingenuity, briskness, and good humor.

TESTIMONY BEFORE THE HOUSE WAYS AND MEANS COMMITTEE OF INDIGENT HEALTH CARE IN SHAWNEE COUNTY, KANS.

I

I am John L. Lattimore. My address is Topeka, Shawnee County, Kans. am a doctor of medicine, having graduated from the Medical School of Baylor University in 1918. I am engaged in the practice of pathology. In 1927 I was president of the Shawnee County Medical Society, and in 1943-44 I was president of the Kansas Medical Society. I have been chairman of the Medical Service

Board for the Shawnee County Medical Society, which administers the indigent care program, and I am currently on the Governor's Advisory Commission on Social Welfare for the State of Kansas. I cite the above to explain to this committee that I have maintained an interest in programs relating to health care of the indigent within my county and in the State of Kansas. I am grateful for an opportunity to explain briefly the manner in which recipients of welfare in Shawnee County, Kans., receive health services. I wish to give you evidence that ability to pay is not a factor in providing health care and that a program of low cost can operate successfully.

Rarely is public assistance money sufficient to cover the cost, so a variety of programs have been instituted throughout the country and in the State of Kansas to make health service available at maximum efficiency and at minimum expense. My testimony will briefly explain one such experiment.

In Shawnee County, Kans., is located the city of Topeka and several small communities. The population of this county is approximately 150,000. There is an almost constant figure of 4,000 persons on welfare in all the public assistance categories. There are approximately 100 physicians engaged in the practice of medicine within this county.

In 1942 the Shawnee County Medical Society approached the county board of social welfare with a plan to provide total health care for all indigent on a prepayment or an insurance basis. After negotiations, a contract was signed whereby the county medical society accepted the responsibility for all health services for each certified recipient of public assistance in return for a stipulated monthly payment. The original figure was $3.50 per family per month. The Shawnee County physicians paid all hospital bills, all drug bills, the administrative costs, and prorated what money remained, if any, among the physicians, according to the services they rendered. At this time, hospitals were paid 50 percent or less of their usual charges.

It became apparent that private patients were assessed the loss of revenue occasioned by underpaying for indigent services. As hospital costs increased, it was determined by the physicians that this situation was not fair to the hospitalized private patient, and for some years now, hospitals have been paid their normal fees.

The county board of social welfare then increased the rate of payment. The source of this money, as you know, includes Federal, State, and county funds, but since we receive our payment from the county board of social welfare, I have not distinguished its source. In 1958 the payment was approximately $6 per person per month. Today, it is approximately $7 per person per month. For the sake of brevity and to avoid the confusion of statistics, I have not given the actual formula, but this may be seen in appendix A attached to this report. Each category of welfare receives a different rate of payment, as you will see, with aid to dependent children being paid at the lowest rate. The average, however, for all 4,000 is almost exactly $7. The Shawnee County Medical Society receives, therefore, on an average, about $28,000 each month.

Currently, 58 percent of this sum is paid to the hospitals. This is based on actual charges for each day's care given every hospitalized indigent patient. Next are paid the drug bills, then the administrative cost, which is under 5 percent, and again the remainder is prorated among the participating physicians according to the number of services they rendered during the month.

For each day's care, the hospital receives, out of our insurance fund, the same rate of payment for indigent patients as for private patients. There is no distinction whatever. This cost requires 58 percent of the total or on an average, about $16,250 of the $28,000 received. Administrative costs are less than $1,400. Drug costs average $5,000 a month, which leaves about $5,500 a month, and often only $4,000, to pay all physicians for all services, surgery, home calls, X-ray, everything they performed during the month. Appendix B attached gives an abbreviated statistical report of services.

27-166-64-pt. 5--22

When you multiply $5,500 (the average remaining for distribution among physicians each month) by 12, we have $66,000 a year to pay for some 20,000 services. This averages $3.30 for each service whether it is a home call or surgery or anything else.

There are at least five major facets to this plan, without which we believe the program could not succeed.

First, this program must receive the cooperation and the active participation of a large majority of all physicians. In Shawnee County, since the inception of this program in 1942, every member of the society has participated. Each has volunteered his services and has agreed to accept whatever prorated value the society gives him for the work he performs. The cooperation of the physicians in this county has been phenomenal and continues so at the present time. I said every physician participates. This is literally true. The society, however, exempts any physician after he reaches the age of 65 years. We learned to our constant surprise that these older physicians continue to cooperate with this program even though they are no longer expected or asked to do so.

The second essential element to the success of this program is represented by committee effort. Supervisory committees must retain an active interest in this program and continually review all facets of its operation. In our county, this project is operated by a medical service board composed of five elected members and three officers of the society. Subcommittees are appointed on drugs and laboratory work, on clinic operation, on consultations, on hospitals, on appeals and complaints, and on audit and finance. These committees meet regularly, usually once a month.

A third essential element is the operation of a clinic. This clinic is conducted daily at the Stormont-Vail Hospital, a municipally operated hospital in the city of Topeka. It is staffed by the members of the Shawnee County Medical Society, working in rotation according to schedules, providing the services of all specialties in medicine at all times. Physicians serve one-half day each week for a 3-month period every year. This arrangement permits every doctor an assignment on a regular basis. Much assistance in the operation of this clinic, housekeeping facilities, nursing care, etc., is given by the city-county department of public health. New patients arrving at the clinic are first seen by the medical service and are then directed to whatever specialty care is indicated. A fourth necessary feature for the success of this program is an arrangement whereby drugs are furnished through the facilities of the hospital. All drugs are purchased with money available under this program by the hospital or by the society, whichever can obtain them more economically. All prescriptions used by the indigent in this county are filled at the clinic pharmacy. It must be stated this feature of the program does not meet with the favor of the Pharmaceutical Association. In fact, physicians do not like it either because we would prefer to have prescriptions filled at the pharmacy of the patient's choice. The sum of money received for this program simply does not allow for the retail cost of drugs, so this feature of the program has been instituted because of necessity.

A fifth and final major feature is the voluntary acceptance by physicians of a very low fee schedule. A copy of this fee schedule may be seen on pages 12-15 of appendix C-the manual which describes the operation of this program. This fee schedule establishes by units the value of various professional services. For example, an office visit is valued at one unit. No procedure is valued at higher than 35 units. Payment is never higher than $1 per unit. It is frequently less. Therefore, no physician will be paid a higher fee than $35 for any service he renders an indigent patient. I must note this does not meet with the approval of the medical profession, but within the range of the fee paid by social welfare, no other payment schedule can be utilized. May I once more call to your attention that all other bills relating to this program, the full payment of all hospital charges, the payment of drug costs and administrative expense, is first taken out of the money received. Following this, physicians are paid from the amount remaining in the allotment for that month.

Now, may I briefly point out a few other features of this program.

1. The indigent are given their free choice of any physician they wish to employ. They are not required, but are encouraged, to utilize the services of the clinic. Should hospitalization be recommended, they need not utilize the services of the surgeon who is currently on the clinic staff, but may ask for the surgeon of their choice.

2. The county medical society maintains a 24-hour telephone answering service through which anyone, including the indigent, may obtain the services of a physician.

3. Not only does the indigent patient have a choice of physician, but he also has a choice of the hospital to which he prefers to go. In addition to several public hospitals in the city, there is maintained a county convalescent center, to which are referred chronic patients requiring more than the care ordinarily given in a skilled nursing home. This center is also staffed by the practicing physicians of the county on a rotating basis similar to the clinic plan. The use of this home represents another saving in cost through the transfer of those patients who do not require hospital services but need nursing care.

4. I stated this program provides total health care. This is true with the exception of very few items, such as care provided by the State or other governmental agencies in mental and tuberculosis facilities. Our plan does not cover the cost of appliances, prosthetic devices, or eyeglasses. It does cover the refractions. It covers orthopedic surgery, but it does not cover the mechanical brace, which may be required. All else is paid under the terms of our contract.

5. Each month the county board of social welfare sends to the Shawnee County Medical Society a list of the names of persons certified eligible for public assistance. This list is supplemented at intervals throughout the month as others are added to these rolls. The county medical society gives each person on the list an identification card which he presents to the physician whenever medical services are required. He does this upon his appearance at the clinic, when he goes to a physician's office or when a physician calls at his home.

:

We know, and you immediately recognize, there are obvious faults in this program. They all relate to the fact that there is insufficient money to pay the cost of total health care. Through increased Federal participation, we anticipate a higher allotment of money in 1964, but much of this will be expended with hospitals because of increased hospital costs. Appendix D lists the proposed payment formula as submitted by the Kansas State Board of Social Welfare for 1964. We expect, if the State board of social welfare, and if the Federal Government will permit us to do so, to operate a similar program for those who will be eligible as of January 1 under the medical assistance to the aged program of the Kerr-Mills law.

It is our hope the Shawnee County project demonstrates that physicians will provide total health care to everyone as needed, with small remuneration, or none at all, should such conditions arise. This testimony is one piece of evidence to support the consistent assertion by the American Medical Association that the economic status of an individual is not a barrier toward the availability of physicians' services.

While I dwelt at length upon the program in my county, this story could be repeated throughout our State. Details would vary, but every program is designed to accomplish exactly what the doctors in my county try to do. We are determined that necessary physician's services will be provided and that this shall be total care without regard to limitations as to days or services for which the person may be legally eligible.

Under the MAA portion of the Kerr-Mills program, however it shall be implemented in Kansas, we propose to do the same.

I have limited my consideration to the indigent and projected this to those who will soon be eligible under MAA. This is not to imply that persons without public assistance whose illness might create economic concern are not cared for. They are.

This report concerns only those of the lowest income levels. I have pride in the fact that the physicians in my county provide service for these persons, also. I can assure you that the same cooperation exists throughout the State of Kansas. Moreover, I am confident this statement can be made with equal integrity about the physicians in all parts of the Nation.

MANUAL OF INDIGENT MEDICAL CARE AND UNIT FEE SCHEDULE, SHAWNEE COUNTY MEDICAL SOCIETY, TOPEKA, KANS.

INTRODUCTION

Providing medical care for the indigent in Shawnee County has been the responsibility of the medical profession for the past 20 years and has required the cooperation of all concerned. Together with the facilities provided by the city-county health department and with the individual members of the society, the program has been successful.

The responsibility of the professional and financial supervision has been under the Medical Service Board and your board has spent much time in formulation of rules and policies to establish a sound and practical program.

Your board urgently requests that you adhere to the rules and policies as established and that you refer to the unit fee schedule in reporting services rendered.

The program must through necessity be kept flexible and therefore, it is impossible to establish a fixed rule for every contingency. When in doubt, call the executive secretary who will answer your question directly or secure the desired information for you.

Your continued cooperation is requested.

MEDICAL SERVICE BOARD, 1962.